File No. 5315/436–445.
Chargé Fletcher to
the Secretary of State.
American Legation,
Peking, July 14,
1909.
No. 1207.]
Sir: In continuation of my No. 1187 of June 25
last, on the subject of American participation in the pending Hukuang
loan, I have the honor to report that on receipt of your telegram of
June 25, in reply to mine of the 24th idem., I called on Mr. Liang
Tun-yen at his residence on Monday, the 28th, and informed him that the
American Government had learned with gratification of the announcement
by the Chinese Government that the Hukuang loan will not be concluded
without American participation. I informed him that I had telegraphed,
as he had requested, that he hoped we would not insist upon our right to
furnish materials, etc., and that I had received your reply to the
effect that the, American Government could not meet his hopes in this
direction, and would insist upon the equal right of the Americans to
furnish materials.
He said he hoped an agreement could be reached and that the matter could
be disposed of at once, as Chang Chih-tung was blaming the Wai-wu Pu,
and they were afraid he would become impatient and throw the whole
matter over and refuse to have anything more to do with it.
As the details of the matter seemed to be in process of settlement in
Europe, I took no further steps, awaiting information as to the result
of the bankers conference.
In confirming the telegrams exchanged with the department with reference
to the text of the assurances given by China to Mr. Conger, I regret
that my effort to place copies of these notes in the hands of the
department at the earliest possible moment by open mail via Siberia
should have miscarried. As soon as I discovered that these notes had not
been copied to the department at the time they were written I endeavored
to supply the omission and they have gone forward in the pouch with my
first dispatch on this subject.1 I
intended that they should have gone in the open mail also. Mr. Conger’s
[Page 173]
notes in reply to which
these notes were written were quoted in the foreign office notes, but in
order that the department may have all the correspondence which I can
find which had passed between the legation and the Wai-wu Pu before the
present affair came up, I am inclosing herewith copies both of Mr.
Conger’s notes and the replies of the foreign office, the substance of
which I have communicated by telegraph.
On the 9th instant I received a personal note from Mr. Liang Tun-yen,
asking me to call to see him that afternoon. I did so, and he informed
me that Messrs. Cordes (Deutsch-Asiatische Bank) and Hillier (Hongkong
& Shanghai Banking Corporation) had called upon him and informed him
that the representatives of the European bankers had met the American
bankers representatives in conference; that they had offered the
American group one-fourth participation in the loan for the Hupeh
section of the Hankow-Szechuen Railway, and that the Americans had
refused, claiming that they were entitled to 25 per cent of the whole
loan. I told him I had no information whatever as to the result of the
meeting, but did not believe our bankers would accept less than 25 per
cent of the present loan. I promised to let him know as soon as I heard
from the department.
On the 11th instant (Sunday) I received your undated telegram informing
me of the instructions sent to the embassies at London, Paris, and
Berlin, by which the American bankers representative was to be informed
that the Government of the United States would not agree to American
participation on a lower basis than 25 per cent of the present loan and
that another meeting was to be held in Paris, etc.
I immediately wrote to Mr. Liang asking for an interview. He was absent
at his country place until yesterday (13th), when he replied, asking me
to call at the Wai-wu Pu. I did so and he informed me that he had
received a long dispatch from Grand Secretary Chang Chih-tung, asking
that the loan agreement be concluded as it stands. Mr. Liang said it
would be difficult to hold Chang indefinitely, and that when he told me
he had told the European bankers that the loan would not be concluded
unless Americans were allowed to participate he did not mean that it
should be held open indefinitely; that he thought we ought to be
satisfied with one-fourth of the loan for the Hupeh section; that the
bankers had been pressing Chang and himself to conclude, on the ground
that we had been offered reasonable participation and had refused. He
said he had as yet made no written communication to me in answer to my
formal note of June 5, but that if the matter were much longer delayed
he would have to write me a formal dispatch discussing the assurances
given to Mr. Conger and the Chinese Government’s position as to the
present agreement. He said that our rights to one-half of a loan for the
Hankow-Szechuen line were rather vague; that China had only promised to
consult us, and that we must have known of these negotiations.
I said it seemed to me useless to reopen this phase of the matter, but I
recalled to him that we had not been consulted; that we could not take
notice of every newspaper report as to Chinese loans; that we had heard
of it through the press, and not, as we were entitled, through the
Wai-wu Pu. Mr. Rockhill had, before the agreement
[Page 174]
was initialed, stated our position with
regard to the assurances given Mr. Conger and notified the Wai-wu Pu of
our readiness to take up the matter. He said he did not believe from Mr.
