File No. 5315/79–80.
Chargé Fletcher to the Secretary of State.
Peking, March 13, 1908.
Sir: I have the honor to inclose copy of the Shanghai-Hangchow-Ningpo loan agreement, signed here on the 6th instant by representatives of the waiwu pu (board of foreign affairs) and the yu-chuan Pu (board of posts and communications) and the British and Chinese Corporation. The matter of the Chekiang Railway loan, as it has commonly been called, and upon which I have heretofore reported, is thus adjusted.
The corporation is authorized to issue a 5 per cent gold loan for £1,500,000. The financial conditions are generally identical with those of the Tientsin-Pukow contract (see my No. 817, of January 18, 1908), but other clauses and modifications have been introduced where a compromise was necessitated by the fact that the rights of the British and Chinese Corporation under the preliminary agreement of 1898 conflicted with those subsequently conferred on the Chekiang and Kiangsu Railway Bureaux. The terminus of the line will be at Shanghai and not at Soochow. The Chinese Government pledges the surplus earnings of the Imperial Railways of north China instead of the provincial revenues as security for the loan.
The corporation makes the loan under imperial guarantee to the yu-chuan pu, and this board is responsible for the economical and efficient construction of the line, of which accounts are to be published annually in Chinese and English.
The concession for the construction of this line was originally granted to the British and Chinese Corporation in 1898, in connection with the line from Shanghai to Nanking. Various causes contributed to delay the commencement of work under it, and in 1905 the Imperial Government sanctioned the building of the line by the local merchants and gentry, under the supervision of the provincial authorities of Chekiang and Kiangsu. The corporation, having in the meantime commenced the construction of the main line to Nanking, asserted its prior rights to construct the Chekiang Railway. A local outcry was raised, public meetings were held, memorials presented, and provincial delegations came to Peking to protest against the construction of the line by foreigners or with foreign capital. The corporation, supported by the British legation, [Page 202] insisted upon its rights. The Central Government was thus put in an embarrassing position. The long negotiations which ensued have, however, resulted in the present agreement, which seems satisfactory to all.
I have, etc.,