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line north of Shanhaikuan was to be considered a Russian railway, there was no justification for Russian objections to the Chinese employment of an engineer of any nationality they pleased, much less of an engineer who had so fully earned their confidence. They authorised me to report to your Lordship that they would not consent to dismiss Mr. Kinder." Strong representations were also made by Sir Claude to M. Pavloff, who said that he “had no wish to get rid of Mr. Kinder because he was an Englishman, but because he was not a Russian.” He told Sir Claude “ frankly that the Russian Government intended that the provinces of China bordering on the Russian frontier must not come under the influence of any nation except Russia." Throughout the negotiations relative to Port Arthur and Talienwan, the matter was argued between Russia and England at St. Petersburg as well as at Pekin. Russia continued, meanwhile, to urge China to remove Mr. Kinder. Eventually (March 20th, 1898) Sir N. O'Conor was informed by Count Lamsdorff, that Russia would raise no further objection to the employment of Mr. Kinder on the railways in China, and that instructions in that sense had been sent to M. Pavloff.

Manchurian Railway (Agreement for Construction of, between Chinese Government and Russo-Chinese Bank). Presented March, 1898.—The Statutes of the Chinese Eastern Railway Company as published in the Official Gazette of St. Petersburg, contain, among others, the following provisions :-1. On the strength of the Agreement concluded on the 27th August (8th September), 1896, by the Imperial Chinese Government with the RussoChinese Bank, a Company is formed, under the name of the “ Eastern Chinese Railway Company,” for the construction and working of a railway within the confines of China, from one of the points on the western borders of the Province of WeiLun-Tsian to one of the points on the eastern borders of the Province of Ghirin, and for the connection of this railway with those branches which the Imperial Russian Government will construct to the Chinese frontier from Trans-Baikalia and the Southern Ussuri lines. The Company is empowered, subject to the sanction of the Chinese Government, to exploit, in connection with the railway, or independently of it, coal mines, as also to exploit in China other enterprises-mining, industrial, and commercial. For the working of these enterprises, which may be independent of the railway, the Company shall keep accounts separate from those of the railway. The formation of the Company shall be undertaken by the Russo-Chinese Bank. With the formation of the Company all rights and obligations are transferred to it in regard to the construction and working of the line ceded in virtue of the abovenamed Agreement of the 27th August (8th

September), 1896. Owners of shares of the Company may only be Russian or Chinese subjects. 2. In virtue of the Agreement with the Chinese Government, the Company shall retain possession of the Chinese Eastern Railway during the course of eighty years from the day of the opening of traffic along the whole line. 3. In recognition that the enterprise of the Chinese Eastern Railway will be realized only owing to the guarantee given by the Russian Government in regard to the revenue of the line for covering working expenses, as well as for effecting the obligatory payments on the bonds (Sections 11, 16), the Company on its part binds itself to the Russian Government, during the whole term of the Concession, under various obligations; these provide for the provision of rolling-stock, etc., due maintenance of the line of traffic, and the establishment and maintenance of a telegraph line along the entire course of the railway, the free transmission of messages from Russia to China and conversely, and free carriage of postal matter and postal officials. The privileges granted to the railway by the Chinese Government are the exemption of passenger luggage and goods in transit from one Russian station to another, of all Chinese Customs, goods, and internal dues, and taxes. Goods imported from Russia into China by rail and exported from China to Russia in the same manner shall pay respectively an import or export Chinese duty to the extent of one-third less as compared with the duty imported at Chinese seaport custom-houses. If goods imported by the railway are destined for conveyance inland they shall in such case be subject to payment of transit duty to the extent of one-half of the import duty levied on them, and they shall then be exempted from any additional imposts. Goods which shall not have paid transit duty shall be liable to payment of all established internal carrier and lits-zin dues. 4. In regard to the place of acquisition of materials for the requirements of the railway, the Company

shall not be liable to any limitations. If | materials be obtained beyond the confines of