Rockhill’s representations that we expected to come into this loan, as
there were no representatives of American financiers here and everyone
believed the Americans had plenty of use for their money at home. I said
that it was unfortunate he had placed such a light construction on I Mr.
Rockhill’s representations. I then called attention to the fact that I
had personally and in writing on the 5th of June given notice of our
claims in regard to this loan (see my No. 1175, of June 9 last); that
the next day, in the face of these oral and written representations, the
loan had been initialed, and in order that there could be no possible
question or misunderstanding of the American Government’s
interpretation, not only of the assurances given to Mr. Conger, but also
of those made to myself, I read to him carefully the full text of your
long telegram received on July 11, above referred to, and pointed out to
him that the American Government regarded these assurances as positive
and unequivocal, and that China had pledged one-half share in the whole
Hankow-Szechuen loan to the United States.
I told him that the British, French, and German Governments had agreed to
American participation in principle and that I had been assured by Sir
John Jordan and Mr. Hillier that no pressure would be brought to bear on
China whereby she might be placed in an awkward position. I told him
that if any action should now be taken by China inconsistent with her
assurances it would have a most deplorable effect in the United States.
He admitted that China had not been asked by the diplomatic
representatives of the powers interested to take any steps, but that the
bankers had been pressing Chang Chih-tung and that the latter was
getting impatient at the delay and wanted to go ahead and close up the
present loan as it stands.
I earnestly requested him not to take any action which would place China
in an awkward position and seriously effect the friendly relations of
our two Governments; that I felt sure that the banks would agree to
American participation on the basis of 25 per cent, when they realized
that the attitude of China and the United States was firm oh this point,
and that whatever pressure was now being applied by the banks must be
without their Governments’ support. I concluded by stating that I could
not conceive of China, by her own motion, disregarding the earnest
representations of the American Government on account of the interest of
private financial institutions.
Mr. Liang closed the interview by asking me to telegraph the department
urging a speedy settlement and stated he would telegraph the Chinese
minister at Washington to the same effect.
I returned to the legation and telegraphed the substance of the
interview.
Yesterday afternoon Mr. Hillier called at the legation and stated that he
understood the negotiations were postponed indefinitely. He knew nothing
of any meeting in Paris. I explained clearly our position and told him I
hoped the matter could be arranged on the basis of 25 per cent; that if
his principals and others concerned would so authorize him the matter
could easily be settled here. He said that
[Page 175]
he thought the matter should be settled here; that
he would again telegraph his principals.
I inclose copy of the note received to-day from the Wai-wu Pu, the
substance of which I telegraphed you this evening and to which I will
reply after receipt of the department’s instructions.
I have, etc.,
[Inclosure 1.]
Minister Conger
to the Prince of Ching.
Legation of the United States of America,
Peking, August 12, 1903.
No. 533.]
Your Imperial Highness: I have the honor to
call Your Imperial Highness’s attention to the statement published
in the Times of London, under date of June 8 last, to the effect
that certain British companies had applied to the Chinese Government
for a concession to build a railroad from Hsin Yang, Hunan, via
Hsiang Yang, Hupeh, to Ch’eng-tu, Szechuen. The article in question
states that the Chinese Government replied that a native capitalist
had already asked for this concession, whereupon the British
responded that, if foreign capital should be required, preference
should be given to them. I have the honor to remind Your Imperial
Highness that my countrymen long ago made application for a similar
concession and that some months ago in a personal interview with
Your Imperial Highness I called your attention to this fact, and
asked that, if foreign capital should be needed for the construction
of such a railway, application should be first made to Americans. As
my countrymen were first in the field with a proposal for this line
of the railway, preference ought to be given them in any arrangement
made for borrowing foreign capital or in granting any concession for
such a line, should it be decided later to allow foreigners to
construct it. I must enter my formal protest against any arrangement
with others which may deprive my countrymen of their just claim to
consideration in this connection.
I avail, etc.,
[Inclosure 2.]
Minister Conger
to the Prince of Ching.
Legation of the United States of America,
Peking, January 20, 1904.
Your Imperial Highness: On behalf of
Thurlow Weed Barnes, an American representing the Hankow &
American Syndicate (Ltd.), I have the honor to transmit herewith a
petition for a concession to construct a railway from Hankow into
the Province of Szechuen.
This syndicate, as I am informed, is composed of American and British
capital, and is very highly recommended to me.
