File No. 893.77/1577
Minister Reinsch to the Secretary of State
Peking, December 19, 1916.
Sir: With respect to the progress under the railway agreement of the Siems-Carey Company, I have the honor to report as follows:
As the exact alignments to be constructed are left open by the agreement and as other lines may be substituted for those tentatively [Page 210] included in the original agreement of May 17 last; there has been continued negotiation between the company and the Ministry of Communications for the selection of specific lines. An alignment most favorably considered, both by the corporation and by the Ministry of Communications, is one leading from Siangyangfu (in Hupei), through Nanyangfu, Yencheng Ho, and Chenchowfu (in Honan), to Pochow (in Anhui), with a possible terminal at Wuhoh-sien, on the lower Huai River. The Minister has expressed himself in a sense favorable to granting this alignment as part of the line to be immediately constructed, but a final agreement to that effect has not yet been arrived at. The line is most attractive on account of the importance of the cities mentioned.
Agreement has been reached upon the first line to be constructed. Instead of the line mentioned in the original contract, proceeding from Hengchowfu (in Hunan) to Nanning (in Kwangsi), there has been substituted an alignment from Chuchow, immediately south of Changsha, by way of Paoking (Hunan), Kweilin (Kwangsi), Liuchowfu (Kwangsi), to Chinchow or Yamchow, on the Gulf of Tongking. If a more desirable port is found in the western part of Kwangtung, it is to be substituted as a sea terminal.
The organization of the engineering parties for the survey has been completed. They have, however, not as yet left because the method of handling the funds of the enterprise has not been entirely agreed upon. The contract of May 17 provides that at the end of each month the contracting company shall render a lump estimate for the ensuing month; upon the approval of this by the director general (Chinese), he is to notify the auditor, who will then turn over a cheque to the contracting company. The Minister of Communications is thus far not willing to turn over the complete control of the expenditure of money as provided in the contract. It is not likely, however, that the contracting company will accept any other arrangement, as its only security is the railway itself, and it therefore feels that it must insist upon a complete control of the expenditures for construction.
I have [etc.]