CO129-362 - Public Offices - 1909 — Page 27

[This Document is the Property of His Britannic Majesty's Government.]

CHINA RAILWAYS.

CONFIDENTIAL.

[21833]

25

C.0. 23208

[June 11.]

SECTION 2,

Prc2

12 JUL C

No. 1.

Messrs. Pauling and Co. to Foreign Office.-(Received June 11.)

(Confidential.) Sir,

26, Victoria Street, Westminster, June 10, 1909. WE have had under consideration your letter of the 14th ultimo, in which was communicated to us the decision of His Majesty's Government that the assistance to be accorded to us in our attempt to secure for British capital the construction of the Chenchow-Taonanfu line would depend on the special circumstances which might arise from time to time.

We fear that, for reasons which at present are beyond our knowledge and criticism, His Majesty's Government have decided to adhere to the principle that the official support of the Foreign Office must be confined to the operations of the British and Chinese Corporation and its associates.

It is of course obvious to us that in a case where His Majesty's Government have pledged their support to other interests we cannot hope for assistance when we appear as direct competitors; we understand equally that the Foreign Office will give no assurances such as we seek except under the condition that our projects meet with their general approval and harmonise with the interests of British policy in the Far East.

With regard to the Chenchow-Taonanfa Railway, which, when constructed, will form the main trunk line of Mongolia (which to-day has no railway outlet whatever), our case, briefly stated, is that we consider the enterprise of paramount importance, not only to ourselves, but to British influence and prestige generally; that in this matter we are in conflict with no other British competitor, but only with the Japanese, from whom we have every reason to fear unwarrantable attempts at interference; and that we seek the official approval of His Majesty's Government to our scheme in order to obtain their public support in our attempts to carry it through.

We are convinced, from experience gained in varied and protracted negotiations with the Chinese Government, that unless we can count upon the official assistance of His Majesty's Government in our efforts to reap the benefit of our labour and expen- diture we shall inevitably find ourselves in a position of hopeless inferiority to that of our foreign competitors who enjoy the powerful aid of their respective Governments, and to that of the British and Chinese Corporation, to which His Majesty's Govern- ment have publicly accorded their official support.

We therefore venture to renew our request that His Majesty's Government accord their sauction to this enterprise, and permit us to count upon their support and on the valuable co-operation of the British diplomatic and consular officials in China. In preferring this request we would point out that we do not ask for greater advantages in this particular region which we are endeavouring to open up for British enterprise than are at present granted to the British and Chinese Corporation in the sphere of their activity, but we do ask that we may enjoy, equally with that body, the privilege of appearing in the field of Chinese railway enterprise under the ægis of His Majesty's Government. Should this be withheld from us we would he compelled to regard it as a very considerable hardship that we should be made the objects of such discrimination.

The circumstances connected with the proposed Chenchow-Taonanfu line and, the agreements we have signed with the Chinese Government are, we believe, within the knowledge of the Foreign Office, and we will not extend this letter unduly by recapitulation.

"We would, however, point out that in this case the absence of official support has most unfortunately had the effect of encouraging the Japanese to a most overbearing and aggressive policy, and we have been recently informed that the Japanese Minister now goes so far as to inform the Chinese Government that Japan will not allow any extension of the Chinese Imperial Northern Railway to be constructed in a northerly direction, whether it be parallel to the South Manchurian Railway or not. This, we

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