[This Document is the Property of His Britannic Majesty's Government,]
CHINESE LOANS AND CONCESSIONS.
CONFIDENTIAL.
35992
Rect M2 13 JUL 21)
[June 27.]
SECTION 1.
[F 2323/333/10]
No. 1.
(No. 254.) My Lord,
Sir B. Alston to Earl Curzon.--(Received June 27.)
Peking, May 10, 1921. I HAVE the honour to enclose copies of correspondence exchanged between the Director-General of the Hakuang Railways and the Group Bank representatives dated the 11th April and the 4th May respectively.
As your Lordship is aware the Chinese have so far persistently declined to recognise Japanese participation in the Hukuang Loan Agreement, and it remains to be seen how they will take the Group Bank's letter of the 4th May.
In connection with the despatch of this letter, I enclose copy of a memorandum by Mr. Hillier on the relatively unimportant point of the order of signature by the respective bank representatives. There appears never to have been any question on the subject until the arrival of Mr. Stevens at the beginning of this year.
The latter is returning to America for three months on the 28th May, with the intention of returning in September. Mr. Hillier has, however, wired privately to Sir C. Addis suggesting that it would be in the general interest of harmony and smooth working of the consortium if the American group could find someone else to represent them, owing to the aggressive and overbearing manner of Mr. Stevens which renders friendly co-operation extremely difficult. From my own experience I quite share Mr. Hillier's view, but realise that it is an extremely delicate matter to raise with the American group.
Enclosure 1 in No. 1.
I bave, &c.
(For the Minister),
R. H. CLIVE,
Gentlemen,
Director-General, Hukuang Railways to Group Banks.
April 11, 1921. THE original amount of the Hukuang Railways Loan having been insufficient for the construction of the lines named in the agreement the late Director-General, Mr. Feng, prepared estimates and entered into negotiations with the group representatives in 1914 for the issue of a supplementary loan, but before these negotiations developed the European war broke out, and as money markets were upset, all that could be done was to employ to the best advantage of the railway the funds available at that time. When peace was declared repeated requests were made to the group representatives to its te supplementary loan bonds in accordance with the Loan Agreement, or to arrange for an advance to continue construction. On account of the lapse of years and the inability of the group banks to accede to our requests, the Hukuang Railways have suffered directly and indirectly very considerable losses.
As it was impossible even to complete the construction of the Wuchang-Changsha section, the Ministry of Communications was obliged in accordance with article 15 of the Loan Agreement to borrow money at different times from various sources, upon which interest had to be paid, in order to meet the payments due on account of interest on the Hukuang Railways Loan as well as to supply funds for carrying on work on the railway.
Up to the end of 1920 the sum of about 6,000,000 dollars had thus been expended in continuing construction work on the Wuchang-Changsha section, and this made it possible to open the line officially for traffic as far as Chuchow on the 1st January of this year.
The Canton-Hankow Railway has a great bearing on the public affairs of China Moreover, of that part of this railway which comes within the scope of the Loan Agreement there still remains a distance of 205 English miles from Chuchow to Hsing Tzu Ling on the I-Chang section which so far has not been built, and we are unable to
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