CO129-372 - Public Offices - 1910 — Page 423

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

CHINA RAILWAYS.

CONFIDENTIAL.

23223

[July 12.] RFS: 28 JUT TO

SECTION 1.

[24641]

Your Excellency,

No. 1.

Sir Edward Grey to Mr. Whitelaw Reid,

Foreign Office, July 12, 1910. I HAVE the honour to acknowledge the receipt of your Excellency's note of the 7th instant respecting the Hukuang Loan Agreement, and to state, in reply, that the reference contained in my note of the 7th ultimo to a possible extension of the Hankow-Szechuan Railway beyond. Chengtu was due to a misunderstanding at the time as to the precise meaning of article 4 of the Paris Agreement of the 23rd May. The extension of the line alluded to, exceeding in length the 1,600 kilom. actually divided among the American, British, and French groups, refers merely to the construction of subsidiary branch lines or to a miscalculation as to the length of the main line from Ichang to Chengtu, and not, as was originally supposed in this department, to an extension of the line westwards beyond the terminus Chengtu.

The substitution of the word "to" for the word "beyond" Chengtu would appear to make the meaning of the sentence correct, and, with your Excellency's concurrence, there appears to be no necessity for any further modification.

I am not quite clear as to what is meant by the penultimate paragraph of your Excellency's note regarding the financing of any future loans that may be needed for the extension of the line to or beyond Chengtu. It is true that the loan of 6,000,000%. alluded to in article 1 of the Paris Agreement will be devoted to the construction of the Hankow-Canton and Hankow-Ichang lines only, but reference is made in the same article to "any supplementary loans to be issued in connection therewith for the above (Hankow-Canton and Hankow-Chengtu) railways on the basis of the two draft agreements approved by the parties hereto and initialled by them, being the draft original loan agreement, with accompanying despatch and a draft supplemental loan agreement."

In the draft supplemental loan agreement it is further stipulated that the provisions of the original loan agreement in regard to supplementary and future loans shall remain unaffected by the present agreement, except that the American right to one-quarter participation in the said supplementary and future loans was recognised.

It would appear, therefore, that the American group have entered into an agree- ment with the three other groups for the financing of future loans needed for the extension of the line as far as, though not beyond, Chengtu, should the extension be entrusted to them by China.

I have, &c.

[2813 m-1]

E. GREY.

420 ·