Russia they shall, on importation through Russian territory, be freed from payment of Russian customs duties. 5. The breadth of the railway track must be the same as that of the Russian lines (5 feet). 6. Tariffs are to be determined by the Company itself subject to par. 3. 7. Crimes, litigations, etc., on the territory of the railway are to be dealt with by the local authorities, Chinese and Russian, on the basis of existing treaties. 8. Chinese Government has undertaken to adopt measures for securing the safety of railway and employés against extraneous attack. 9. Cost to be determined by estimates. 10. Share capital fixed at 5,000,000 nominal credit roubles, and divided into 1,000 shares at 5,000 roubles. Guarantee of Russian Government does not extend to shares. 11. The remaining portion of the capital of the Company will be formed by the issue of bonds. The

bonds will be issued in measure of require the Chinese contractor at Port Arthur had ment, and each time with the special been instructed by the Chinese general sanction of the Minister of Finances. The there to get ready the necessary provisions nominal amount and value of each separate for five Russian men-of-war, which were issue of bonds, the time and condition of the | going, by the permission of the Russian issue, as also the form of these bonds, shall Government, to winter at Port Arthur. be subject to the sanction of the Minister of On December 20th, he reported that H.M.S. Finances. The Russian Government will Daphne had visited Port Arthur on the 18th guarantee the interest on and amortization inst., and had returned to Chefoo. She of the bonds. For the realization of these reported four Chinese men-of-war anchored bonds the Company must have recourse to inside Port Arthur, and three Russian menthe Russo-Chinese Bank, but the Russian | of-war outside. The captain of the Daphne Government reserves to itself the right of was informed that three Russian men-ofappropriating the bond loan at a price which war were expected at Talienwan, and three shall be determined between the Company more at Port Arthur. On December 22nd, and the bank, and to pay to the Company Sir Claude was informed by the Yamên the agreed amount in ready money. Sub that the Chinese Government had given sequent clauses are of a detailed financial permission for the Russian fleet to winter character; and it is necessary only to quote at Port Arthur. On the 23rd Count MouClauses 29 and 30:-“29. In accordance ravieff spoke to our representative at St. with the Agreement concluded with the Petersburg about Port Arthur, to the effect Chinese Government, the latter, after the that the Russian ships had gone there expiration of eighty years of possession of “only owing to the existence of a certain the railway by the Company, enters into difficulty in keeping more than a certain possession of it and its appurtenances. The number of ships of war in Japanese ports reserve and other funds belonging to the at one time." "The Chinese Government." Company shall be employed in paying the added the Count, “had expressed their money due to the Russian Government willingness to give the ships hospitality under the guarantee (Section 16), and in there, and the convenience of Port Arthur satisfaction of other debts of the Company, lay in the fact that it was not so far distant and the remainder shall be distributed from Vladivostock, and that for repairs to among the shareholders. Any money that ships, &c., it was more suitable than any may remain owing by the Company to the other place.” Russia assured the Japanese Russian Government at the expiration of Government that “ Port Arthur has been eighty years in respect of the guarantee lent to Russia by China only temporarily shall be written off. The Russo-Chinese as a winter anchorage ”-an assurance Bank will incur no responsibility in respect which the Japanese Government credited. of the same. 30. In accordance with the On December 29th the British Admiral on Agreement concluded with the Chinese the China Station telegraphed that the Government, on the expiration of thirty-six Immortalité and Iphigenia were at Port years from the time of completion of the Arthur. On the 22nd Sir Claude had whole line and its opening for traffic, the informed Lord Salisbury that the Chinese Chinese Government has the right of Government had had an offer from Russia acquiring the line, on refunding to the of a 4 per cent. Loan at 93, guaranteed by Company in full all the outlays made on it, the Russian Government; the land-tax and and on payment for everything done for the likin revenue to be the security, and the requirements of the railway, such payments quid pro quo asked being that Russia should to be made with accrued interest. It follows. have the financing, construction, and conas a matter of course that the portion of the trol of all railways in Manchuria and share capital which has been amortized by North China, and that a Russian should be drawing, and the part of the debt owing appointed Inspector-General of Customs to the Russian Government under the when that post became vacant. In reportguarantee, and repaid out of the net profits ing this circumstance, Sir Claude said he (Section 17) will not constitute part of the was asked by the Tsung-li-Yamên whether purchase-money. In no case can the the terms offered to China in June 'would Chinese Government enter into possession | still be granted by the Anglo-German of the railway before it has lodged in the Syndicate, under which terms there was to Russian State Bank the necessary purchase be no foreign control of the revenue, to money. The purchase-money lodged by the which control China objected. Sir Claude Chinese Government shall be employed in asked for instruction as to the attitude of paying the debt of the Company under its Her Majesty's Government, and said that bonds, and all sums, with interest, owing to the Agent of the Hong Kong and Shanghai the Russian Government, the remainder of Syndicate was telegraphing that day to the money being then at the disposal of the London. He. (Sir Claude) had promised shareholders.”

