CO129-376 - Governor Sir Lugard - 1911 [3-4] — Page 581

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Colonial Secretary,

Hongkong.

Peking April 13th.,

1911.

I have the honour to acknowledge the receipt

of your letter of March 21st., and to state in reply, after communication with my Directors by telegraph, that the British and Chinese Corporation are not in a position to claim that the words "subsequent joint working of the two sections", which appear in Article 18 of the Canton Kowloon Railway Loan Agree- -ment, can be interpreted as imposing on the Chinese Government the obligation to accept joint management.

While the correspondence quoted in paragraph 3 of your letter shows that it was hoped, in 1905, to obtain the establishment of a Joint Board, it will be recalled that the Corporation's original scheme for joint management was rejected, and that they accepted the principle, in deference to the views of His Majesty's Government, that the loan negotiations should be based on the Northern Railways loan terms instead of on the terms of the Shanghai Nanking Railway loan agreement.

The prospect of participating in the manage- -ment of the line was thus excluded from the outset, and the Chinese negotiator was placed in the position to demand that all mention ofthe working agreement should be deleted, as mentioned in paragraph 4 of your letter. Eventually he consented to insert the Canton Viceroy's original proposal that the two sections should be worked under conditions prevailing in other countries in respect to interstate railways.

This wording pointed definitely to the