operations were to be extended by continuing the railway southward to Canton, and by the construction of a short line between Shanghai and Soochow. The formation of any other railway company was prohibited, and the suggestion appeared to be that, when the lines already enumerated had been constructed, no further extension of China's system would be required. Meanwhile the idea of inviting the assistance of foreign capitalists did not appear to be in contemplation.

Such in outline was the scheme on paper. It does not, however, necessarily follow that it more than approximated in a general way to the scheme as it revealed itself in Chang Chih Tung's own mind, and it may be well to remark in passing that in general a Chinese memorial is by no means the same document as a foreign State paper. The compiler of the latter may be taken, on the whole, to give tolerably straightforward expression to his views. The Chinese memorialist, on the other hand, rarely states more than a fractional part of his intentions, and scarcely ever contemplates the performance of his proposals in their entirety. In most cases the object of a memorial is to obtain the recognition by the throne of a principle. Various considerations render directness of language undesirable. In consequence, such documents are frequently couched in the language of hyperbole, and arguments, suggestions, and even statements and undertakings are frequently introduced only to be dropped as soon as the desired result has been achieved.

These remarks appear to find illustration, though certainly in a less degree than on many other occasions, in Chang Chih Tung's memorial adumbrating his views on railways.

However much alive he may have been to the political dangers attendant on the introduction of foreign capital, and however desirable it may have appeared to him that resort to the expedient of raising loans either in Europe or America should be avoided, it is highly improbable that he should have believed, with Li Hung Chang's experience in connection with the Imperial Railways of North China before his eyes, that Chinese investors would subscribe the necessary funds. Yet such was the impression of the first memorial, which certainly gave rise to the idea that he not only intended to raise, but expected to succeed in raising, Chinese capital.

All efforts, however, in this direction, if indeed such were made,

failed, and foreign capitalists had ultimately to be admitted, a Belgian syndicate leading the way by obtaining, in May 1897, a contract for the construction of the line from Lukouchiao to Hankow. The grant of other concessions rapidly followed. The southern section of the trunk line between Hankow and Canton was placed in American hands. The British and Chinese Corporation secured the right to construct lines radiating from Shanghai. The same combination undertook the construction of a line between Canton and Kowloon, while the Russo-Chinese Bank secured a concession for a line from Taiyuanfu, the capital city of the province of Shansi, to Chengtingfu, where it joins the Peking-Hankow Railway. At the same time the Pekin Syndicate, a British combination with an Italian representative in Peking, obtained a grant of extensive mining and railway rights in the highly mineralised provinces of Honan and Shansi.

Meanwhile Germany and France had not been inactive in other parts of the Empire. In the province of Shantung "German diplomacy, pursuing its path," as Baron von Bülow euphemistically put it, “calmly, firmly, and peacefully," secured a lease of territory and extensive railway privileges. Similarly France was granted a lease of Kwangchauwan, and valuable railway rights in the provinces of Yunnan and Kwangsi.

The mention of these events recalls the distinction, to which allusion has already been made, between the causes resulting in the acquisition by Germany and France respectively of their privileges in Shantung and South China, and those operating to bring about the grant of the concessions above enumerated. And it will be found that the distinction is as clearly defined as in the case of Manchuria; furthermore, that it is in principle the same distinction, as is also the conclusion to be drawn therefrom. In other words, the railway policy of Germany and France, like that of Russia, has been a means to an end, an incident in a larger policy, which can only be described as in intention a policy of colonisation.

Of late, events have combined to defeat, or at least to postpone, the attainment of Russian, German, and French aims, but the nature of the operating causes remains unchanged.

Too many or too fine distinctions, however, in laying down at the outset the broad principles on which investigation is to proceed only tend to confusion. Moreover, in the present case they

would have resulted in considerable inconvenience. The fact that the growth of the Chinese Eastern Railway was bound up with that of the Imperial Railways of North China rendered it imperative to treat them together. In the case of South China, on the other hand, convenience dictated the discussion of the French rights in the position that appertained to them geographically as railways in China Proper. Similarly with the German rights in Shantung. Though they may be said, strictly speaking, to have formed no part of the Battle of Concessions, it is nevertheless convenient to discuss them here, particularly in view of their connection with the Tientsin-Nanking Railway, which was one of the concessions following on the grant of the concession for the Peking-Hankow line.

