CO129-362 - Public Offices - 1909 — Page 596

C.O.

33552

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

RECE

(REG 12 OCT 09

CHINA RAILWAYS,

CONFIDENTIAL.

[34497]

No. 1.

[September 3.]

SECTION 3.

594

Dear Mr. Greg,

Mr. Addis to Foreign Office.-(Received September 3.)

Hong Kong and Shanghae Banking Corporation,

31, Lombard Street, London, September 2, 1909. IF the Germans were, as they say, to revert to their agreement of the 7th March, 1909, the position would be as follows:--

1. The Germans, so they inform us, concluded with Chang Chih Tung on the 7th March, 1909, an agreement for the Hankow-Canton railway loan (Hupei--Huvan section), with the right to appoint a German engineer.

2. The inter-group agreement of the 6th July, 1909, excepts the Hankow-Canton railway from the sphere of its operations (vide article 2).

3. A resolution was passed by the three groups at the London conference of the 6th July, 1909, that if the Edict for the Hankow-Canton loan were not issued, then the above exception should cease to have effect.

4. Therefore, in the case supposed, the Hankow-Canton railways and Hankow- Szechuen railways would both come within the scope of the general inter-group agreement.

5. As regards the Hankow-Canton railway, the Germans are bound to offer equal participation to the French and British.

6. The British would claim to appoint the chief engineer, presuming, as has been admitted, that their interest could be shown to predominate, in terms of article 10, section (A).

7. As regards the Hankow-Szechuen, this would be shared by England and America, in terms of Chang's undertaking of 1905.

8. The British share would, however, be reduced to one-sixth, since by the inter- group agreement they are bound to offer equal participation, that is one-third of the half, to the French and Germans.

9. The engineer for the Hankow-Szechuen line would be British, in terms of article 10, section (a), providing for appointments in succession, beginning with the English, unless, which is unlikely, either French or Germans were able to establish a predominant interest.

The net result, then, of German reversion to the Anglo-German agreement of the 7th March, 1909, would be, so far as the British share is concerned---

Hankow-Canton-Finance and materials. One-third. Engineer, British.

One-sixth. Hankow-Szechuen--Finance and materials. British, for three-sixths.

Engineer, probably

Yours, &c.

C. S. ADDIS.

[2413 c-3]