Lords Sitting of 18 July 1902

PRIVATE BILL BUSINESS.
THE LORD CHANCELLOR acquainted the House, that the Clerk of the Parliaments had laid upon the Table the Certificate from the Examiners that the further Standing Orders applicable to the following Bill have been complied with:—
New Forest (Sale of Lands for Public Purposes).
The same was ordered to lie on the Table.

PRIVATE BILL BUSINESS.
  HULL, BARNSLEY, AND WEST RIDING JUNCTION RAILWAY AND DOCK (SOUTH YORKSHIRE EXTENSION LINES) BILL.
  Reported, with Amendments.
  LOCAL GOVERNMENT PROVISIONAL ORDERS (No. 7) BILL.
  The Chairman of Committees informed the House that the opposition to the Bill was withdrawn: The orders made on the 1st instant and yesterday discharged, and Bill committed to a Committee of the Whole House.
  MEDWAY AND THAMES CANAL BILL [H.L.]
  Returned from the Commons agreed to, with Amendments.
  COMMONS REGULATION (SODBURY) PROVISIONAL ORDER BILL.
  Moved, That the Order made on the 14th day of March last, "That no Provisional Order Confirmation Bill brought from the House of Commons shall be read a second time after Thursday the 19th day of June next," be dispensed with, and that the Bill be now read 2a (The Earl Howe) agreed to; Bill read 2a accordingly, and committed to a Committee of the whole House.
  LOCAL GOVERNMENT PROVISIONAL ORDERS (No. 6.) BILL.
  Amendments reported (according to order), and Bill to be read 3a on Monday next.
  LOCAL GOVERNMENT PROVISIONAL ORDERS (No. 4.) BILL.
  House in Committee (according to order): the Amendments proposed by the Select Committee made: Standing Committee negatived: Report of Amendments to l)e received on Monday next.
LAND I RAINAGE PROVISIONAL ORDER BILL.
  LOCAL GOVERNMENT PROVISIONAL ORDERS (No. 10.) BILL.
  House in Committee (according to order): Bills reported without Amendment: Standing Committee negatived; and Bills to be read 3a on Tuesday next.
  GREENOCK AND PORT GLASGOW TRAMWAYS (EXTENSION) ORDER CONFIRMATION BILL [H.L.]
  Read 2a (according to order), and (pursuant to the Private Legislation Procedure (Scotland) Act 1899) deemed to have been reported from the Committee: Bills to be read 3a on Monday next.
  LONDON COUNTY COUNCIL (SUBWAYS AND TRAMWAYS) BILL.
    LONDON COUNTY COUNCIL (TRAM WAYS AND IMPROVEMENTS) BILL.
      LONDON UNITED TRAMWAYS BILL
      Report from the Committee of Selection, that the Lord Wandsworth be proposed to the House as a member of the Select Committee on the said Bills in the place of the Lord Brassey; and that the Earl of Yarborough be Chairman of the said Committee; read and agreed to.
  RETURNS, REPORTS, ETC.
    SEA FISHERIES (ENGLAND AND WALES.)
    Sixteenth Annual Report of the inspectors, for 1901.
    JUDICIAL STATISTICS (IRELAND) 1901.
    Part II. Civil Statistics.

    IRISH LAND COMMISSION.
    Report of the Commissioners, for the period from 1st April 1901 to 31st March 1902.
    Presented (by command), and ordered to lie on the Table.

    UNIVERSITIES OF OXFORD AND CAMBRIDGE ACT, 1877.
    Statute made by the Master and Fellows of University College, Oxford, on 20th March 1902, amending Statute III., 12 (Fellowships held by Professors) of the Statutes of the College: Laid before the House (pursuant to Act), and ordered to lie on the Table.
    SALE OF INTOXICATING LIQUORS (LICENCES) (IRELAND) BILL.
    Read 3a, with the Amendments, and passed, and returned to the Commons.
    SHOP CLUBS BILL.
    Read 3a, with the Amendments, a further Amendment made; Bill passed, and returned to the Commons.

    NEW FOREST (SALE OF LANDS FOR PUBLIC PURPOSES) BILL.
    Order of the day for the Second Reading read.
    LORD HELPER: My Lords, this is a small Bill, which has passed the other House, the object of which is to empower the Commissioners of Woods and Forests to sell pieces of land in the New Forest for sanitary purposes. The case for the Bill is this: The soil of the New Forest is vested in the Crown, and it appears that the Commissioners of His Majesty's Woods and Forests have no power to sell any land without an Act of Parliament. As long ago as 1884 it was found that the sanitary arrangements of Lyndhurst, which is within the limits of the New Forest, were very bad, and the Local Government Board came to the conclusion that not only the sanitary arrangements, but also the water supply, were deplorable. Since that time a proper water supply has been provided, but great difficulty has been experienced, in consequence of there being no land, in carrying out sewerage works, and this Bill is for the purpose of giving the Commissioners power to sell land, and the parish authorities power to purchase it in the interests of the public health of the locality. The Bill is carefully guarded in the matter of the consent of the Local Government
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    Board and a proper local inquiry. The provisions of the Bill are practically concurred in by all the persons locally interested, and have been accepted by the Commons Preservation Society.
    Bill read 2a, and committed for Monday next.

