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no doubt deemed prudent to tone the proposals down. The fact was that the meeting was got up in a hurry, simply as a sop to the Ministers, and the president was utterly unprepared with any proposals. It has, however, brought us a substantial step in advance; we have the president's repeated assurance, confirming that given by the Wai-wu Pu, that the principle of the initialled agreement shall not be touched, and that only verbal alterations will be asked for, a memorandum of which will be submitted to us at our next meeting on the 3rd January. That assurance must be our sheet anchor, and, although I feel sure that we still have much weary negotiation before us, I am hopeful that if we all stick together we may pull the business through. After our next meeting with the Board I may have something to wire to you; at present there is really nothing to justify the cost of a wire.
Reported Anglo-Belgian Syndicate.--I am informed by Casenave that there are in Peking at the present moment two gentlemen, one a M. Libert Oury, Belgian by birth and British by nationality, and the other, M. de Séguier, a Frenchman, in the interests of the Peking syndicate. At the same time, so they inform the French Minister, they represent a new Anglo-Belgian syndicate, in which the Russian Bank is interested, which contemplates competing with us for Chinese Government loan business. Casenave is writing to Paris on the subject, and I shall be glad if you will give me any information you can about the concern, and especially how it is that the Peking syndicate, who are interested in our inter-group combination through the Chinese 1 hear that it Government railways, should, as it appears, be connected with it. was recently decided by our groups to offer the Russians a small participation in the Hukuang loan, should it come off, and that the offer was refused by them on the ground of their connection with the above syndicate. It is important to have all the information we can about any such attempts to create outside competition.
Yours very truly,
Enclosure 2 in No. 1.
E. G. HILLIER.
Liang Shih-yi's Proposed Alterations in the Hukuany Loan Agreement.
(Translation.)
IN the heading of the agreement, the first contracting party should be changed to read "The Company-General of the Hunan-Hupei Section of the Canton-Hankow Railway, and the Hupei Section of the Szechuan-Hankow Railway," instead of his Excellency Chang Chih Tung, &c.
In article 2 delete the reference to branch lines of the Szechuan-Hankow Railway.
Delete the names of the places through which the line is to pass.
The director-general shall decide the point where the work shall commence. In article 3 it should be clearly stated that funds formerly provided by the Chinese Government and the funds contributed for shares by merchants shall all be reckoned as part of the capital of the railway.
Delete the reference to the date of commencement and completion of the work. In article 4, after the words "5 per cent. per annum," add "reckoned from the date of receipt of the funds by China."
Article 9 should be altered to read " The Imperial Chinese Government shall give instructions to the provinces concerned that out of the li-kin and other revenue stated sufficient funds to meet the amount of principal or interest in arrears shall be paid over to the banks."
Add to article 7 the words "or payments may be made in national currency,” In article 17 delete the words "in accordance with the methods now in operation on the northern section of the Chin-Pu Railway." (This reference does not occur in our final draft.)
Supplementary letters to be cancelled.
Alfer to read "A Chinese engineer-in-chief shall be employed. Divisional engineers for each line shall be one British, one French, one German, and one American."
To article 18 should be added "Before purchase of materials is made, the price and quality must be submitted to the director-general for his approval."
Article 19 should be entirely deleted.
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Delete the clause "The Chinese officials acting in the matter of this loan do not receive any commission whatsoever."
Cancel all supplementary letters.
The question of purchase of materials and that of auditing the accounts should be inserted in the preliminary agreement.
Insert wherever required the words "Board of Posts and Communications" and "the Board of Finance."
Insert wherever required the words "France" and "America.”
There are still many points which require either deletion or adjustment.
Enclosure 3 in No. 1.
Notes of Interview at Yu-chuan Pu, December 29, 1910.
Present:
Shen Yun Pei, Acting President.
Messrs. Hillier, Cordes, Straight, and Casenave.
THE president recapitulated the difficulties they experienced in dealing with the provincial gentry. He referred to the recent interview of the four Ministers with the Wai-wn Pu, and said that the statements that be had made to us at our last meeting of the 3rd October, appeared to have been misunderstood. There was no intention to change the "sung chih," or general basis of the agreement; what was proposed was merely to make a few changes in the "tzu chu," or wording.
The objections of the gentry were particularly directed against the Tien-tsin- Pukow terms which had been incorporated in the present agreement.
We again explained that the whole of the present agreement was based upon
the Tien-tsin-Pukow agreement by the special request of the late Grand Secretary Chang Chih Tung.
The president said that in this respect his Excellency Chang had made a mistake, the two railways were separate, and the basis of negotiations should have been kept quite distinct.
Then followed a repetition of the discussion which took place at the last interview with regard to the validity of the present agreement and the powers of his Excellency Chang to bind the Imperial Government.
The president was verbose and inconclusive, and, as it was impossible to keep him to the point, it was suggested that he should state, for the information of the representatives, what were the verbal alterations to which he had referred. He said that he would farnish us with a memorandum of them in the course of a day or two. It was suggested that, since we were all present, it was a good opportunity to discuss the more important of them at once. The president repeated that the proposed alterations were unimportant and he was obviously anxious to postpone the discussion. He was pressed to send for the Chinese text of the agreement in order that he might go through it, clause by clause, and inform us of the nature of the alterations proposed, but this he persistently declined to do, pleading as an excuse the absence of his Excellency Liang Shih Yi, on whom he evidently depended for assistance.
Finally the president proposed another meeting on the 3rd January, at 3 r.31., for the discussion of the promised memorandum.
A copy of the English text of the supplemental agreement, dealing with American participation in the loan, was handed to the president for translation in the Board, and the meeting terminated.
Peking, December 30, 1910.
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