[This Document is the Property of His Britannic Majesty's Government.
[B]
CHINA RAILWAYS.
}
CONFIDENTIAL.
[22411]
No. 1.
C.O.
23208
[June 23.]
SECTION 2,
Your Excellency,
Sir Edward Grey to Mr. Whitelaw Reid.
Foreign Office, June 23, 1909.
I HAVE the honour to acknowledge the receipt of your note of the 12th instant on the subject of the proposed participation of American financiers in the Hankow- Szechnen Railway loan.
I entirely agree with all that your Excellency says as regards the danger that would arise in China from the pursuit of conflicting interests and the consequent disagreements among Western nations.
As I had the honour to explain verbally to your Excellency, I also concur entirely in your view that, as a doctrine of international law, one of two joint concessionnaires has no power to fix the term when the right of the other to its share in a concession should lapse through non-use. I suggest, however, to your Excellency that in certain matters of business that do not admit of indefinite delay circumstances arise which justify, and, indeed, compel, one party to a bargain to assume that the other party no longer desires to adhere to the arrangement if the latter party after reasonable notice gives no indication of its wishes. In the present case several years notice was given, and it was not until the negotiations between China and the European groups concerned had been proceeding quite openly for many months and had, subject to Imperial sanction, reached a successful issue that any claim to participation was put forward on behalf of American financiers.
The agreement which has been reached between British, French, and German financial groups and the Chinese Government is to the following effect
---
A loan of 5,500,000, is to be raised by the three groups in equal shares for the construction of railways in Hupei and Hunan.
The portion of the Hankow-Canton Railway which lies in these provinces is to be constructed by a British chief engineer.
About 500 miles of the Hankow-Szechnen Railway, including branches, all in Hupei, is to be constructed by a German chief engineer, and the remainder of the lines in Hupei by a French engineer.
It is further agreed between the three groups that endeavours should be made to secure an extension of the line to Chengtu, the capital of Szechuen, to be constructed partly by a French and partly by a British chief engineer in such a manner that of the whole line from Hankow to Chengtu about a third each should be entrusted to German, French, and British chief engineers.
I venture again to express the hope that the American group will place no difficulties in the way of securing Imperial sanction for the agreement which has been reached.
As regards, however, the participation of American capital in financial loans in China, I have the honour to suggest that the American group should place themselves in communication with the British, French, and German syndicates concerned.
His Majesty's Government entirely approve and welcome in principle the participation of American capital in Chinese railway loans, and they hope that au arrangement may yet he arrived at for an equal participation between the American and other foreign banks in the loan in question, leaving undisturbed the agreement concluded by the British, French, and German groups.
I have, &c.
[2317 -2]
К
E. GREY.
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