CO129-384 - Public Offices - 1911 — Page 162

'''མ ཡ བྷིཀྑུ ... ཝཱ Au

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question of rates, mutual provision of rolling-stock, and other such matters which demand solution before the line opens in August.

5. Generally speaking, the arguments which I have advanced as the basis of a working agreement are as follows:-

That the line is one entity, and should be regarded as a business proposition, in which it is to the interest of both parties to realise a return for capital outlay. That in order to do so the rates, and the amenites offered by the railway, must be such as will enable it with some degree of success to compete against water transport; that as suggested by his Excellency Liang Shi-yi, the British section, in order to obtain an approximately equal return on its outlay must levy higher rates, but that in the statement of capital outlay (e.g., construction account) every item should be eliminated which was not strictly necessary to the building of a railway, or immediately necessary for its working. To this we have given a very liberal and generous interpretation. Every foot of railway reclamation (the result of spoil taken from a railway cutting), which is not actually required The cost of doubling the by the completed railway, has been valued and deducted. track, the cost of certain bridges which failed and were reconstructed, and other similar items have all been deducted, though I doubt whether they would have been in any ordinary negotiation.] That since the combined through rate must be limited water competition, this through rate (apart from local slow rates) must be assessed proportionately, the profits being divided in the fixed proportion and the Chinese rate conforming to the agreed proportion. That a fixed minimum number of through trains shall run each day with as little delay, inconvenience, and trouble to passengers as possible. To effect this the Hong Kong Government is willing to go to consider- able expense in regard to ferries from the island, convenient piers and terminal, &c, and to allow the Chinese customs to collect all dues at Kowloon, and seal goods in transit, &c., the Chinese on their side undertaking not to delay trains at the frontier and not to charge any dues which are not leviable on waterborne goods.

6. The proposals are onerous to Hong Kong, for they involve the upkeep of a complete railway staff for a section only 22 miles long, and also the provision of customs examination platforms and sheds, and permission for the officials of a foreign Government to function in British territory. The sovereign rights of China" have been most carefully safeguarded, and we have agreed to allow acts by Chinese officials in British territory to which no corresponding concession has been demanded.

7. I regret to say that the Chinese Government has not met us in a like spirit of compromise and good-will. A note from Mr. Chao of yesterday's date places us even further from the goal of agreement than we were before.

8. So much in brief for the railway negotiations. I now desire to invite your Excellency's consideration of some other collateral matters which have, or should have, a bearing and influence on these negotiations.

9. You are aware of the serious revolutionary outbreak which occurred recently in Cauton. I have grounds for belief that the feelings and sympathies of a consider- uble part of the Chinese population of this colony, in common with the population of South China are largely on the side of the "reformers." In spite of this the Hong Kong Government has taken most energetic measures to assist the Viceroy of Canton. In the first place I suggested personally to his Excellency a number of measures calculated for the suppression of crime, co-operation in the arrest of criminals, stricter supervision over the passengers to and from Canton, facilities for extradition, &c. His Excellency naturally grasped at these suggestions with alacrity, and Mr. Wei Han (ex-director-general, Kowloon-Canton Railway), accompanied by the police taotai, arrived on the 23rd instant to consult with the captain-superintendent of police as to the steps to be taken to put the measures into operation forthwith.

10. But apart from these general measures of co-operation, which are of benefit to both Governments, a large number of search-warrants have been issued in order to seize, if possible, any arms which may be concealed by suspected revolutionaries, and I have announced that any recent arrivals who may be shown to be engaged in fomenting outbreaks in China, will be required to leave the colony, and if they do not do so will be deported. The result of the searches has been the capture of some important revolutionary literature, including telegraphic codes, maps, and cyphers. For this assistance the Viceroy has repeatedly expressed his most cordial and carnest thanks. One of the Chinese papers in Hong Kong has for some time past published articles hostile to the Chinese Government, and I have recently instituted a prosecu-

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The editor has been convicted and sentenced to two years' imprisonment. This will have a most salutary effect, and Mr. Wei Han expressed unbounded delight on bearing the news.

11. In another matter also the Government of China has recently had need of the good offices of this Government. It has transpired that the Government of India has issued a single certificate to cover varying numbers of chests of Malwa opium. These bave in many instances been divided up and sold separately, while the certificate remains in the hands of the merchant. Even in the case of Bengal opium, for which a separate certificate has been issued for each chest, the opium has been sold and the certificate never called in. As the marking of certificated chests consists merely of a stencil mark "China (with a crown added in the case of Malwa), it is exceedingly easy to stamp this mark on uncertified chests, and in point of fact I am told that it is already being done in the Straits Settlements. The Chinose commissioner of customs has appealed to me to issue sub-certificates for each chest, to examine every chest on landing, and give it an unmistakable number (in fact to keep a register of the life history of each chest), and to address the Government of India on the subject. I need not here go into details. It is sufficient to say that Mr. Harris tells me that without this assistance, he cannot possibly give effect to the Opium Convention, but in doing so this Government derives no benefit whatever, and incurs a heavy amount of work which it is under no obligation to discharge. I at once signified my willingness to assist the Chinese customs in the manner desired, but here again I desire that it should be strongly impressed upon the Chinese Government that unless they show some intention of reciprocal good-will, I am not disposed to continue these good offices. 12, In the matter of the draft Customs Convention, you are aware that the initiative was taken by the Chinese commissioner of customs, with a view to the immense benefit which would accrue to the revenue of China if the extensive smuggling of salt could be placed under control, and if facilities could be afforded to the "Kowloon commissioner of customs with this and other objects in view. The convention contains clauses which confer reciprocal benefits, but the fact remains that it was inaugurated and is being pressed by an official in Chinese employ as a great benefit to China. The proposals have been met with cordiality by this Government which is ready to negotiate on the basis of the draft.

13. I have thus as briefly as possible summarised on the one hand the basis on which negotiations for a working agreement for the railway have been carried on, and endeavoured to show that this Government desires nothing but an equitable arrange- ment which shall enable the line to be worked under conditions which will bring in some return for capital outlay, and has been very willing to accord the most liberal consideration to China's desires and prejudices. On the other hand I have shown that in many other questions of recent date Hong Kong has conferred benefits on China.

14. In these circumstances I have the honour to appeal to you to represent these matters to the Chinese Government, and to urge the Wai-wu P'u to assent without further delay to the reasonable demands of this Government in the matter of the working agreement and to conclude that instrument at once without further delay. I attach a brief memorandum showing the extent to which agreement has been obtained and the points on which we now desire the acquiescence of China. I believe that the Viceroy himself intends to write urging the Peking Government to accede to our proposals without further delay. may, perhaps, be permitted to observe that in my personal judgment the time has arrived to insist with emphasis upon the early completion of the matter, and that continued arguments and continued concessions, are neither likely to advance our interests nor to imbue the Chinese with any respects for the dignity of our nation.

Enclosure 2 in No. 1.

I have, &c.

Note respecting Working Agreement.

Points already agreed upon.

F. D. LUGARD.

1. Rolling-stock for through running to be provided by each section in propor- tion to its mileage, i.e., composition of trains shall be one-fifth British and four-fifths Chinese.

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