CO129-373 - Public Offices - 1910 — Page 77

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sections, but he thought that the Board's objection was really political and due to the distrust of the foreigner now rife in China.

We replied that we were unable to enter into any discussion of separate management, and pointed out that, at a meeting held in the British consulate-general in Canton on the 18th December, 1905, at which Mr. C. H. Ross (representing the British and Chinese Corporation), Taotai Wên Tsung-yao, the Viceroy's Foreign Secretary, and Vice-Consul Tebbitt were present, the "Memorandum re Proposed Agreement between the Government of Hong Kong and the Chinese Government for the working of the entire Railway from Canton to Fort Kowloon" (printed on pp. 132-4 of the Confidential Colonial Office paper, Eastern No. 88, of April 1907), was handed by Mr. Ross to Taotai Wên, both in the original English and in a Chinese translation. We added that, when the loan agreement was negotiated, the intention of the British and Chinese Corporation and of the Chinese Government in using the words "joint working of the two sections" was clearly that the joint line should be worked on the principles embodied in this memorandum, and that the loan was made on this understanding. This, we said, was also the view taken by the Hong Kong Government; it was a position from which we declined to recede.

Mr. Wei Han remembered the meeting of the 18th December, 1905, and said that he also had been present at it. To refresh his memory we handed him a copy of the English text as printed.

With regard to the connection with Hankow, Mr. Wei said that the Board had raised no objection. In this connection we handed him a copy of the Preliminary Agreement of the 28th March, 1899 (printed as an appendix to Eastern No. 88).

We then gave Mr. Wei two copies of the draft working agreement as prepared by the Hong Kong Government, and read it through with him, explaining it clause by clause.

Mr. Wei said that he personally had no objection to the principles involved, and that he would communicate the draft working agreement to tlie Board at Peking, but he expressed the hope that we would support him by requesting by telegram the British Minister at Peking to urge our views upon the Board.

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

CHINA RAILWAYS.

CONFIDENTIAL.

[31490]

No. 1.

[August 29.]

SECTION 1.

CO 2.647

RECO

Consul-General O'Brien-Butler to Sir Edward Grey.-(Received August 29,569 16 SFP 10:

(No. 15. Confidential.) Sir,

Yunnan-fu, July 21, 1910.

WITH reference to my despatch No. 5 of the 26th February, I have the honour to forward to you herewith copy of a despatch which I am sending to His Majesty's chargé d'affaires at Peking reporting an interview which I had yesterday afternoon with his Excellency the Viceroy of Yunnan and Kweichow regarding the proposed Bhamo and Tengyueh Railway.

I am also sending a copy of the despatch in question to the Government of Burmah and to His Majesty's consul at Tengyueb.

I have, &c.

Sir,

P. E. O'BRIEN-BUTLER.

Enclosure in No. 1.

Consul-General O'Brien-Butler to Mr. Max Müller.

(No. 26. Confidential.)

Yunnan-fu, July 21, 1910. WITH reference to my despatch No. 10 of the 25th February and to my telegram of this morning, I have the honour to report that I had yesterday afternoon an interview with his Excellency the Viceroy Li Ching-hsi, at which we discussed the matter of the Tengyneh and Bhamo Railway. The Administrator of Foreign Affairs and his interpreter for English, Mr. Wong, and the Viceroy's private secretary were present.

After a few remarks on indifferent topics I reminded his Excellency that when I saw him on the 24th February he told me that he had already formulated certain proposals regarding a railway between Bhamo and Tengyuch, which he had laid before the Wai-wu Pu, and that he could not tell me what these proposals were until he had received an answer from Peking. He replied that he had received this answer some time ago.

His proposals were that a carriage road from Tengyueh to the frontier should be constructed in such a way that, should trade conditions warrant the expense, it could be subsequently converted into a railway; and the authorities at the capital had, he said, disapproved of his idea, on the ground that to build in a mountainous country a carriage road which could be afterwards converted into a railway would be almost as expensive as to build the railway itself in the first instance.

I then asked him what he thought of my scheme of a jointly owned railway, as I had described it at the last interview I had had with him, and he replied that it was very good, but there were objections; either the Wai-wa Pu or the Yunnan gentry, or both, objected to a foreign Power being even jointly interested in a railway on Chinese soil,

I thereupon suggested that each country should build the portion of the line on its own territory, but I pointed out that this would be more expensive for China than the former scheme, since, as two-thirds of the total length of the line would be on Chinese soil, China would have to bear two-thirds of the cost instead of one-half, as in the case of a jointly owned railway. The Viceroy admitted this, and said that this proposal also was impracticable, as the province of Yunnan could not raise the necessary funds. I suggested a loan from the Yunnan syndicate, but the Viceroy objected that the prospective earnings of the line, about 42 per cent., would not be sufficient to pay even the interest on a loan, and that the possibility of paying off the capital out of these earnings was out of the question.

I then, in a final endeavour to come to an understanding, suggested that perhaps the Government of India or of Burmah might be willing to lend at a low rate of

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