the Chinese Government that he would

answer within seven days. Lord Salisbury Port Arthur and Talienwan: The replied (December 28th) that Her Majesty's Question of Loan. Correspondence. Government were considering the question, No. 1. Presented April, 1898.-On and asked Sir Claude to advise as to what December 17th, 1897, Sir Claude Mac- might fairly be asked, “if we could offer donald telegraphed to Lord Salisbury that | entire or partial guarantee, or advance the

No. stion of "Land Tall

money ourselves.” On the 30th Sir Claude | Claude reported negotiations re Loan with recommended that the following concessions the Yamên, who asked that a route should should be asked for in return for a direct or be indicated for a railway from Burmah to guaranteed loan :-(1) Requisite control of the Yang-tsze Valley, and objected to the revenue; (2) Railway from Burmese opening of Talienwan as a Treaty Port. frontier to Yang-tsze Valley ; (3) Guarantee Russia had protested against its opening against the cession of territory in the “ in the strongest manner, and had warned Yang-tsze Valley to any other Power; (4) them that they would incur the hostility of Talienwan to be made a Treaty Port; Russia by doing so." Sir Claude invited (5) Greater freedom of internal trade; 1 the Yamên to explain Russia's hostility, (6) Freedom for foreign goods from likin unless she had ulterior designs on the in the Treaty Ports. A letter from the place. “They fully admitted that its open. China Association (3, Lombard-street, E.C.) ing would protect China against its is printed, urging the British Government annexation, and therefore be in China's to give the guarantee for the loan. On own interests. I said I was astonished to December 26th, Mr. Goschen (St. Peters. find they were not free to open a Treaty burg) wrote Lord Salisbury that Count Port in any portion of Chinese territory. Mouravieff had spoken about Port Arthur, Yamên had previously seemed to welcome putting the anchorage of the Russian ideas of opening Talienwan, advantages of men-of-war at that port on the ground of which they see clearly, but they are evi. convenience; but stating that the hospi dently greatly frightened by Russian tality thus afforded by China was of less threats..I asked for a port to be importance than formerly would have been opened in Hunan and Nanning, as well as the case, because Vladivostock was at Talienwan. To two former demands they present furnished with an exceptionally showed themselves inclined to agree.” On powerful ice-breaker which, it was hoped, January 12th Count Mouravieff again would make the port available for ingress alluded (to Mr. Goschen) to Port Arthur, and egress during the winter months. saying that the anchorage of the Russian “In fact," continued the Count, Squadron was merely a temporary " Vladivostock remained, as heretofore, measure, but that, after the wintering of their centre in the Far East, and the head the vessels there, the Chinese Government quarters of their land and sea forces, so had given Russia the prior right of that the mere fact of the Russian Squadron anchorage—le droit du premier mouillage.wintering at Port Arthur made no change Lord Salisbury telegraphed to Sir Claude whatever in the situation.” On January (January 17th) that he would not insist on 8th, 1897, Lord Salisbury telegraphed to Talienwan being made a Treaty Port if he Sir Claude that if all the conditions of thought it impracticable, "though we Loan as advised by him were accepted, Her should give it up with great regret." Majesty's Government would pay to Japan Other demands were to be maintained. As the remaining indemnity, which he under to the route for the Burmah Yang-tsze stood to be about 12 millions, China to pay Railway, the Indian Government were 4 per cent. in gold, net, on whatever amount being consulted. Li Hung Chang hoped was so paid, for fifty years, for principal (January 17th! that the request for and interest, which would extinguish