    TRANSVAAL CONCESSIONS COMMISSION—POSITION OF THE NETHER LANDS RAILWAY.
    THE EARL OF CAMPERDOWN: My Lords, I rise to call attention to the finding of the Transvaal Concessions Commissioners in regard to the Netherlands South African Railway Company, that—
    "The Company did, before war was declared, initiate and organise elaboiate plans, and afterwards effectively carried them out, causing great damage, delay, and loss to the Queen's armies."
    And to ask whether action has been taken, or is going to be taken, to punish the Company for these belligerent operations. The active part which was taken by the Netherlands Railway Company in the late war is a matter of considerable notoriety. I ventured, just a year ago, † to bring the finding of the Commissioners before your Lordships, and to ask what indemnity, or other punishment, it was intended to inflict for the unwarrantable attack by this Company on Great Britain. The Secretary of State for Foreign Affairs told me at that time that the matter was under consideration, that a correspondence was taking place with foreign Powers, and that His Majesty's Government were unable at that moment to give me any answer. A year has elapsed, and I now venture to repeat my question. The facts are not in dispute; they have been investigated, and I am anxious to know whether anything has been done, or is going to be done, to punish the Company for their operations. When I brought this matter before your Lordships a year ago, I entered in considerable detail into the investigations of the Commission, and, therefore, it will not be necessary for me today to trouble your Lordships with more than a very few remarks on that part of the subject. As I have said, the
    See (4) Debates xcii., 8.

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    main facts are not in dispute; but, lest it should be supposed that anything is wanting to make the case against this railway company complete, I would remind your Lordships that, according to their own admissions, the managers and the staff in South Africa, the board of directors in Amsterdam, and also the shareholders, aided and abetted, more or less actively, in the action that was taken at that time by the Company, Just before the outbreak of the war, M. Van Kretschmar, the directing manager of the railway in the Transvaal, took a very lively and direct interest in the prospects of the Republic. He called their attention to the fact that they had not sufficiently provided for defence and offence, and went so far as to produce schemes, and give them advice as to how they should attack Natal and defend themselves. He did more. He suggested that the employees of the Company should be commandeered, and he paid those employees while-they were actually engaged in operations against the British troops. He directed those operations, suggested that they should blow up bridges, and acted from beginning to end as an open enemy of this country. So much for the direction. I will now read to your Lordships what M. Van Kretschmar's opinion was as to the result of his action. After the fortunes of war had turned, he wrote to his directors in Amsterdam as follows—
    "I am afraid we have hopelessly compromised ourselves in deed, word, and writing. We have made cannon and ammunition; we have sold material to the Republics; we have blown up bridges on English territory, and have not discharged our staff on commando."
    Passing to the staff, how did they carry out M. Van Kretschmar's directions? They assumed open action as belligerents; they blew up the bridge at Colenso, arid when the Boers were in retreat subsequent to the relief of Ladysmith, they also broke up the line of railway and protected the retreating enemy. Another portion of the railway staff blew up bridges in Cape Colony and protected the retreating Boers by destroying the communications. We have it on record, in a letter written by M. Van Kretschmar, that the Board in Amsterdam were greatly pleased with the action he had taken in the first instance; but when the fortunes of war
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    changed they recognised that what had been done might prove detrimental to their interests, and they advised M. Van Kretschmar to take up a different line of action, to which he replied—
    "I like to hoar your judgment—you who were so proud when you heard of the deeds of heroism of the Company in the destruction of bridges, etc., and wished for special data in order Co refer to it in your Annual Report. We are now once for all in a boat, and must remain in it to the other bank."
    When the Transvaal Concessions Commission was sitting, they invited the Board of this Company in Amsterdam to send witnesses to give some account of themselves and explain what had been done, but from that day to this no answer has been received from the Board, and we must therefore assume that they agreed with the action of their manager in South Africa. Even the shareholders received the Report in silent acquiescence, and it was not till the war was nearly over that they ventured to intimate some doubts as to the wisdom of the course that had been followed. There is no doubt that the servants of this Railway Company openly aided and abetted belligerent operations against the British troops, and we have the right to exact the full penalty for this audacity. In justice to the taxpayer that penalty ought to be exacted, for no inconsiderable part of the cost of the war was due to the destruction of the communications by the Company's servants. I submit that the fact that there are foreign shareholders of the Company has nothing to do with the question. The point in question is, What is the damage that has been done to this country? And it is only right and fair that the people who did the damage should pay for it. I regret the long delays and correspondence which have taken place, because they suggest that this country is to get nothing in the end. This is the most flagrant case I have ever heard of; and if by any misfortune the penalty which is undoubtedly due is not exacted, then our leniency will be entirely misplaced and very much misunderstood.
    *LORD STANLEY OF ALDEELEYsaid the word "punish" in the noble Earl's Question was not in accord with the general amnesty which, though not proclaimed, had been virtually acted upon in South Africa. He took it that this Company was composed, not of Trans-vaalers, but of Dutchmen, and they had

