[This Document is the Property of His Britannic Majesty's Government.]
[B]
CHINA RAILWAYS.
CONFIDENTIAL.
[23865]
No. 1.
[July 4.]
SECTION 1.
Mr. O'Beirne to Sir Edward Grey. (Received July 4.)
(No. 289.) Sir,
St. Petersburgh, June 28, 1910. MR. STRAIGHT, an American gentleman representing Messrs. Kuhn, Loeb and Co., Messrs. Morgan, and two other of the largest New York banking houses, has been in St. Petersburgh during the last few days, and has been received by M. Stolypin, by the Finance and War Ministers, and by M. Isvolsky. His object, as M. Isvolsky informs me, was to induce the Russian Government to reconsider their objections to the Chinchow-Aigun Railway scheme. He had explained that the projected railway was a purely commercial undertaking free from any political arrière-pensée, and he had advanced arguments to show that economically it would be in no way prejudicial to Russian interests.
M. Isvolsky remarked to me that the Russian Government had quite recently ascertained, as a result of a survey made of the proposed line, that the railway could not of itself be a remunerative undertaking, because two-thirds of the country through which it would run between Chinchow and Tsitsihar were either mountainous or practically unproductive. It was true that the line would tap the traffic of the Chinese Eastern Railway, but it would itself create no new traffic of any great importance. His Excellency said that he had pointed out that fact to Mr. Straight, and had drawn his attention to the influence that the syndicates which he represented were really encouraging China in the pursuit of political objects opposed to Russia's interests in Manchuria. Mr. Straight had taken the line of maintaining that China was at perfect liberty to build railways within her territory where she pleased, and he had, in fact, intimated that the American financiers concerned intended to carry through their concession, whether it was agreeable to Russia or not. He seems to have particularly irritated the Minister for Foreign Affairs by saying that China had but little confidence that Russia would ever restore the Chinese Eastern Railway to her. M. Isvolsky had stated to Mr. Straight emphatically that the Chinchow-Aigun Railway was objectionable to Russia, both on strategic and economic grounds, and that the Russian Government would use the means which were at their disposal to oppose it. They would make it plain to China what would be the consequences, having regard to the unprotected condition of her extensive frontiers, of persisting in a policy directed against her neighbour. Russia, his Excellency remarked to me, was prepared to take a strong line with China. As to the holders of the railway concession, he had informed Mr. Straight that if they attempted to persevere with it, Russia would neither permit them to effect a junction with the Russian railway nor to cross it. At the same time, he had given the American financier to understand that if the groups which he represented would abandon the idea of constructing a line to the sea-coast which would compete with the Chinese Eastern Railway, and would be prepared to build lines from points in the interior which would act as feeders to the Russian line, the Russian Government would be quite willing to negotiate with them.
M. Isvolsky said to me that he thought that, in view of the language which he and other members of the Russian Government had held to Mr. Straight, that gentleman would advise his principals definitely to abandon the Chinchow-Aigun scheme. I asked whether Mr. Straight had touched on the question of Russia parting with her rights in the Chinese Eastern Railway to China within the next few years, the money for the transaction being found by American financiers. M. Isvolsky told me that Mr. Straight had hinted at some such transaction, and that he, M. Isvolsky, had said that when the Amur Railway was constructed "they would see" whether they could entertain the idea. The Japanese Ambassador, however, has expressed to me his very positive conviction that Russia has not the faintest intention of relinquishing her hold on the Chinese Eastern Railway.
I have, &c.
HUGH O'BEIRNE.
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