File No. 893.77/1667

The Minister in China ( Reinsch ) to the Secretary of State

No. 2142

Sir: In connection with my despatch No. 1736 of November 1917,1 relating to the protest of the British Government against the proposed construction by an American corporation of certain railways in the Provinces of Hupeh and Hunan, I now have the honor to enclose a translation of a note from the Ministry for Foreign Affairs to the British Minister under date of June 21, 1918, in answer to said British protest. It will be seen the essential point in the answer [Page 201] of the Chinese Government is that, as the main agreement to which the letter of the Hukuang Viceroy refers has now no force, by the terms of the agreement itself, the letter which was an addendum thereto has also ceased to have force.

I have [etc.]

Paul S. Reinsch
[Enclosure—Translation]

The Chinese Minister for Foreign Affairs ( Lu Cheng-hsiang ) to the British Minister ( Jordan )

Excellency: I had the honor to receive a note from Mr. B. F. Alston, Chargé d’Affaires, in which he stated that the railways included in the agreement between the Chinese Government and American merchants, the International Corporation, were an encroachment on the railways specified in the Hu-Hang-Yung (Shanghai-Hangchow-Ningpo) Railway agreement, and also were inconsistent with the note formerly given by the Hukuang Viceroy to the British Consul at Hankow.

This Ministry has referred the matter to the Ministry of Communications with instructions to investigate carefully. That Ministry now replies as follows:

1.
Regarding the claim based on the Hu-Hang-Yung agreement, in the 19th article of the said agreement it is specifically stated that the agreement includes the construction of branch roads. The Wen-Hang (Wenchow to Hangchow) Railway is a main line of the Chinese system, in length 400 to 500 li, and cannot be considered a branch road of the Hu-Hang-Yung line. Since this road cannot be considered a branch line of the Hu-Hang-Yung Railway, Article 19 of the agreement can have no reference to it.
2.
With reference to the note formerly given the British Consul at Hankow by the, Hukuang Viceroy, it is clearly stated in Article 2 of the Hongkong agreement that when the capital and interest have been paid the agreement shall be canceled. The note referred to was an addendum to the said agreement. The capital and interest specified in the agreement have long been paid and so the agreement has now no force, so any addendum to the agreement has also ceased to have force.

As in duty bound we send to your excellency the report of the Ministry of Communications.

[File copy not signed]