[This Document is the Property of His Britannic Majesty's Government.]
CHINA RAILWAYS.
CONFIDENTIAL.
[21251]
614
[June 7.]
C.O.
SECTION 1.
22029
RECO
No. Bre? 2 JUL 09
!
Sir J. Jordan to Sir Edward Grey.-(Received June 7.)
(No. 180. Confidential.)
Sir,
Peking, May 19, 1909. THE modification of clause 14 of the Tien-tsin-Pukow agreement, which, as reported in my despatch No. 168 of the 30th April, was proposed by Chang Chih Tung's delegates, was accepted by Mr. Hillier's principals, and he was authorised to negotiate both the Hankow-Canton and the Hankow-Szechuan railway loans on those terms, on the basis of Anglo-French-German participation. According to Mr. Hillier's telegram of instructions, it was understood that the British claim to appoint an English engineer for the whole of the Hankow-Canton Railway was not disputed by either French or Germans, and the suggestion was made that the Hankow-Chengtu line should be divided into three sections, with English, German, and French engineers respectively.
In Peking, however, M. Cordes at once objected to the British engineer for the Hankow-Canton Railway, alleging that the conditions had changed since the provisional agreement of the 1st March between the three financial groups was made, and the Chinese on their side raised difficulty as regards the introduction of the Banque de l'Indo-Chine into the loan agreement, which threatened for some days to be serious. Chang Chih Tung professed to fear that if the French, who had no engagement with the Chinese Government concerning either railway to rely on, became a party to the transaction, some other nationality-the Belgians or Americans-might interfere and make claims; but his delegates confidentially informed Mr. Hillier that his opposition was really based on personal antipathy and suspicions of French policy. Eventually Mr. Hillier overcame the difficulty by arranging that the French Bank should be stated in the loan agreement to be "in association" with the English group.
The matter was now plain sailing so far as the Chinese were concerned, but the British group showing disinclination to communicate with the Germans at Berlin, who "let it be known through M. Cordes that they expected London to make the first move, Mr. Hillier suggested to London that he should be authorised to make the best arrangements possible with M. Cordes, who telegraphed for similar authority to Berlin. Mr. Hillier had proposed previously that, as a settlement, a German engineer for the Hupei section should be accepted by us, but I had let him see plainly that I was not in favour of the proposal unless it included a satisfactory arrangement regarding the future extension into Szechuan beyond Ichang, which we knew Chang Chih Tung had no power to discuss, and which bad to be left to the future.
The authorisation required by Messrs. Hillier and Cordes duly arrived, and in the evening of the 6th May they and Mr. Casenave, on behalf of the Banque de l'Indo- Chine, agreed, subject to ratification by the English, French, and German groups, to the following terms:-
Loan to be issued in equal shares by the three groups in one amount of 5,500,000/, providing 2,500,0001, for the construction of the Hukuang sections of the Dankow-Canton Railway, for which there was to be a British engineer, with a preference for British and French materials; 2,500,0001. for the Hupei section of the Hankow-Szechuan Railway, for which a German engineer and preference for German material; and 500,0001. for the redemption of the Belgian bonds,
I told Mr. Hillier that I was unable to support this provisional agreement unless the three groups concluded a general agreement similar to the draft enclosed in your despatch No. 78 of the 18th March, or came to a definite and satisfactory arrangement on the subject of the Szechuan extension. Although I fully recognized Mr. Hillier's difficulties, I thought it unfortunate that he had not raised this point in his discussions with M. Cordes, for it seemed to me only too probable that silence would only increase the difficulty in Europe. My objection, communicated to you in
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