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    a perfect right to do the best they could for their fellow countrymen in South Africa. The feelings of the Dutch had not been properly understood, because the history of the Boer War which had been most in circulation began in 1806 instead of in 1795; thus misleading by an error of eleven years. In 1795 the Duke of York, with a British army, was in the Low Countries in alliance with, and in support, of the Dutch against the French. He had always regarded the noble Earl who had asked this Question as a sensible and moderate Liberal-; and as the feeling of the country was that the Liberal Party in both Houses wanted strengthening, he hoped to -see the noble Earl join the Opposition, and in that way make the Opposition Benches less attenuated and more respectable.
    THE UNDER SECRETARY OF STATE FOR THE COLONIES (The EARL of ONSLOW): My Lords, the belligerent acts of the Company are admitted on all hands. At the time the war broke out the Company was paying a handsome dividend, and its shares stood at 230 or 240. As soon as the British troops occupied the country through which the railway ran, the railway was taken possession of by them. That itself is a serious penalty. The noble Earl said that there had been considerable delay in announcing the intentions of the Government. That delay hurts the shareholders much more than His Majesty's Government, because in the meanwhile the shareholders are not receiving a penny. The Transvaal Concessions Commission advised the Government that this concession ought not to be recognised; and His Majesty's Government thought that in that recommendation the Commission were perfectly correct. But the money invested by the railway was invested by different classes of persons. There were those who invested money on debenture. They had no voice in the management of the railway. Others invested in shares, and it was within their power to control the board of directors who sat at Amsterdam. It was in the power of the directors to dismiss their officers in South Africa. These two classes of investors ought to be treated very differently; and His Majesty's Government do not intend to allow the debenture-holders to suffer for action which they could not control.
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    But with regard to the shareholders, the concession not being recognised, the whole matter is entirely in the hands of His Majesty's Government, who are still considering what, if anything, should be done ex gratia, but hot of right, for those who have bonâ fide invested their money in the shares. The noble Earl may rest assured that the damage inflicted on the armies of the King will not be left out of consideration in any arrangement which may hereafter be come to ex gratia with the shareholders.

    CHINA—GENERAL POSITION — RUSSIA AND MANCHURIA—ANGLO-JAPAN ESE ALLIANCE — ANGLO-ITALIAN RELATIONS IN THE MEDITER RANEAN.
    *EARL SPENCERrose to ask the Secretary of State for Foreign Affairs to inform the Home as to the position of affairs in China since the return of the Chinese Court to Peking, especially in regard to—

    1. The Port of Neuchwang.

    2. The Northern Chinese railways in which the British interests are large.

    3. The arbitration as to land at Tientsin.

    4. The evacuation of Tientsin by the Allied Forces.

    5. The present position of Russia in regard to Manchuria.

    6. The payment of the Chinese indemnity, and whether the effect of the depreciation in silver has led to any alteration in the mode of paying the indemnity by gold.

    7. As to the position of this country and of other countries at Shanghai.

    8. Whether his attention has been called to the statement that great surprise has been caused in Japan by language used on behalf of the Government in another place respecting the Anglo-Japanese Treaty; and whether he is in a position to correct the misapprehension which appears to have been created.

    9. Whether he can make any statement as to the relations between this country and Italy in the Mediterranean.

    He said: My Lords, notwithstanding what was said a few minutes ago by the noble Lord near me (Lord Stanley of

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    Alderley), I hope the House will agree that I come from a respectable Bench, and am a respectable member of your Lordships' House. I have today followed the course which I have adopted before with regard to questions on foreign affairs; and I have set out at some length the points to which I hope the noble Marquess will refer. I shall follow the divisions of the subject as they appear on the Paper in the few remarks I intend to make. First of all I have referred to the port of Neuchwang. Now we have had that before us on previous occasions, and the noble Marquess has given us explanations about it. Your Lordships all know that this port is a very important one for British commerce. I believe I am right in saying that we have more trade and commerce with that port than almost any other nation. There have been various questions as to the government of this town and port. At one time it was almost wholly under the government of Russia. I should like to know how far a change has taken place in regard to this. As we all know, there has been a considerable change with regard to the influence and interference of Russia in China within the last few years. I should like very much to know whether the government of Neuchwang has been now made over again to China, and, at all events, whether that treaty port, which is of such importance to our commerce, has now the same advantages for us and other nations as it had before the disturbances which took place in China. Now there is a question with regard to the railroads in the north of China. That, too, has been the subject of considerable difficulty in that country, and has been made the subject of various discussions in Parliament. There are two railroads, which were, I believe, entirely under the control of the Chinese Government, in which English investors have very great interest indeed. These two railroads are the railroad to Shan-hai-kwan and the railroad between Tientsin and Shan-hai-kwan. At one time, I believe, the Russian Government had, for various reasons—probably strategical reasons— taken control chiefly of these railroads. There have been various appeals that the management of these railroads should be once more transferred to the Chinese Government, and that the interests of
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    this country should be respected on these railroads. I should be glad to know whether that has been carried out. We all know that, by arrangement between China and Russia, Russia was to be allowed, not complete control, but nearly complete control of the railroads north of the Great Wall. These railroads do not, go as far as that, and therefore I believe I have a right to ask whether any change-has taken place with regard to these great commercial undertakings. Then there was a very acute disturbance and controversy about certain lands, also, I believe, connected with some railroads, at Tientsin. The noble Marquess—either himself or the noble Marquess the late Prime Minister—dealt effectively with that and obtained redress for the British, who claimed possession of some of the land which had been taken over for various reasons by Russia. This question was at last referred to arbitration, and we do not know—at least, I am not aware—how far that arbitration has been settled. These are all questions more or less connected with Russia in the Par East.
    Of course the greatest question of all is the position of Russia in Manchuria. I hardly know how that stands now; but we have been told in the public Press that within the last few months considerable changes and modifications in the position of Russia have been made in that country. I have always felt, in regard to our policy with Russia in the East, that we have not been altogether fortunate in dealing with this matter. We heard long ago of the vast map of the East—that it was so large that we need not be afraid of Russia's a quiring an ice-free port in these seas. We have had various negotiations, and we have had more than once to oppose the policy of Russia in China But, unfortunately, it has seemed to me, we never looked forward sufficiently in our policy; and eventually we had on more than one occasion to withdraw our opposition; and then our agreement with Russia, instead of being a gracious and spontaneous one, came in a very different spirit from us. I should like to know in what position Russia is in regard to that country. We know that she has now a railroad connecting the eastern part of her great Empire with Manchuria and China, and it may be