I improve the opportunity to renew to Your Highness the assurance of
my highest consideration.
[Inclosure
3.—Translation.]
The Chinese Foreign
Office to Minister Conger.
We have the honor to acknowledge the receipt of Your Excellency’s
note, saying that Mr. Thurlow Weed Barnes, representing the
Hankow-American Syndicate, had sent an application which he
requested you to forward; that the purport of it was an application
to construct the Hankow-Szechuen Railway,
[Page 176]
and that you understood that the capital
subscribed was partly American and partly British, and that those
who introduced the company affirmed that it was a reliable one, and
that, as in duty bound, you forwarded the application for our
consideration.
We find that our board some time ago memorialized with regard to the
Hankow-Szechuen Railway, recommending that the ministers of the
board of commerce should collect shares of Chinese capital for its
construction. The request of Mr. Barnes it is useless therefore to
consider.
As in duty bound we send this note for Your Excellency’s information
and trust that you will communicate its contents to Mr. Barnes.
We avail ourselves, etc.
Twelfth Moon, 14th day (January 30,
1904),
[Inclosure 4.]
Minister Conger
to the Prince of Ching.
Legation of the United States of America,
Peking, China, July 6, 1904.
Your Imperial Highness: I have the honor to
inform Your Imperial Highness that I am in receipt of a letter from
Mr. A. W. Bash, agent of the China Investment & Construction
Co., requesting me to forward to Your Imperial Highness the inclosed
letter, in which he makes application for a concession to provide a
loan for the construction of a railway line from Chengtu, Szechuen,
to Chungking and Hankow, in case the viceroy of Szechuen should find
himself unable to prosecute his reported plan to raise money from
native sources for such a line. He begs that your board will place
this application on file.
I have much pleasure in complying with Mr. Bash’s request and so
forward the application inclosed.
I avail myself of the opportunity to renew, etc.,
[Inclosure 5.]
Minister Conger
to the Prince of Ching.
Legation of the United States of America,
Peking, China, July 21, 1904.
Your Imperial Highness: I have the honor to
call the attention of Your Imperial Highness to an article in a
Tientsin paper, said to have been translated from a Chinese official
newspaper, in which it is stated that the viceroy of Szechuen has
received an official communication from the French consul at
Chungking to the effect that he has a telegram from the French
minister at Peking stating that French capitalists are negotiating
with the Wai-wu Pu as to the loan of French money for the
construction and management of a railway line from Chungking to
Hankow. I inclose the article for Your Highness’s consideration and
have the honor to inquire if the statements therein contained are
correct, and, if so, to remind Your Highness that last year and
again recently Your Imperial Highness gave me a definite promise
that if a loan should be made for the construction of the line
mentioned the first application would be made to American and
British capitalists.
I avail, etc,
[Inclosure
6.—Translation.]
The Prince of Ching
to Minister Conger.
I have the honor to acknowledge the receipt of Your Excellency’s
letter in which you say that you have recently seen an article in an
English newspaper, said to have been translated from an official
Chinese newspaper, saying that the viceroy of Szechuen has received
an official communication from the French consul at Chungking to the
effect that he has a telegram from the French minister
[Page 177]
at Peking, stating that
French capitalists are negotiating with the Wai-wu Pu as to the loan
of French money for the construction of a railway line from
Chungking to Hankow, and that these negotiations have been about
completed. Your Excellency inclosed the article in question and
asked if the statements contained therein are correct, and if they
are correct you wished to remind me that last year, and again
recently, I had given a definite promise that if a loan should be
made for the construction of the line mentioned the first
application would be made to American and British capitalists.
In regard to the above matter I have to state that there is no truth
whatever in the said newspaper article, hence this letter in reply
to that of Your Excellency that you may be informed of the matter;
and at the same time I avail myself of the opportunity, etc.
Cards inclosed.
Sixth Moon, 14th day (July 26, 1904).
[Inclosure
7.—Translation.]
The Prince of Ching
to Chargé Fletcher.
Foreign Office,
Peking, July 14,
1909.
Your Excellency: I have the honor to
acknowledge the receipt of Your Excellency’s note regarding the
Hankow-Szechuen Railway loan, as well as the memorandum on the same
subject, in which you state that it is still the desire of the
American Government to consult with regard to the raising of this
loan. I have communicated with His Excellency Chang Chih-tung on
this subject, and am now in receipt of his reply, as follows:
The relations between China and the United States are of a
long-standing and friendly character, and they are augmented
at the present time by the remission of a portion of the
indemnity of 1900 and the summoning of students to America.
