CO129-558-11 Mission of Sir F. Leith-Ross to China- proposals for a Hong Kong - China customs... 29-9-1936 - 30-12-1936 — Page 105

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Financing of future railway developments and the "Open Door" policy.

Personnel of the Chinese Maritime

Customs.

He understood that the Foreign Office did not like to try

to influence the Bondholders' Committee. The practice

whereby a joint secretary was appointed from the Foreign

Office was useful. He thought that it would be advisable

for His Majesty's Government to indicate to the Bondholders'

Committee that they would be wise to expedite a settlement

of outstanding defaults on the basis offered by the Chinese

Government. The Belgians and Dutch had accepted a far less

satisfactory offer for the Lung-hai Railway default. The

attitude of the British Committee was also causing much

ill-feeling with the German creditors.

SIR FREDERICK had referred in his report to a proposal

that future railway development in China should be financed

by a further international loan in which Japan might well

take part, on condition that she was allowed orders for

materials commensurate with her participation. He did not

think that there was any immediate possibility of this but &

scheme might be practicable in a few months' time.

All was,

of course, dependent on political relations between China

and Japan; and the Japanese might make difficulty by

demanding more than their fair share. In any case, the

allocation of orders in each country in proportion to the

amount of its participation in the loan would require

amendment of the present understanding among the members of

the Consortium that all orders should be placed by open

tender. Mr. Orde said that the first step was to get rid

of this under standing; a procedure had been worked out and

it was agreed that the Foreign Office should write to Sir

Charles Addis urging this upon him.

SIR FREDERICK LEITH-ROSS referred to his conversations

with Mr. Horinouchi regarding the personnel of the Chinese

Maritime Customs. Mr. Horinouchi had agreed that, without

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