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    that all she is doing now is to defend this railroad against any inroads of the Chinese. But we hardly know yet whether she has fulfilled what I believe was some assurance on her part that at a certain time she would relinquish once more to the Government of China this large and rich province.
    Now there is another matter which we have discussed in this House, and we have had some very interesting statements from the noble Marquess on the subject. I refer to the financial position of China. We all know what an important part the tax known as the likin tax plays in that country. We have heard from the noble Marquess, if I am not wrong in saying so, that he hoped to get some large concession from the Chinese Government about this tax. Of course likin applies to the internal government of the country as well as to foreigners and to Customs. Probably if we had our way we should say it is as much in the interests of China and of the large population there as in the interests of those who are trading with China that this duty, both internal and external, should, if not altogether done away with, be greatly modified. At the same time, we know there are serious difficulties with regard to it. If the public Press is correct, there have been a great many changes of policy on that matter; but, so far as I can gather now, we are still pressing for the reduction of this likin on Customs, but we have been obliged almost entirely to relinquish our pressure with regard to the likin in the internal parts of China. No doubt the noble Marquess will be able to tell us something about that. It is a very important thing; for the financial position of this great country is of the utmost value to all those trading with her, as well as to the enormous population over which she rules.
    But I have rather diverted from the actual list of my questions. I ought to come to the question of the Chinese indemnity. We and other nations had a most absolute right to demand serious indemnity from China for the serious outrages that took place in that country both on persons and on property belonging to foreign subjects. The indemnity was settled after very considerable difficulty; but I am afraid lately a very serious addition to the difficulty has
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    occurred owing to the great depreciation in silver. The indemnity was to be in gold; but almost all the transactions of China are in silver, and that is the current coin in that country. If that be so, the great depreciation in silver has had a very serious effect on China with regard to the payment of the indemnity. It has added, no doubt, greatly to the difficulty which that country has in paying the indemnity; and it is a matter of great interest to know whether, in regard to the future financial position of that country, which is of such great importance to us and to the other countries of the world—whether anything has been done to try to meet, temporarily or permanently, this great additional burden on China. I am not going to refer, except in passing, to what has been often discussed—namely, our position in the Yang-tsze region. That is the region which has been rather marked out by agreements—and, if not by agreements, by understandings—between us and other countries for the influence of this country. I shall not dwell upon that, although I think a great deal might be said as to our position with regard to Germany in that region. But I should like to know, as there has been a great deal of observation about it, whether any difficulty has arisen at Shanghai between us and other Powers. Shanghai is one of the most important places with regard to commerce in the Eastern seas. It is a place where we have had a very great, if not a predominant, influence. But, as far as I know there is no reason whatever why other nations should not occupy a position of great influence there as well as ourselves; and I therefore do not quite understand the extreme jealousy that has existed with regard to the increasing influence of other countries in Shanghai. Perhaps the noble Marquess will tell us something about it.
    Before I leave the question of China, I should rather like to say this. I do not say it with special reference to the noble Marquess and his administration of foreign affairs, but I cannot help thinking that of late years our whole policy in the East and in China has been wanting in foresight. We have had a policy rather of going from hand to mouth; a policy of the moment. We have not looked forward

