This Document is the Property of His Britannic Majesty's Government.]
[B]
CHINA RAILWAYS.
CONFIDENTIAL.
CO
23539
[May 26.] ·
SECTION 3.
[20184]
(No. 204.) Sir,
Rec? RES18 JUL 1|
No. 1.
Sir J. Jordan to Sir Edward Grey.-(Received May 26.)
Peking, May 10, 1911. SINCE my despatch No. 149 of the 9th April was written the Hukuang Railway Agreement has continued to engage the constant attention of myself and my colleagues, but as the various phases through which the negotiations have passed have been reported to you by telegraph either by myself directly or indirectly through the agent of the Hong Kong and Shanghai Bank, it is unnecessary to do more than recapitulate very briefly the leading facts of the situation.
The main difficulty on the side of the foreign negotiators has centred upon the question of the deposit of the proceeds of the loan in the Chinese Government banks. The stipulation did not suit the interests of the foreign banks, whose exchange operations it seriously threatened, and every effort was made to obtain some modification of the proposal. But the Chinese naturally declined to forgo the prospect of the higher rate of interest which the use of their own money in China offered them, and the foreign negotiators were virtually obliged to subordinate their interests as exchange banks to their duties as financiers of railway undertakings.
When the four groups waived their objections to this proposal the last difficulty on our side in the way of an agreement was removed, and the four Ministers lost no time in addressing a joint note to Prince Ch'ing (copy enclosed), pressing for the immediate signature of the contract.
The difficulties on the Chinese side had not yet all been overcome, although it was known that Sheng-kung-pao favoured the adoption of drastic measures for dealing with the provincial opposition, but whether he would carry with him the other members of the Government seemed open to doubt. His proposal was to have all trunk railways declared to be Imperial lines and to confine provincial activity to the construction of branch lines. The first step was to get a censor to put forward this proposal and have a decree issued referring the whole question to the consideration of the Board of Communications, of which Sheng is President. A decree in this sense, copy of which is enclosed, was issued three days after the receipt of our joint note, and yesterday a further decree, copy of which I have also the honour to enclose, appeared in answer to Shêng's report on the subject. This latter decree is beyond doubt the boldest and most statesmanlike pronouncement that the Chinese Government have made on any question of policy in recent years. No more scathing indictment of provincial ineptitude in the matter of railway construction has ever been written by any foreign critic. Canton, which takes much credit to itself for being a successful province in railway construction, is told that after many years it has only raised half its share capital and built but a few miles of railway. Szechuan has lost the greater part of its railway funds, which, in spite of impeachments and prosecutions, are now beyond recovery. Hunan and Hupei have had their railway bureaus for many years, but have nothing to show for the money they have squandered. Countless numbers of people have lost their all through the waste and embezzlement of railway funds, and the longer this state of things continues the greater will be the misery inflicted on all classes of the population.
The decree therefore ordains that all trunk lines shall be the property of the State, and orders that steps shall be taken for resuming control of all such lines which have been conceded to provincial companies, and the construction of which has been delayed. Any resistance to the railway policy thus outlined is to be treated as
treason.
The Government has at least decided to try conclusions with the provinces on this important question, and taken a step which cannot fail to have the most far-reaching consequences. It has boldly faced the issue, and has faced it in a way which either compels acquiescence or invites rebellion. It is not difficult to
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