CO129-470 - Public Offices - 1921 — Page 79

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important public works in any particular region of China; and on the other hand, it is designed to prevent foreign money markets from making loans to China indis- criminately and thereby obtaining in that country any further special rights or privileges.

An understanding of this new position can best be reached by a few concrete definitions: The Consortium Agreement does not affect the Japanese position in Korea or Formosa, which are Japanese possessions, or the Japanese railway rights in Manchuria, which she holds by virtue of agreements already made with the Chinese Government but it does affect any expansion of the latter rights, since it brings into the pool any future finance of new public works in that region, exclusive of operations now in hand such as the Kirin-Changchun extension and the South Manchurian branch lines to Taonanfu, but inclusive of the projected line from Taonanfu to Jehol and its connection with a seaport.

Similarly it affects any Japanese claims to preferential rights in the provinces of Fuhkien and Shantung, though in regard to the latter province it is evident that the Consortium Agreement cannot upset the award of the Versailles Treaty respect- ing the Port of Tsingtao and the Tsingtao-Chininfu Railway. That award can only be dealt with by the signatories of the treaty, either through the instrumentality of the League of Nations or by diplomatic negotiation. All that the Consortium Agree- ment could do in regard to the Shantung question is to secure the pooling of any new construction or developments in that province.

As regards Great Britain and France, their historic claims to preferential rights in the Yang-tsze Valley and South China are cast into the common pool, subject always to the consent of the Chinese Government; and the way is thereby opened for the consortium to finance the Pukow-Sinyang and Nanking-Hunan Railways, as well as the American concessions obtained by Messrs. Siems, Carey and Co., which have hitherto encountered diplomatic opposition.

It will be seen from the foregoing that while the Consortium Agreement does not bring into the pool the individual rights of British, French or Japanese interests in existing railways such as the Peking-Mukden, Shanghai-Nanking, South Man- churian or Yunnan Railways, it establishes the principle that all new business shall or may be pooled, and thereby puts an end to the policy of spheres of influence.

In order to substitute for that policy a new scheme for development, the consor- tium will aim at persuading China to agree to a general unification of all her railways, and if that can be effected the policy of spheres of influence will not merely be abandoned but to a great degree wiped out. There will even then remain the territorial acquisitions of foreign Powers, but these lie entirely outside the scope of the consortium.

As things stand, it may fairly be said that the agreement affords evidence of a willingness on the part of the four countries concerned, and of the Belgian financial group which is about to join the consortium, to share in all new financial operations and to bring their existing interests as far as possible into one comprehensive whole.

C. S. A. London, November 8. 1920.

1A.

Lenong.

23.

iton No.

3/9/50.

Copy.

H. B. M. Legation, Paking.

No. 695

Copy to dengkung and Canton.

My Lord,

October 11th, 1920.

I have the honour tɔ enclose for Your Lordship'■ informe-

tion copies of despatches which have been addressed to me by the

Governor of Hongkong and His Majesty's Consul General at Canton

"

in regard to a proposal by kesars 7. K. Loxley and Company, a Bri-

tish firm in Hongkong, to issue to the Military Government at Can-

ton a Sterling Loan equivalent to $20,000,000 for the construction

of the uncompleted sention of the Canton-lans0% fail-ay.

Whilst it is of the highest importance to tha Colony and

to British com srcial interests generally that this railway should

be completed at the earliest possible opportunity, the schme for-

mulated by Xeasrı. 4. R. Loxley and Company appears to me to pres

@ent difficulties of an almost insuperable nature

The negotiations in regard to the low have been conduct-

ed with a #ilitary Government which has never received roognition

O

either by His Majesty's Government or by Paking.

That Military

Government now appears to be in process of dissolation and is der-

tainly/

The Right Honourable

The Earl Curzon ef Kedleston, F.0., G.C.3.1、,

eto. eto,

FOREIGN

etc..

OFFICE.