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    sufficiently, and we have not made up our minds clearly as to exactly what we should do. The consequence of that has been that there has been considerable vacilliation, and from time to time our policy has been abruptly and suddenly altered. What has happened in regard to Port Arthur and Wei-Hai-Wei, I think, indicates want of consistency and firmness in the policy and intentions of His Majesty's Government. I will merely say that I sincerely trust the noble Marquess and His Majesty's Government are following a stronger and better course than that I have indicated. They may deny that their previous conduct has been characterised by want of decision; but I cannot help hoping that they have a clear and distinct policy before them, and will carry it out not only with regard to the interests of this country, but in harmony with other nations.
    I have an important question to ask as to Japan. It is not long ago that we all heard with great pleasure of the good understanding and the treaty which the noble Marquess concluded with Japan. Some of us may have doubted whether the actual treaty was necessary, though I am sure all of us, and anybody who knew Japan and the East, welcomed this proof that we were trying to encourage arid cement good feeling with that country. Nothing that has occurred since has altered that feeling. I think the feeling has been strengthened, and I think that almost every body rejoices that this treaty has been carried out. It has I hope been conducive to good results in the East. Not very long ago in another place some discussion took place upon it; and I cannot help thinking that there was some misunderstanding with regard to some words which possibly dropped out, and which certainly were not intended to have the purport which was given to them. They were words used by an important member of the Government, and some people thought the terms used were somewhat arrogant. I cannot help thinking that there was a misunderstanding about this, and there was no such intention on the part of His Majesty's Government. At the same time considerable attention was called to these words. Those gentlemen who are often very well
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    informed—sometimes we think almost better informed than His Majesty's Government—drew attention to them and stated that they had produced in Japan a very bad impression. It was on that account, in order to give an opportunity for explanations, that I included this question among those which I have put.
    I now come to my last point. It is a very important one, and yet I do not think that we need have any anxiety with regard to it. A good deal of discussion has occurred within the last few weeks with regard to Italy and our relations with that country. A good deal of unnecessary anxiety has been shown with regard to this matter. That anxiety arose in consequence of a rumour, which I believe to be true, that the Italian Government had come to some direct friendly relations with France. I feel sure that your lordships will agree that it is in our interests to be on the most friendly terms with France; I hope we are so at the present moment. But I cannot see why if Italy, with whom we have always had the very closest sympathy and alliance, draws nearer to France, we should feel any anxiety or jealousy whatsoever. It seems to me that the closer France is drawn to her nearest neighbour, Italy, the better security there is for there not being any trouble in the Mediterranean. I am quite sure your Lordships will agree with me that there is no country in the world to whom our sympathies are drawn more closely than to Italy. I therefore hardly understand the anxiety which is felt on this matter. I hope the noble Marquess will be able to give an assurance, which we shall all welcome, that there need be no anxiety in this country with regard to our foreign relations with any Power in the Mediterranean. I now ask the questions of which I have given notice.
    THE SECRETARY OF STATE FOR FOREIGN AFFAIRS (The MARQUESS of LANSDOWNE): My Lords, the noble Earl began his statement by a few words in justification of the form of the Questions on the Paper. Perhaps he will allow me to say that if any Member of your Lordships' House is a gainer by the detail with

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    which lie has worded his notice, I am that Member. It was thoughtful of him to give me so plain an indication of the points on which ho desired information. I will take first the noble Lord's question with regard to the port of Neuchwang and the Northern Chinese railways, in which, as ho truly says, this country is largely interested. The northern railways may be conveniently dealt within two parts. There are those lines which are within the Great Wall and those which are without it. With regard to the extra-mural part of the northern railways, and in regard to the town of Niu-chwang, the importance of which the noble Lord certainly did not overrate, we have to consider how matters stand in consequence of that convention between Russia and China to which the noble Earl referred, and which was signed in April of the present year. Under that convention Russia undertakes the restoration of the province of Manchuria to the Chinese Government, that it shall remain an integral part of the Chinese Empire, and that the Chinese authorities are to exercise within the province the powers of administration which they possessed before it was occupied by the Russian troops. That is qualified by an intimation that the evacuation of Manchuria is to take place by three successive instalments. In the first six months after the signature of the convention, the Russian troops are to evacuate the south-west part of the province of Mukden, and they are to restore the railways within that part of the province to the Chinese Government. In the following six months the Russian troops are to retire from the remaining part of Mukden and the province of Kirin. The remainder of the withdrawals are to take place in the third period of six months. We gather from that that the extra-mural line will be surrendered by the Russian authorities within the first six months, which I presume will run from the month of April this year, and that the city of Neuchwang will probably be restored to the Chinese in the second period, although I may perhaps add that from intimations which have been made by the Russian Government, we infer that they will be disposed to restore Neuchwang at the same time as he city of Tientsint is restored to the Chinese Government.
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    The intra-mural portion of the railways, your Lordships will recollect, was handed over by the Russians to the Germans and by the Germans to us, and it is at this moment in our occupation; but we have never desired to retain it a day longer than was necessary, and we are at this moment fully prepared to hand it over to the Chinese Railway Administration. But in common prudence we must before we do so be satisfied that sufficient arrangements are made and sufficient precautions taken to safeguard the large British financial interests in the line, and also to secure it as a means of communication between Peking and the sea. It seems to us absolutely necessary that for that purpose some arrangements should be made for establishing contact between the military authorities and the authorities who have the management of the railway. I am able to say that some time ago agreements were signed between representatives of His Majesty's Government and the Chinese authorities which seemed to us to provide adequately for the precautions the necessity of which I have indicated. A difficulty has arisen at the last moment, not between us and the Chinese, but between the Chinese and another Power; and that has for the moment prevented the completion of the transaction. Until these difficulties are removed we are obliged to remain in military occupation of the line. But I am glad to be able to add that, so far as I can foresee, those difficulties are not likely to prove of a very serious character, and we may look forward to being able at an early date to replace the line in the hands of the Chinese.
    Then the noble Earl questioned me with regard to Tientsin; and again in relation to Tientsin I have to say that it has for a long time past been our earnest desire that the provisional Government established there should be brought to an end, and the Government of the city again placed in the hands of the Chinese. But in this case also it was necessary for us to make some preliminary arrangements. Your Lordships well recollect the important strategical position which Tientsin occupies between Peking and the sea-board, and your Lordships also remember that it was part of the arrangement arrived at: with the other Powers that a military