the Talienwan to be opened as a Treaty Loan. Certain securities were mentioned, Port would be withdrawn, "as it was and the revenues pledged were to be violently opposed by Russia.” The terms audited by an Englishman, and, in case of on which the English Loan was offered were default, to be placed under English control. preferable to those offered by Russia. The On January 12th Lord Salisbury tele next day Sir Claude advised that the graphed to Sir Nicholas O'Conor (St. Yamên had agreed to grant the following Petersburg), that the Russian Ambassador securities :-(1) What remains of Maritime had in conversation referred to the presence Customs; (2) Likin; (3) Salt; (4) Native of two of Her Majesty's ships at Port Customs ; (5) In case of default, securities Arthur, and “that the circumstance had to be under English control. The Russian produced a bad impression in Russia.” Minister (January 19th) again inquired as to Lord Salisbury replied that “he saw no the position of the Chinese Loan. He urged ground for complaint in the presence of the very strongly that if England insisted British ships in a bay where they had a on Talienwan being a Treaty Port, it would Treaty right to enter, but that, as a matter be an encroachment on the Russian sphere of fact, they had been sent thither by of influence, and would deny to Russia in Admiral Buller, without any orders from the future “that right to the use of Port home, and that he (Lord Salisbury) Arthur to which the progress of events had believed that in the ordinary course they given her a claim.” “I asked what would soon move to some other anchorage." possible objections he could have to making On January 12th Sir Edmund Monson Talienwan a free port if Russia had no (Paris) reported that M. Hanotaux had designs on that territory." The reply was, asked for information on the subject of a that without any such designs it was Loan, and had said that in the event of an | generally admitted that Russia might claim isolated guarantee by England “there a commercial débouché upon the open sea, would be risk of a good deal of jealousy in and that she ought to be at liberty to other quarters.” On January 16th Sir, make such arrangements with China as she could obtain. Lord Salisbury answered 1 nounced at St. Petersburg that British that the most-favoured-nation clause for men-of-war had received orders to quit Port bade China to give Russia at Talienwan Arthur immediately, in consequence of more favourable terms with regard to Russian representations. This was having customs dues than she gave to other Treaty a most injurious effect at Pekin. Lord Powers. From a despatch from Berlin Salisbury replied that the statement that (January 19th), it appeared that Germany the Admiral had been directed to withdid not oppose the Loan being accorded to draw ships from Port Arthur was a pure England. On January 19th Sir N. invention. The Chinese Government then O'Conor reported that Count Mouravieff sought a middle course by suggesting "complained of the action of the British that the Loan should be divided between gunboats in entering Port Arthur.” “These Russia and England. On the 23rd proceedings,” he said, “ were looked upon Sir N. O'Conor reported that Count here as so unfriendly as to set afloat Mouravieff, referring to the opening of rumours of war with Great Britain; and Talienwan, said that the port was one of the Russian Ambassador had consequently the few places on the north coast of China received instructions to make representa free from ice during the winter. That tions in a friendly spirit. That Talienwan being so, Her Majesty's Government was to be a Treaty Port, as one of the con having in a public speech recognised the ditions of the Loan,” Count Mouravieff pro right of Russia to have an open port, it was ceeded, “could not be regarded as a friendly hardly to be expected that the Russian action, if it were true.” On 21st Sir Claude Government should approve of the demand. said