CO129-362 - Public Offices - 1909 — Page 761

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To-day, the 6th instant, acting under the instructions of His Majesty's chargé d'affaires, I visited Mr. Kurachi, chief of the Political Bureau in the Foreign Office, and in the course of conversation asked him how the syndicate, which is within his province and not that of the Commercial Bureau, was getting on. He said that they had at last got everything fixed up satisfactorily, but that it had been a most difficult undertaking, because it was the first syndicate on these lines that had been formed in Japan. He explained that several of the rich men would not join unless their liability were limited, while, on the other hand, a limited liability syndicate did not seem feasible according to Japanese law. Finally a way was found out of the difficulty, and the syndicate was formed as a joint stock company, and no shareholder is allowed to dispose of his shares without the consent of the board of directors. I then asked him how the syndicate stood with Paulings, and he confirmed everything that Mr. Kadono had said, excepting that he stated that the arrangement had been arrived at by Lord ffrench and Messrs. Mitsui and Co.'s representative--not Mr. Odagiri. He pointed out that the necessity for keeping the arrangement secret was very urgent, because, as Paulings and the syndicate were the only competitors for the construction work for the Hankow-Canton Railway, they might, by appearing to be opposed, get better terms out of the Chinese, who were fond of playing one party off against another. It was for this reason, apparently, that there was no written agreement, so that they could tell the Chinese that there was no agreement.

I asked him how it was that Paulings, who were, it seemed, so intimately connected with the Japanese, had written so strong a letter against them to the "Times." Mr. Kurachi did not actually say so, but he led me to understand that this was done in order to blind the public, because, as a result of an indiscreet communication by one of the directors to a newspaper correspondent, the press had got an inkling of the fact that an agreement was being arranged between the two parties.

Mr. Kurachi further went on to say that the Japanese syndicate were for the present confining themselves to the Hankow-Canton Railway.

September 6, 1909.

E. F. C.

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

CHINA RAILWAYS.

CONFIDENTIAL.

[37823]

(Extract.)

No. 1.

(REG: 25 OCT 09

[October 12.]

SECTION 1.

Mr. Hillier to Mr. Addis.-(Communicated by Mr. Addis, October 12.)

Peking, September 22, 1909. MY letter to Straight I forward to you, as an indication of the attitude I have taken up over the question of the purchasing agents, to which the Americans would scem to attach vital importance. My feeling is that it is time we took a stand over something; and, considering all the trouble we had in getting the British and Chinese Corporation agents for our line, I do not feel inclined to budge. The Americans are very angry, as they say it is an attempt to throw the onus of blocking negotiations upon them, and they are about right. Our object is to gain time, and I hope the groups will be firm in sticking out over this point. If the deadlock results in the collapse of the negotiations, and the return of the whole business into the melting-pot, I shall, to speak quite frankly, not be sorry, for it seems to me that the attitude of the Americans, marked as it has been throughout by insufferable bounce and an entire want of generous consideration for the circumstances in which their action has placed us, offers no guarantee that we shall ever be able to work together with cordiality and accord. If that is the case, what is the good of embarking, past recall, upon a partner- ship which can only be one of mutual suspicion and disunion? It would be far better to give the Americans their half of the Haukow-Szechuan line at once, and let them finance and run it themselves, while the European groups confine their joint operations to the Hankow-Canton line and the British half of the Hankow-Szechuan line. This may seem an extreme view, but I think it might be pointed out to the Americans, with From a British point justice, that it is the result to which their policy is driving us.

All these

of view, I do not see that we have anything to fear from such a result; our claim over one-half of the Hankow-Szechuan line would revive intact, and the Germans would retain their interest in it only by our sufferance; if they stuck to us, they might get the remaining leg of the Hupei section left by the Americans; if they went in with the Americans in an anti-British combination, that leg would belong to us. are possibilities which should weigh equally with the Americans and Germans, and induce them to be reasonable. Sir J. Jordan is of opinion that the whole tangled position has become too unwieldy to be settled by the machinery of European I have suggested that Cordes and myself, diplomacy, and should be transferred here. who are unhampered by any diplomatic restrictions, should be allowed to discuss the question frankly and informally, and try to arrive at a solution which will satisfy our Governments. Sir John is considering this, and is possibly wiring to the Foreign Office on the subject.

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