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    garrison should, for some time at all events, be left at Tientsin. The question of these precautionary arrangements was therefore primarily a military question, and as such we referred it to the commanding officers of the international contingents. These military authorities presented us with a scheme, of which I desire to speak with the utmost respect, but of which I have to say that it seemed to us rather too military in character arid to have not quite sufficient regard for political as distinguished from purely military considerations. At any rate, we have given instructions for the revision of the scheme; and I am glad to be able to tell your Lordships that it has been redrafted, that it has been considerably modified in directions favourable to the Chinese, and that the modified version has been accepted by the other four Powers interested in the provisional Government. We have, moreover, every reason to believe that it will be accepted by China also. I ought to say that the original scheme contained stipulations that Chinese troops should be excluded from a very large area indeed in the neighbourhood of Tientsin, an area which we thought unreasonably large, and that the new scheme provides that the area of exclusion shall be about one-twentieth of the size of the original area. We have also obtained the elimination of a Clause under which it was to be a part of the contract that the Powers were to insist on the carrying out of certain concessions which, it appears, had been promised by the provisional Government, and which it seemed to us it was scarcely necessary to insist upon in an arrangement of this kind. We hope that under this new arrangement the city of Teintsin may be restored to the Chinese authorities in three or four weeks.
    The noble Earl spoke of another matter concerning the city of Tientsin— I mean the dispute which arose there last year with regard to certain plots of land within the Russian concession in which British interests were involved. The noble Earl is quite correct. We have always held that this was a dispute which could be properly settled only by arbitration. The Russian Government has agreed to that. Each
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    side has appointed its own representative; they have accepted an arbitrator and the terms of reference, which seen to me eminently reasonable and with which I need not trouble the House have been agreed upon. It was expected that the first sitting of the tribunal would lake place in the early days of the present month.
    The noble Earl asks a question will regard to the present position of Russia in reference to Manchuria. I have already touched to some extent upon that point. All that I need add is that the Convention which I have quoted ha; been published, and we have every hope that it may be given effect to in due time. So far as we can see, the provisions which it contains are not of an unreason able kind or more extreme than might naturally be resorted to for the purpose of preventing a recrudescence of the terrible disorders which at one time prevailed in the province.
    Then the noble Earl called attention to the question of the Chinese indemnity. That is a matter which has given us not a little anxiety. I may say that the first instalment of the indemnity has already been paid, and we have thought it right to earmark our share of it for the purpose of satisfying the claims of those unfortunate persons who lost relatives during the late disorders, and also to settle the claims of the smaller claimants, who presumably stand in greater need of receiving the money; and, in order to give priority to these claims, we agreed to postpone for the present the claims of the Government. The noble Earl called attention to the effect produced upon the Chinese liability by the recent heavy fall in exchange. The sum total of the indemnity was, as your Lordships recollect, expressed in taels, but it was clearly laid down in the Protocol of 1901 that it was to be a gold debt. The idea of the Powers was that, if any one was to run a risk on account of the possibility of a fall in exchange, that risk should fall upon China, and not upon the Powers. Since that time the gold value of the tael has fallen from about 3s. to something a little over half-a-crown, and I need scarcely point out what a serious addition that involves to the indebtedness of China. I do not think I should be