he had learned from the Yamên that On January 31st Sir Claude telegraphed to "active steps to thwart Loan were in pro Lord Salisbury :—“Yamên at a meeting gress. The Yamên insisted upon the yesterday informed me that they greatly whole arrangement being contingent upon appreciated the generosity and goodwill the amount being 16 millions, which were displayed by Her Majesty's Government in offered by Russia. In addition to condi offering to help them by guaranteeing a tions already stated, China would agree to Loan. They considered the financial terms the non-alienation of the Yang-tsze Valley very generous, and the concessions such as to any other Power than England. On they could grant, because they were as 28th the Russian Ambassador again re much for the benefit of China as for foreign ferred to Lord Salisbury and the visit of Powers, and they would gladly accept our two British war-vessels to Port Arthur. offer if left to themselves, but Russia had " The Russian Government were anxious to used such threats that they saw no way out maintain the most friendly relations with of the difficulty but coming to some arrangeus in the Far East, and hoped we would ment with Japan, and borrowing neither endeavour to avoid any friction in their from England nor Russia. I pointed out sphere of influence.” Lord Salisbury re that if Russia were prepared for a hostile plied that the only British vessel there was move she could easily find some other prethe Iphigenia, and that she "would be text, and that China had better make her leaving in a few days, and that her visit stand in a matter where she would have was by orders of the Admiral, issued at his general sympathy. They said that a proown discretion, and not under directions of mise of protection against Russia was the Her Majesty's Government. I added, only thing that would help them. They however, that British ships of war had a said that the French Chargé d'Affaires had perfect right to visit Port Arthur and other again been to see them, and had spoken Chinese ports in that neighbourhood, and very violently against the opening of Nanthat such visits afforded no ground for ning.” Lord Salisbury (February 2nd) inraising objections, or deserved that any formed Sir N. O'Conor (St. Petersburg) importance should be attached to them." that the Russian Ambassador had had On the 24th Lord Salisbury acquainted Sir another conversation with him with referClaude that it was impossible, for Parlia ence to Port Arthur and Talienwan, and mentary reasons, to advance £4,000,000 added : -" The only circumstance which above the £12,000,000 required to pay the created apprehension in this country was Japanese indemnity, unless the object of the report that Russia intended to cause such a step was legitimate, and was duly some port to be opened to her own imports specified. On January 25th Sir Claude was which should not be opened, or should only be informed by the Yamên that the Russian opened under a higher tariff, to the imports Government had “protested against the of other nations. This would be an infracLoan in the strongest manner, on the tion of the most-favoured-nation treatment ground that it would disturb the balance of assured to us by Articles XXIV. and LIV. influence in China. French Government of the Treaty of Tientsin (26th of June, had also protested against opening of 1858), and would be very deeply felt in Nanning and the railway clause." Sir England. It would, moreover, even on proClaude persuaded the Yamên to resist these tectionist grounds, be of no advantage to protests, and said that if China did not, Russia, for the most important part of roshe must be prepared for the conse whatever trade might take this route would quences:" The Yamên asked time to con pass on across the Russian frontier, where, sider the decision. On January 27th Sir, of course, Russia could impose what duties Claude reported that it was officially an. I she pleased.” Sir Claude (February 3rd)

