CO129-371 - Public Offices - 1910 — Page 41

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should be assigned to the Chinese Central Railways (Limited), to be apportioned by them in equal moities between a French and English engineer. This division, though departing from the strict one-fourth division which the English directors had always held out for, did not depart so very widely but that it might be accepted, and accordingly they announced their acquiescence subject to certain reservations.

If the French directors had similarly acquiesced or would now acquiesce, the whole natter would be settled subject to the adjustment of details to be arranged in conference. Or, in the alternative, if the French directors, while refusing to accept the division proposed by the Americans, had intimated their willingness to adhere to the one-fourth equal division, the English directors would have used their best efforts with the other parties to secure this solution.

From the

This brings me to the subject of your letter to Mr. Addis now under acknowledg- ment. This letter, we regret to find, raises new points on which there has hitherto been no discussion or dispute between the English and French groups. note addressed by the French Government to the American chargé d'affaires in Paris- a quotation from which is given in your letter-we gather that the French Government propose, first, either that the British group (the British and Chinese Corporation, Limited) should surrender their claim to nominate the engineer for the Canton- Hankow line, or, secondly, that there should no longer be equality of treatment between the constituent groups of the Chinese Central Railways (Limited), but that the French engineer should have, say, 800 kilom., so as to put him on a level with the American, aud the British engineer should have only 200 kilom. To neither of these propositions can the British groups assent. It may be that we have misunderstood the attitude of the French Foreign Office, because it is difficult to understand why, after having expressed no dissent when the proposition was 1,700 kilom. British to 800 kilom. French, or, ou the one-fourth division, 1,500 kilom. British to 600 kilom. French, they should now bring forward such radical objections when the proportion is 1,400 kilom. British to 500 kilom. French.

I have endeavoured to put the position in the plainest possible language, because it requires serious consideration on both sides. If the proposition of differential treatment as between the two constituent groups now forming the Chinese Central Railways (Limited) is persisted in, the whole object for which that company was formed, viz., to eliminate competition, is destroyed, and it would be better to dissolve it and wind up forthwith. This is a conclusion which the English directors would infinitely regret, and which, they trust, may be avoided.

The points now to be considered are:--

1. Whether it is possible to induce the Quai d'Orsay to modify its position, at least as regards the suggestion of differential treatment of the two groups of the Chinese Central Railways (Limited), and leaving the Canton-Hankow line British.

2. Whether the French group and the Quai d'Orsay still adhere to the one-fourth division of the whole Hankow-Szechuan line, with an engineer of each nationality for each section.

In the latter case, the English directors would make one more effort to induce the Americans to accept the 200 kilom. as arranged with the Germans, plus 400 kilom. out of the deferred portion of the line. If this effort fails, and if the French Foreign Office still refuses to fall in with the American proposition, the British groups will find themselves in a difficult position, and will have to consult with the French groups as to what rearrangement should be made to meet the new circumstances.

I have, &c.

G. JAMIESON,

Managing Director.

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

CHINA RAILWAYS.

CONFIDENTIAL.

[46366]

No. 1.

Sir Edward Grey to M. Cambon.

[December 28.]

SECTION 1.

Your Excellency,

Foreign Office, December 28, 1909. I HAVE the honour to acknowledge the receipt of your Excellency's memorandum of the 8th instant, stating that the French group are unable to accept a share of the Szechuan line inferior to that allotted to the other groups, or to agree to any reduction in the position of the line given them by the Anglo-Franco-German arrangement of the 14th May last. Your Excellency goes on to say that the British group can, however, satisfy the demands of their French colleagues without affecting the arrangements come to with the Germans and Americans in the following manner: the Chinese Central Railway to appoint a French engineer and an English sub-engineer for their share of the Szechuan line, and the Hankow-Canton line to be placed under an English engineer, assisted by a French sub-engineer. Your Excellency adds that if the above condition were accepted, the Government of the Republic would instruct the French Minister at Peking in the sense indicated at the end of the Foreign Office note of the 24th ultimo.

I have learnt with great regret the decision of the French Government to allow the slight difference between the share allotted to the American and German group and that allotted to the Anglo-French group to interfere with the settlement of the whole question, more especially as only the matter of engineers is at present in question, and I note with surprise that the Hankow-Canton line should be mentioned on an apparently equal footing with the Hankow-Szechuan line, as if the two lines formed part of oue undertaking. As your Excellency will recollect, the latter has always been treated, not only by His Majesty's Government and the British group, but also by the French group, as an absolutely separate concern.

In fact, the separation of the two contracts, as a condition precedent to the Freuch acceptance of American participation in the Hankow-Szechuan line, was laid down by the French Syndicate themselves in a letter to Mr. Addis, the chairman of the Hong Kong and Shanghae Bank, of the 12th August last, in which it was stated that the preferable course would be to recognise the American claim to a half-share in the loan for the Szechuan line rather than to a quarter share in the loan for the two lines.

This was subsequently confirmed by a letter, dated the 20th August, according to which the French group were in complete agreement with their British colleagues in considering that the concession made to the American syndicate should embrace the half of the loan for the Szechuan line.

The identity of Anglo-French interests was emphasized by a letter, dated the 13th August, in which the French group announced that they entirely concurred in the view that vis-à-vis the German syndicate, the Anglo-French "Chinese Central Railways (Limited)" should be considered as one body speaking with one voice," and that all attempts to represent British and French interests in the matter as antagonistic should be resisted.

The French Government seem to overlook the fact that the American demand was limited to the Szechuan line, and that they never claimed to appoint an engineer to the Canton line, the latter being the subject of a separate agreement between Mr. Addis and M. Simon of the 24th February, 1909, and concerning neither the German nor American groups.

In the circumstances, it would appear that the only solution of the question now remaining is the division of the Szechuan line into four equal parts among the four groups, with the internationalisation of the bonds as desired by the American group, and I have the honour to state that, subject to the concurrence of the French Govern- ment, I am prepared to put this proposal before the American and German Governments.

I am, &c.

E. GREY.

[2538 ee-1]

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