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    far wrong if I said that it moans an addition of something like ninety millions of taels to the total amount of the obligations which China has incurred.
    My Lords, our feeling towards the Chinese, although we have been justly indignant at their conduct, has never been one of vindictiveness, and we have never sought to punish them for their misdoings by imposing on them a sacrifice so heavy that the country would be unable to bear it. In these circumstances we have thought it proper to propose to the other Powers that we should agree to some mitigation of our demands on the Chinese Government. The form which we proposed that this mitigation should take was this—that we should agree to accept during the first eight years a sum in taels not greater than that which would have been due to us had the tael remained at the gold value at which it stood at the time of the Protocol. I gather that our proposal did not, when it was first put before the other Powers, receive much encouragement. I believe, however, that we stand by no means alone in the desire to give the Chinese Government some relief of this kind. There may be a difference as to the most proper way of affording such relief, but the object which several of the Powers, and notably the United States, have in view is, I believe, the same. I hope your Lordships will not differ from me when I say that the case is one in which it seems to me we ought to strain every effort to act with the other Powers, and for this reason. In the first place the relief to China will obviously be very much greater if it is afforded not by one or two Powers but by the whole of the Powers concerned. Again, it would certainly not be fair that we should bear the burden of this sacrifice and that no share should be taken by any one else. In this as in other cases I hold strongly that we should, not each of us to play for our own hand, but that we should, by the frankest and most confidential exchange of ideas, endeavour to arrive at a common policy and a common mode of giving effect to it.
    The noble Earl referred to the position of affairs as affecting this country and other countries at Shanghai. He asked me whether we had encountered any difficulties at that place with other Powers. I am not aware of any such
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    difficulties. There are at present four Powers represented at Shanghai. We have a small force there, and the Germans, the French, and the Japanese have each one, but I have not heard of any friction of the kind to which the noble Earl refers. The mention of Shanghai leads me, however, to refer—indeed, I could hardly avoid doing so—to a matter in which Shanghai figures largely. I mean the negotiations which are now proceeding there under the guidance of Sir James Mackay. Your Lordships will remember that under the 11th Article of the Protocol it is provided that China should make certain arrangements for the facilitation of commerce between herself and other Powers, and for some time past Sir James Mackay has been endeavouring to arrive at an understanding with the Chinese Government upon this most important subject. He has had a task of enormous difficulty; he has had to deal with an immense number of very complex points; he has had to be constantly vigilant for fear that any concession which he might make might prejudicially affect the commercial interests of this country; and I am afraid that his difficulties have been aggravated not a little by the dilatory methods which we know are not unusual in Chinese diplomacy. I am glad to say, however, that Sir James Mackay has been able to report a very considerable amount of progress. He has, moreover, lately taken what I must say appears to me a most judicious and commendable step; he has gone with the Chinese Commissioner Sheng to Plan-kau, and he has been in direct personal consultation with the two Viceroys there. The result of the negotiations has already been hopeful.
    Sir James has reported in the last few days that he has been able to arrive at an agreement upon Clauses relating to the following subjects:—The protection of trade marks, the extension of the system of bonded warehouses, the improvement of the Canton and Yang-tsze River approaches—a very important matter—the equalisation of the duties upon goods carried in junks and those carried upon steamers—the discrimination between which had operated very adversely upon our trade—the speedier issue of drawback certificates, and

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    the recognition of the obligations of Chinese shareholders in British companies. What used to happen was that Chinese investors took shares in British companies, and then, when calls were made upon them, absolutely ignored the intimation they received, the state of the Chinese law being such that it was impossible to obtain redress before the Chinese tribunals. This was a point which the commercial community felt most deeply. In addition to that, Sir James Mackay has arrived at a general agreement with regard to a Clause for the establishment of a national currency which would be the only legal tender for the payment of taxes and duties. Those of your Lordships who have any idea of the present condition of the Chinese coinage, which, I believe, consists in great part of uncoined masses of silver of different size and different fineness, will be able to appreciate how greatly the interests of the country are likely to be advanced if its coinage is placed on a more satisfactory basis. Besides that there is a satisfactory Clause with regard to mining regulations on the model of the Indian mining regulations.
    Of course, what overshadows all other points in regard to these commercial matters is the question of likin. We had always hoped that we should be able to remove the great part, at all events, of the abuses which surround the likin system, and your Lordships may recollect that during the Pekin negotiations we absolutely refused to agree to any enhancement of the Customs tariff except upon the condition that these abuses should be, to some extent at all events, mitigated. We have had many schemes proposed to us, and we have found great difficulty in discovering anything that promised to be capable of satisfactory application. We have always been face to face with these two difficulties—in the first place, if we agreed to an increase of the Customs duties as a consideration for the reform of the likin, are we perfectly certain that we should not have to submit to the sacrifice and yet find that the old abuses in some insidious shape or another still survived? That is one point. The other is this—that the provincial authorities in China, who play such a large part in their political system, depend upon the income derived
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    from these internal duties for the financial resources of their provinces; and we have to be extremely careful that we do not bring about some arrangement under which the provincial governors would find themselves absolutely denuded of their source of income.
    Within the last few hours, I may say, I have received from Sir James Mackay a proposal which we have not yet had time to examine with the care it demands, but which at first sight seems to us to promise a basis for an arrangement which shall not be open to the objections I have indicated, and which may be the means of giving a very much extended scope and greater facilities to our commerce in the Far East. I need not say that we shall make it our business before we accept a scheme of the kind to consult the best commercial authorities available.
    The noble Earl animadverted upon what ho described as the failure of the Government to maintain a continuous policy in dealing with Chinese affairs. I do not know that we are open to that charge, and I think I can describe in a few words what I believe has been our policy, and what seems to me should be our policy, in dealing with China. I think we ought to avoid any measures tending towards the partition of the Chinese Empire. I think we ought to avoid any steps tending to place her Government in the tutelage of any foreign Power. I think we should spare no pains to obtain the utmost freedom for our commerce and for the commerce of the world in the Chinese Empire. And I think we should endeavour to do these things so far as possible in close concert with other Powers interested in the Far East.
    The noble Earl has called attention to a statement made by my noble friend, Lord Cranborne, in another place in regard to the Anglo-Japanese Alliance. Let me, before I go on, thank the noble Earl for the words of approval with regard to that alliance which fell from him. The expression to which the noble Earl referred was used by my noble friend in the course of a long debate, during which he replied to a great number of criticisms of very various kinds. Among those criticisms two have been conspicuous. It has been

