[This Document is the Property of His Britannic Majestys Governino_4.j
CHINA RAILWAYS.
CONFIDENTIAL.
[December 22.]
SECTION 2.
[46521]
No. 1.
Chinese Central Railways to M. Simon.--(Communicated by Mr. Addis December 22, 1909.) M. le Président,
110, Cannon Street, London, December 21, 1909. MR. ADDIS has handed me copy of your letter to him of the 17th December, and I am requested by my colleagues, the English directors of the Chinese Central Railways (Limited), to address you on the situation which has been created by the refusal of the French Government to accept the distribution of engineers on the Hankow-Szechuan line proposed by the American group, and assented to under certain reservations by the English directors of the Chinese Central Railways.
In all the long correspondence which has taken place between the French and English groups on this subject, there are two points on which the two groups have been hitherto in complete accord. These points are:-
1. That the engineer for the Hankow-Canton line should be British.
2. That whatever portion of the Hankow-Szechuan line fell to the Chinese Central Railways (Limited), that portion should be shared in equal moities between French and English engineers.
As regards the first of these two propositions, the accord between the two groups was based on a twofold consideration: first, that a preference had been accorded to British capital by Chang Chih Tung in return for the loan made by the Hong Kong Government; and, secondly, that by express agreement between yourself and Mr. Addis on the occasion of negotiating the Lahan redemption loan, the French group expressly waived all claim to appoint a French engineer for any part of the Hankow-Canton line.
As regards the second proposition, it has been a fundamental principle ever since the Chinese Central Railways (Limited) was formed that the French and English constituent groups should be as far as possible on a footing of entire equality. It is quite evident, indeed, that on no other principle could harmonious co-operation between the two groups be secured, and that if either of the two were to press for exceptional advantages, whether termed political or commercial, it would necessarily bring about the dissolution of the company.
The arrangement come to between the three European groups up to the advent of the American claim was based on the above understanding. The engineer for the Canton-Hankow line was assigned to the British group (the British and Chinese Corporation, Limited), and the two-thirds of the Szechuan line falling to the Chinese Central Railways (Limited) was allotted, as to one moiety, to a French engineer, and as to the other moiety, to an English engineer. In other words, the two British groups between them had the nomination of an engineer for 1,700 kilom., the Germans for 800, and the French for 300. This arrangement was fully approved of by the Foreign Office in London, and it was understood it also had the approval of the Quai d'Orsay.
With the advent of the American claim a redistribution of engineering sections became necessary. The English directors of the Chinese Central Railways (Limited) have always maintained that the only fair and acceptable adjustment was to divide the whole of the Hankow-Chengtu line into four approximately equal sections of 600 kilom. each, giving an engineer of each nationality to each section. This plan of adjustment had, it is understood, the approval of the Paris directors and of the Quai d'Orsay (vide, in particular, letter from Mr. Addis of the 21st August and reply of same date, also Mr. Addis's letter of the 30th August), and the English directors still hold that this is the only proper solution of the difficulty. The obstacle at first was the reluctance of the German group to give up any part of the 800 kilom. assigned to them by the tripartite agreement, but this obstacle has in part been overcome by their agreeing to surrender 200 kilom, to a sub-engineer of the American group. Consequent on that the American group put forward the proposition which is now the subject of discussion, viz., that 600 more kilom. of the deferred portion of the line should be assigned to an American engineer, and the remainder, some 1,000 kilom.,
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