The advantages of the course that has been pursued, however, will become clearer when the proceedings, which have been touched upon, are narrated in greater detail. In the meantime a word is necessary in reference to the form of contract which these various arrangements, with the exception of the concession to the Pekin Syndicate and the French and German rights, have assumed.

In this connection the convenient term concession has been very generally, and perhaps somewhat loosely, applied.1 When we come to analyse them we find that primarily these arrangements are in the nature of underwriting contracts. The contracting syndicate undertakes to provide 90 per cent., for example, of a loan of so many millions of pounds or dollars, as the case may be, repayable at a certain specified time and bearing interest at the rate of 5 per cent. per annum; it takes its chance of being able to float the loan upon the public at a higher percentage of its nominal value. What has happened in most cases is that on every £100 bond, for example, issued by the Chinese Government the latter have received £90, while the syndicate have succeeded in getting them taken up at £97 or thereabouts, thus securing a respectable margin on the transaction. But under the recently concluded agreement in connection with the Canton-Kowloon

1 In the case of the French and German rights, the Russian rights in Manchuria, and the Japanese rights in regard to the Southern Manchurian and Antung-Mukden Railways, the 'term in its strictest sense is, of course, quite correctly applied. For in these cases the grants have been made under conditions which deprive China of all control and profit in the several undertakings, and seriously prejudice her sovereign rights within the territory through which these railways run.

Railway the Chinese Government have secured far more favourable terms.

This is one aspect of the contract. There appear to be three others.

Firstly, the syndicate is given the right to construct the line, and in return for its trouble in this connection it is in most cases allowed a sum equivalent to 5 per cent. on the total cost. It is this right which presumably gives rise to the idea of concession.

Secondly, on completion of the line it is placed in some cases under a theoretically joint Chinese and foreign control, in which in practice the foreign element predominates. In other cases the Chinese have merely a consultative voice.

Thirdly and lastly, at this stage, or rather from the time of the issue of the loan, the syndicate become trustees for the bondholders, and it is easy to see that, in the nature of things, the loan being secured by a first mortgage upon the railway, the position of the syndicate for all practical purposes must be that of mortgagees in possession.

Such are the underlying principles of the agreements which confer these rights, which for want of a more precise term we call, and shall continue to call, concessions. The details, of course, vary.

In considering them, although the method of treatment may involve repetition in certain small particulars, seeing that the grants have been virtually contemporaneous, it seems on the whole more convenient, as tending to avoid confusion among the multiplicity of interests involved, to consider each concession separately rather than to attempt any general development of the subject. In these circumstances the Peking-Hankow, or

Ching-Han, Railway, as being the earliest concession in point of 7 of cher,

time of those immediately under consideration, first demands our attention. Subsequently the remaining concessions, together with the Pekin Syndicate Concessions and the French and German rights in South China and Shantung respectively, will be severally dealt with in the place that geographical or historical conditions may dictate as most convenient.

Ling,21

CHAPTER XI

THE PEKING-HANKOW OR CHING-HAN RAILWAY

WHEN

HEN Chang Chih Tung's scheme took definite shape it was, of course, realised among foreigners that China herself could not hope to put it into execution. The war with Japan had been a serious strain upon the financial resources of the country, and the Imperial Treasury was exhausted. Again, as has been seen, the idea of joint-stock enterprise, except under foreign supervision, fails to appeal to the generality of Chinese investors.

In these circumstances a departure from the apparent principle of the scheme was inevitable, and early in 1896 the formation of a company whose capital should be subscribed two-thirds by Chinese and one-third by foreigners was discussed. It was even alleged that an American named Jefferds had successfully concluded negotiations on these lines. Later in the year it was rumoured that a Cantonese syndicate with a preponderating British element had entered into a contract with the Chinese Government to finance not only the northern but also the southern section of the proposed trunk that is to say, the whole line from Peking to Canton. But, for some reason or other, neither of these schemes matured, and no real progress was made until October, when an Imperial edict was issued appointing the Tientsin Customs, Taotai Sheng Hsuan Huai, now better known as Sheng Kung-Pao, Director General of the projected railway between Lukouchiao and Hankow, with instructions to commence the work with all possible despatch.

On assuming office Sheng was not slow to act, and no long time was suffered to elapse before arrangements to survey the proposed route were made with an American group of financiers, represented by Senator Washburn, with whom Sheng had, in anticipation of his appointment, already been in negotiation.

No agreement for the construction of the line had at that time. been arrived at, but the Director General was anxious to satisfy