CO129-371 - Public Offices - 1910 — Page 180

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

178

CHINA RAILWAYS.

CONFIDENTIAL.

[2272]

No. 1.

[January 20.]

C

3502

SECTION 1.

RECE REG 3 FEB 10:

Mr. C. S. Addis to Sir F. Campbell.--(Received at Foreign Office January 20.)

Dear Sir Francis,

Hong Kong and Shanghae Banking Corporation,

31, Lombard Street, London, January 19, 1910,

I HAVE to thank you for your letter of the 19th instant, which explains Sir John Jordan's proposal with regard to the substitution of another railway as the object of the Shanghae-Ningpo loan.

I must say I am not convinced of the practicability of bringing the Chekiang gentry into submission, and, for reasons already mentioned to you, I am of the opinion that the general result upon Chinese credit in this country would be detrimental. We shall, however, do our best to give effect to Sir John Jordan's wishes in the matter, and no time is being lost in preparing a case for counsel.

Hukuang loan. I enclose copy of a letter from the German group, which came to hand this morning, together with a copy of my reply.

Yours truly,

C. S. ADDIS.

Enclosure I in No. 1.

Herr Urbig to Mr. C. S. Addis,

Dear Mr. Addis,

Berlin, January 17, 1910, I HAVE heard that the representative of Messrs. Warburg has left Paris, and that thus far the negotiations about the division of the remaining lines of the Szechuan Bailway have not led to any result. I must confess that the progress of the affair is somewhat of a surprise to me. If my informations are correct, there was a time, while the negotiations between London and Paris were going on, when there was an inclination in France to come to a definite arrangement if England, which reserves for itself the entire length of 900 kilom, of the Hankow-Canton Railway, liad ceded to France about 50 kilom. of the Szechuan Railway---50 kilom. of a "perhaps "-to-be-constructed railway.

I was told a few days ago in Brussels that the Hong Kong Bank did not wish to treat on any other basis than on that of a division of the entire Szechuan Railway in four equal parts. I was inclined to assume that this information was not correct, but now hear that the American Embassy in London has informed your Foreign Office that the division of the Szechuan line into four equal parts amongst the four groups would be entirely unacceptable, as such an arrangement would cancel the agreement already reached between Germany and the United States, and which Great Britain has approved. From this it results that a corresponding proposition has been made by the English groups.

It is a fact that the German group has not given its consent to the agreement with America until after this agreement had been pronounced in England as being satisfactory. Nor have we entertained any doubts that you in England would take such a view. As the German group ceded to the English group its rights to the Hankow-Canton line, based on the preliminary agreement dated the 7th March, 1909, on the explicit condition to receive in return a portion of equal value of the Szechuan Railway, it is evident that the sacrifice which is being imposed on the German group by the agreement with the United States has also been advantageous to the English group. The German group has made this sacrifice in order to contribute to the finalisation of the pending affair.

The matter now presents itself for us as follows:-

A proposition, imposing a sacrifice on the German group, goes with careful considerations through all competent channels of the English-German-American coalition and finds the approval of all the respective organs. Soon afterwards, and at a time when France apparently can be made content by an insignificant concession, a

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