CO129-362 - Public Offices - 1909 — Page 55

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C.O.

24967

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

CHINA RAILWAYS,

CONFIDENTIAL.

REC

REGP 26 JUL 09

[May 9.

SECTION 1.

No. 1.

Sir J. Jordan to Sir Edward Grey,-(Received May 9.)

(17536]

(No. 88.)

(Telegraphic.) P.

RAILWAY negotiations.

Peking, May 9, 1909.

I have received your telegram No. 88 of the 7th instant, informing me of to-morrow's meeting of the three groups at Paris, in view of which I would lay the following observations before you for your consideration:---

As regards the Hupei sections of the Hankow-Szechuan Railway (please see last paragraph of your telegram No. 85 of the 3rd instant), Hillier and I have been in complete agreement, both previous to and since the drawing up of his preliminary arrangement, as to the necessity that the line to Ichang should not be given to the Germans without a definite arrangement being arrived at as regards the extension into Szechuan. Hillier thought that this question would be discussed and settled in Europe, and for that reason, he tells me, he has said nothing on the subject to the German agent.

I am fairly sure that until we cease our protests the Chinese have no intention of coming to a conclusive agreement with the Germans about the Cantou-Hankow Railway, and I fear that the Hong Kong and Shanghae Bank do not give sufficient credit to our protests during the last two months for the manner in which we have thereby prevented the Chinese from coming to terms with the German group.

The Hupei and Hunan sections of the Hankow-Canton Railway are together but little longer than the Hupei section of the Szechuan line, and the preliminary arrange- ment clearly gives the Germans a preponderant share in the matter of supplying engineers and material, taking into consideration the fact that the subject of a foreign loan for the Canton section has not been mooted.

The French have a half-share in the Central Railways, as the Chinese are aware, and the question as to the supply of engineers and material, if not settled now, cannot fail to come up for decision in the future. I am much inclined to fear that we would suffer eventually if this question be not arranged at the present time, for the Germans will of course direct all their endeavours to securing the Szechuan extension, once they have completed the Hupei section as far as Ichang.

I am not of opinion that much good would result from the adoption of the suggestion that Mr. Addis should approach the subject of the Szechuan extension, only to drop the same if faced by German opposition. I am more inclined to think that our best policy, in the event of a satisfactory understanding not being arrived at, would be to continue our attitude of protest regarding the Canton Railway while keeping in our own possession what we have already secured, namely, the Hupei section of the Szechuan Railway.

Private.)

As things stand at present, it seems to me that the Germans have secured quite as much as they have a right to expect, namely, the supply of material and engineer for the Hankow-Ichang section and a third of the aggregate loan for the two railways. It is unfortunate that the anxiety of the Hong Kong and Shanghae Bank to make a satisfactory financial deal seems to blind them as regards the political interests involved.

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