[This Document is the Property of His Britannic Majesty's Governinem.
CHINA RAILWAYS.
CONFIDENTIAL.
168
3502
[January 13 FEB 10,
SECTION 2.
[1321]
No. 1.
Papers communicated to Foreign Office by Mr Addis, January 11, 1910.
(1.)
Telegram from Bank, Peking, to Bank, London, January 10, 1910.
Advise the following to British and Chinese Corporation from E. G. Hillier :--- Shanghac-Hangchow-Niugpo Railway.
In order to assist director-general force submission of provincial bureaux, would you be prepared, at request of Chinese Government, to apply for order of court allow transfer of loan funds construct proposed new railway Kaifengfu-Isuchowfu, about 200 miles, security and other terms loan agreement remaining in force, and funds already withdrawn to be replaced.
Foregoing telegraphed at request of director-general, who is very anxious to put an end to present situation, but desires to be assured of practicability of alternative scheme in case of need.
We strongly commend to your support. Inform Foreign Office. Telegraph reply as soon as possible.
(2.)
Extract from Letter from Mr. Hillier to Mr. Addis, dated Peking, August 13, 1909.
Shanghae-Hangchow-Ningpo Railway.-I reminded Liang this morning that by the terms of article 18 of this agreement, the sum of 17,5007. is due to the corporation on the 6th September, being half their commuted commission as purchasing agents for the railway. Liang assures me that there will be no difficulty about this, and he will let me know in good time as to arrangements for payment. I presume that payment will be made from the loan funds in your hands.
Liang took the occasion to refer to the affairs of this railway, which he admits are going from bad to worse. The Peking Government is defied, the loan conditions are ignored, and everyone concerned is placed in a humiliating position. The mistake was in making the loan at all, in the face of popular opposition and conflicting claims, but that cannot be undone now. Liang asked me if I would be prepared to discuss informally, with himself and Sir J. Jordan, some way of coming to a compromise over the question, which would relieve the Chinese Government from an intolerably false I replied position, while securing due protection for the interests of the bondholders, that while no way of escape from the impasse had suggested itself to me, I entirely sympathised with his views, and he could rely upon my co-operation.
Although he was careful to label the conversation private, he was evidently speaking under instructions, probably from the new president of the Board, Hsu Shih- chang, and I think we are likely to hear more of this matter, hence I mention it to you now.
There is no doubt that, owing to the fact that it is not able to impose its will upon the people of Chekiang-in other words, owing to force majeure--the Chinese Govern- ment is not in a position to carry out the agreement for this loan, and is not likely to be within any reasonable period of time. If the Chinese Government is prepared to own up to this fact, and ther are ways of putting it which are not quite so painful to national pride, it seems to me to afford sufficient ground for a petition by the British and Chinese Corporation to the proper British tribunal, asking that the loan funds should be permitted to be transferred to the construction of another railway under approved conditions as to expenditure and construction. Any of the loan funds
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