[This Document is the Property of His Britannic Majesty's Government.]
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of the British Company, "British and Chinese Corporation," which advanced money to the Chinese Government for the construction of the line Shan-hai-kwan--Newchwang, it having been noted that this line must not be under foreign control. It is evident that the position of the Shan-hai-kwan-Newchwang line was recognised as an exception to the general rule established by the agreement of 1899. Therefore the Imperial Government presume that they will in any case be informed as to the form of guarantee of foreign capital under which the Chinchow-Aigun Railway will be constructed before deciding whether they are able to agree with the opinion of the British Goverumeut that the participation of British capital in this enterprise is not contrary to the agreement of 1899.
Again, in the opinion of Sir E. Grey, the Imperial Government have already recognised the correctness of the view of the British Government as to the relation of the agreement of 1899 towards the financing of railway enterprises in China in general, and in particular the Chinchow-Tsitsikar-Aigun Railway, when they expressed a desire that Russian capital should participate in a loan for the construction of the Hankow-Canton and the Hankow-Szechuan railways. As regards this, the Imperial Government consider it their duty to mention that between the plans for the Hankow- Canton and Hankow-Szechuan railways on the one side, and the Chinchow-Tsitsikar-- In the first case the Aignu line on the other side, there is a very essential difference. question was that the Russo-Chinese Bank should receive a share in an enterprise conceived by British capitalists, approved of by the British Government, and being realised with the equal participation of British, French, German, and American capital. On the other hand, the project for the Chiuchow-Tsitsikar-Aigun line was not only conceived without any participation by Russian capitalists, but Russia was informed of it only as a matter already decided upon, and now the Imperial Government learn that an ukase by the Chinese Government has already been signed formally authorising this enterprise.
Moreover, the Chinchow-Tsitsikar-Aigun line, which will be the shortest of existing railway routes from Europe to Pekin and the ports of China, and will pass through a district which has hitherto been tapped by the Chinese Eastern Railway, bas, for Russia, an economic significance of the first degree; only a very exhaustive study can determine to what degree this line will compete with the Chinese Eastern Railway. The strategic significance for Russia of the Chinchow-Tsitsikar-Aigun line is evident, as at Blagovyeshchensk it must pass towards an unfortified frontier of Russia. Even if this railway was constructed to Tsitsikar only, it would make it possible for China to concentrate troops along it to the Chinese Fastern line itself whereas Russia, by virtue of article 7 of the Portsmouth treaty, has bound herself not to take advantage of her railway in Manchuria for strategic aims, and has limited her military strength along this route to fifteen men per kilometre. Moreover, the Chinese Eastern Railway occupies an entirely special position; it fulfils for Russia a very important State task as the main route for her relations with her Far Eastern possessions and their supply with Russian wares. The Imperial Government cannot without apprehension see a line of such State importance under a constant threat of interruption and seizure.
The above considerations have, in the eyes of the Imperial Government, a most serious significance. The construction of the Chinchow-Tsitsikar-Aigun Railway would bring about such a material violation of the balance which has existed along the Chinese Eastorn Railway and on the Russo-Chinese frontier, and has permitted their remaining without effective measures of protection, that, in the event of the realisation of the proposed construction, the Imperial Government would be compelled to consider seriously measures for the defence of their possessions in the basin of the River Amur, and a radical alteration of their friendly and confiding policy as regards China.
British capitalists evidently are only seeking an advantageous investment of their money, and cannot be interested in co-operating in the unfriendly intrigues of China with reference to Russia. The Imperial Government are therefore convinced that the British Government, in the question of the Chinchow-Tsitsikar-Aigun Railway, will take Russian interests into consideration, and will find it possible to exchange opinions with Russia on this matter.
St. Petersburgh, January 18 (31), 1910.
CHINA RAILWAYS.
CONFIDENTIAL.
[4503]
No. 1.
[February 8.]
SECTION 2.
Sir C. MacDonald to Sir Edward Grey.-(Received February 8, 1910.)
(No. 375. Very Confidential.)
Sir,
Tokyo, December 26, 1909. I HAVE the honour to state that Sir John Jordan repeated to me on the 10th instant his telegram No. 198 of the 18th to you, stating that the American chargé d'affaires in Peking had informed him that he intended to submit a proposal of a formal nature to the Chinese Government to the effect that all railways in Manchuria should be internationalised, and that the principle of such internationalisation had been accepted by His Majesty's Government. The American chargé d'affaires further stated that he had been instructed to co-operate with Sir John Jordan in advising the Chinese Government to admit the Japanese into some participation in the Chinchow- Tsitsihar-Aiguu Railway.
This step on the part of the American chargé d'affaires in Peking seemed to me to be of a somewhat unusual nature. Sir John Jordan's telegram did not specifically state that the proposal was made under instructions from the American Government, and the statement that His Majesty's Government agreed in principle to the interna- tionalisation of all railways in Manchuria was not in accordance with the action His Majesty's Government had in the past taken with regard to the South Manchurian Railway; I thought, therefore, that the chargé d'affaires bad exceeded his instructions or perhaps taken a line of his own, and I was the more inclined to adopt the view as I had heard nothing from you on the subject. Happening to meet Count Komura at a private reception the same afternoon, I sounded him on the subject. His Excellency at once said that from Peking he had heard nothing, but the American Ambassador a few hours previously had sent in a formal proposal in writing on behalf of his Government suggesting the internationalisation of all railways in Manchuria-" those already con- structed as well as those which might be constructed in the future." This proposal had come as a great surprise to the Japanese Government; it was, in fact, one to inter- nationalise property belonging to the Japanese nation which they had acquired as a result of great expenditure in lives and treasure. His Excellency added that he had not had time to study the proposal carefully; it would of course be submitted to the Cabinet, and when a decision had been arrived at he would at once let me know. The same evening the American Ambassador, Mr. O'Brien, was dining at this embassy, and of his own accord spoke to me on the subject. He said that he had received instruc- tions on the 18th instaut from Washington to submit a memorandum to the Japanese Government suggesting that all railways in Manchuria should be internationalised. Personally he had more than once spoken to Count Komura with regard to the advisability of the sale by Japan of her rights in the Manchurian Railway-the Japanese Governinent were in want of money, and hard cash would be much more useful to them than the railway. I ventured to say that it seemed to me that, the South Manchurian Railway being the one asset which remained over to the Japanese as the result of a hard-fought war, for sentimental if for no other reasons they would not feel disposed to sell their hard-won rights. Anyway, I thought that railways in Manchuria meant a great deal more to Japan than money, and, speaking privately, I did not think that the proposal which his Government had made would be favourably received by the Japanese Government, certainly not in regard to the South Manchurian Railway.
The gist of my conversation with the American Ambassador I telegraphed to you on the following day, the 21st December.
On the 24th December I received your telegram No. 40 of the 23rd instant, the first on this subject of internationalisation. You stated that the Japanese Ambassador had informed you that his Government proposed to decline to accede to the American proposal for internationalisation because it would be contrary to the position secured to Japan by the Portsmouth Treaty. You added, however, that Mr. Kato was per- sonally inclined to agree to a suggestion made by you to the effect that Japan, while
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