For all of this I render my grateful recognition.
It is now the desire of the American Government to segregate
a certain portion of the French-British-German loan for
itself. If this matter had come up before the signing of the
agreement with the banks of the three countries mentioned I
would have no reason for objection. But the agreement has
now been signed and there is now no way to discuss the loan
with America. It is hardly feasible to direct the makers of
this loan to broach this new proposition lest other
difficulties arise.
My board was just in the course of investigating this matter and
taking action when I received another dispatch from His Excellency
Chang Chih-tung to the following effect:
I have received written communications from the three foreign
banks as follows:
“The representative dispatched by the American banks is in
consultation with our banks in London, and our banks have
agreed to assign one-quarter of the loan for that portion of
the Hankow-Szechuen Railway within the Province of Hupeh as
the American share. The American representative submitted
this proposition (i. e., to his superiors, Tr.) and received
telegraphic instructions to add one-quarter of the loan for
that portion of the Canton-Hankow Railway within Hunan and
Hupeh—that is to say, one-quarter of £5,000,000. The desire
of the American banks to add on this sum certainly can not
be agreed to by our banks. Thus our consultations have not
been productive of definite results, of which fact, as in
duty bound, we hasten to inform you.”
America, in entering into the discussion at such a late hour,
is certainly making herself the cause of delay. I was
originally unwilling that America should participate in this
loan, yet I take into consideration the friendship between
China and America; and, also, in the 29th year of Kuanghsu,
in the 6th moon (August, 1903), the Wai-wu Pu acknowledged
the receipt of Mr. Conger’s request that America be allowed
to undertake the construction of the Hankow-Szechuen
Railway, although there is no evidence that such request was
granted, so that there is this record to be referred to.
America, in desiring to consult in regard to this loan, is
very late on the scene. Even if the three banks are willing
to come to an understanding with the American banks and make
a division, the agreement is already signed and can not be
changed. Still I do not insist on my original stand against
American participation. In order to further cement the
friendly bonds between the two countries I am willing to
make concessions. I now learn that the three banks are
willing to allow America one-quarter of the loan for the
Hupeh section of the Hankow-Szechuen Railway, but that the
Americans desire to add on one-quarter of the loan for the
Hupeh-Hunan section of the Canton-Hankow Railway, which has
caused the three banks to discontinue negotiations. For any
further delay to be occasioned is very strange.
With regard to the Canton-Hankow Railway I learn that
formerly, because the American-China Development Co.
secretly sold two-thirds of the capital shares to the
Belgians, thus breaking the agreement, a loan was sanctioned
by the throne of £1,100,000 to redeem to China all interest
in this railway. It is unreasonable now once more to borrow
American capital to construct this railway. Moreover, there
has been no record since the
[Page 178]
31st year of Kuanghsu, the 12th moon
(December, 1905), when China had redeemed the Canton-Hankow
Railway, that that line has authorized the borrowing of any
American capital. Why does America now, without any pretext,
still desire to lend funds for the purposes of this railway?
Most emphatically, no such course can be considered. At the
mere mention of it the literal and people of the three
Provinces would rise up in protest against it as absolutely
out of the question; unfavorable criticism would rise up
like a flood. I, also, would be most unwilling, after this
railway has been redeemed from the Americans, to again
borrow American capital for its construction.
I may add that some time ago I received instructions to delay
memorializing, but now a long time has elapsed, my
responsibility in the matter is very great. The hopes of
everyone are getting impatient and further delay is
inexpedient. I intend to wait a very few days more for word.
If the Americans refuse to come to an agreement with the
banks of the other three nations to take one-quarter of the
loan for the Hupeh section of the Hankow-Szechuen Railway, a
most just and equitable arrangement, I will then be forced
into a position where I can not make the change desired. On
I then delay further. I shall be obliged to submit to the
throne the agreement already concluded, so that this
important work may not be subjected to further
procrastination. I desire that you will communicate this to
the American minister.
Your Excellency has orally discussed this matter at the board of
foreign affairs and has received a full reply. The difficulties
pointed out by His Excellency Chang Chih-tung will, I hope, be borne
in mind by your Government. I earnestly hope that stringent orders
will be sent to the American banks to come to an immediate
agreement, so that the desire of China to foster our friendly
relations may not be disappointed. I request that you will
communicate the above to the American Government, and I earnestly
look for a speedy reply.
A necessary dispatch.