telegraphed that Prince Kung informed him understanding. The paragraph subjoined that the decision of the Chinese Govern is the most important:-“It appears to me ment was to borrow from neither Power. that a slight misunderstanding has crept Sir Claude impressed upon the Prince that, into the distinction to be drawn between a loan or no loan, Her Majesty's Government Free Port and a Treaty Port. It is perhaps would insist on the Inspector-Generalship due to a difference of terminology. The of Customs being held by an Englishman, English term Free Port' appears to correand would require an assurance to this spond to the French term port franc' effect. Li Hung Chang, on the following (porto franco '), that is, a port where goods day, officially informed Sir Claude that this imported are exempt from all import dues, decision was “in consequence of threat of whereas a Treaty Port, while being equally rupture by Russia.” The message of Grand open to international commerce, subjects Secretary Liwás as follows :-" The Chinese it nevertheless to the observance of the Government has been warned by Russia Customs Regulations and Tariffs in force in that their acceptance of a Loan guaranteed the country where the port is situated.” by Great Britain will entail an interruption On February 14th Sir Claude Macdonald in the friendly relations existing between was able to telegraph to Lord Salisbury the two Empires. In consequence of the that he had obtained the following assurminatory attitude assumed by Russia, the ances of concessions from the Chinese Chinese have been obliged to come to a Government independently of any question decision not to take a Loan from either the of a loan) :-"1. Internal navigation will Russian Government or that of Her Majesty, be opened before middle of June to British and the British Minister at Pekin bas steamers. Sir R. Hart has been instructed been informed accordingly.” Lord Salis to frame Regulations. Wording of my bury immediately telegraphed :-“If the despatch, which Yamên accept, is as folChinese Government enter into negotia lows:- Chinese Government consent that tions for obtaining a Loan from European foreigners shall equally be permitted to financiers, Her Majesty's Government must employ, steamers or steam - launches, insist on at least an adequate share being whether Chinese or foreign owned, wherever assigned to British banks, and, if you con use of native boats is now by Treaty persider such a step desirable, you are author mitted.' 2. Form of assurance as regards ised to give the Tsung-li-Yamên & very Yang-tsze is as follows:-" In reply to my serious warning to this effect, and to state despatch reminding them of the great imthat. the friendly relations existing be portance that has always been attached by tween the two countries will be seriously Great Britain to the retention in Chinese imperilled if there should be any appear. possession of the Yang-tsze region, and ance of excluding this country." On Feb demanding an assurance that China would ruary 9th Lord Salisbury wrote to Sir N. never alienate any territories of the proO'Conor, that M. de Staal had had a con vinces adjoining the Yang-tsze to any other versation with him relative to Russia's Power, Yamên quote my Despatch in full, assurances. In a speech in the House of and say it is out of the question that terriLords, Lord Salisbury had said the Ambas tory in the Yang-tsze region should be sador had given him a written assurance mortgaged, leased, or ceded to another that any port ceded to Russia as a commer Power. 3. Yamên have written despatch cial outlet, would be a Free Port. M. de stating that, owing to the great preponderStaal had pointed out that this assurance ance of British trade over that of other was “verbal” not “written,” and that he Powers, Chinese Government intend that had only meant that the port was to be a the post of Inspector-General shall in the Treaty Port- not a “Free” Port. Lord future, as in the past, be held by an Salisbury informed Sir Nicholas that he Englishman. If at any time British trade could not admit the applicability of with China at the ports should fall below the word “verbal," inasmuch as M. de that of any other nation, Chinese GovernStaal had shown him a copy of the tele 1 -ment will no longer be bound to appoint an gram conveying the assurance of the Rus Englishman Inspector-General. I was unsian Government. His lordship continued : | able to induce them to pledge themselves to -“ With respect to the other correction, I open port in Hunan in less than two years, said that he had actually used the word though they promised to shorten the time

open,' by which I had imagined he meant if possible. What they fear is an outbreak • free.' I thought that if he had meant a in that province.” Lord Salisbury teleTreaty Port, he would have used the word. graphed that Sir Claude had obtained very I did not doubt, however, that I had given valuable concessions, and was greatly to be insufficient weight to the general context. congratulated on the skill and perseverance As far as we were concerned, a Treaty Port he had shown. On February 19th Sir was not much inferior in value to a Free Claude further telegraphed that a prelimiPort; and the course of policy it implied nary agreement for a loan of £16,000,000 was more agreeable to our own contentions, had been signed by the Agent of the Hongin that it preserved for the port in question Kong and Shanghai Bank, that the likin the Conventional Tariff, which coulā hardly revenues were to be placed under Customs be set aside without violence to existing control, and that the Bank had ten days Treaties.” A despatch is printed from M. for a definite acceptance. On February de Staal, giving his version of the mis- | 25th a Chinese minister told Sir Claude

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