File No. 5315/769.

Chargé Phillips to the Secretary of State.

No. 1163.]

Sir: Referring to my cable February 3, I have the honor to transmit herewith a copy of a note from the foreign office, dated February 2, giving the substance of the communication from the French embassy concerning the division of the Szechuen line into four equal parts, and also the substance of British reply thereto.

I have, etc.,

(For the chargé d’affaires.)
Hugh S. Gibson
.
[Page 273]
[Inclosure.]

The Minister for Foreign Affairs to Chargé Phillips.

No. 1696/10.

Sir: With reference to your letter to Sir Charles Hardinge of the 11th ultimo relative to the Hukuang loan negotiations, I have the honor to inform you that I have now been informed by the French embassy that the proposed division of the Szechuen Railway (Hankow-Ichang) into four equal parts among the four groups is not unacceptable to the French Government provided that the principle of equality between the French and British groups be extended to the Hankow-Canton Railway by the appointment of a French subengineer, and that in the event of China granting the concession for the extension beyond Ichang the French group receive as compensation for the section they are giving up to the American group the fourth or most westerly section of the Hankow-Szechuen line, which was allotted to the British group by the agreement of May 14 last, made at Berlin and subsequently ratified in London.

I have informed the French Government in reply that, while noting with satisfaction their acceptance of the proposal in regard to the division of the Szechuen line, I see no reason for departing from the understanding arrived at last spring in regard to the two points above alluded to, since the inclusion of the American group involves equal sacrifices on the Szechuen line for all three groups, and can not therefore be held to affect the distribution of engineering sections on either line in the manner suggested by the French Government. I added that in the opinion of His Majesty’s Government the reopening of these questions was to be greatly deprecated, as tending to the conclusion that there was to be no finality in any of these negotiations.

I have, etc.,

(For the Secretary of State:)
F. A. Campbell.