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    suggested that we were in a position of such dangerous isolation that we were obligel to sue for alliances, and that we went to Japan and asked for such an alliance. The other suggestion was that the Anglo-Japanese Alliance was a very good thing in its way, but that we should have had it long ago, and that we might have had it for the asking. Now, Lord Cranborne's speech was directed to those suggestions. He insisted very distinctly, in the first place, that we had not been suppliants for the Japanese or any other alliance, and in the next place, that when there is any question of an alliance between two Powers dealing on equal terms, it is not open to one of the Powers to go to the other and ask at any moment for an alliance, but that there must be negotiations, and that the appropriate moment for concluding a contract of the kind is when both Powers have compared their views and ascertained what interests are common to them, and are both ready to embody those interests in a pact of a binding character. Those sentiments, may be discovered in the speech my noble friend delivered in the House of Commons and in the statements I have made to your Lordships here, and we do not recede from them, If there was any ambiguity in his words, that ambiguity was removed by an answer given on the following day by the present Prime Minister, who explained that nothing was further from our thoughts than to suggest that the Anglo-Japanese Agreement was not made on terms of absolute equality between the two Powers concerned. The noble Earl seems to be under the impression that my noble friend's statement occasioned great perturbation in Japan. I am rather inclined to think it created more perturbation in this country than in Japan.
    EARL SPENCER: I was quoting from a paragraph, dated July 9, telegraphed from Japan to a leading journal.
    THE MARQUESS OF LANSDOWNE: Since the noble Earl put this Question on the Paper I have made inquiries, and am quite satisfied that, if any uneasiness was occasioned by the very
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    condensed reports which, no doubt, were telegraphed from this country to Japan, that uneasiness has been completely dispelled.
    It remains for me to say a few words in regard to the question as to the relations between this country and Italy in the Mediterranean. I could answer the noble Earl's Question almost in a single sentence by saying that I believe those relations to be of the most cordial and friendly character. I have heard it said that this country, if it has gained an alliance with Japan, has, either by its own remissness, or owing to the machinations of other Powers, lost an alliance with Italy. My Lords, I am bound to state to your Lordships that there never was, as far as I am aware, an alliance between this country and Italy of the same character as the alliance which now exists between this country and Japan. It is quite true that in 1887 there was an. exchange of views between the Governments of the two countries— an exchange of views which established the fact that those views on the question of Mediterranean policy were identical, or, at any rate, closely resembled one another. Both countries desired the maintenance of the status quo in the Mediterranean and the adjoining seas. Both of us desired that there should be no encroachment upon the independence of the territories on the Mediterranean seaboard, and both of us desired that our diplomacy should be directed, to those objects, and that, should the occasion arise, we might be found co-operating for the purpose of maintaining those interests. But that expression of policy was certainly not embodied in any treaty or communicated to Parliament as the Anglo-Japanese Agreement was. Its value lay not in the engagements assumed, but in the fact that it contained a re-affirmation of our traditional friendship with Italy and a re-affirmation of the common policy of the two countries. My Lords, from that declaration of policy we, at any rate, have never receded. We are ready today to re-affirm, the same principles—to re-affirm our friendship for Italy, our desire that the status quo in the Mediterranean shall not be disturbed, and

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    our hope that, should it ever be disturbed, we may find ourselves acting in co-operation with Italy.
    But what seems to me more important than any diplomatic documents of the kind described is the actual condition of our relations with the Italian Government. I say that I am not able to discern any single point at which our relations with Italy as matters now stand are likely to be affected. We had, it is true, a short time go one or two, I will not say differences, but one or two matters which required a certain diplomatic adjustment. There was the use of the Italian language in Malta. That has been satisfactorily disposed of. Then we had a question of boundaries where the British, Italian, and Abyssinian frontiers meet. That is a difficulty which, I think, was due more to our ignorance of the geographical features of the country concerned than to any other cause. It is a remote region, and consequently we found that there was a conflict of evidence as to the precise position of particular localities; but that question has also been satisfactorily disposed of. Finally—and perhaps this is the most serious matter of the three— there was the question of Tripoli. In 1899 my predecessor came to an agreement with the French Government under which a line which was to run in a southeasterly direction below Tripoli was laid down as the division between the French and British spheres of influence. I dwell upon the fact that the line then laid down was not a line of partition. It did not imply that we on one side and the French on the other claimed as our own the territory to the east and west of the line. What it did imply, and what we accepted, was that this line was one which in no circumstances either we or France should pass over, either eastward or westward as the case might be. Undoubtedly, the effect of this agreement was to create some misgivings in the minds of the Italian Government. They thought that they detected in it an intention on our part to disturb the status quo on the littoral of the Mediterranean. We have had explanations with them on this point, and they have also had explanations with the French Government. Both the French and the British
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    Governments have been able to give I them assurances which have been entirely satisfactory to them, assurances to the effect that the acceptance of the line in question did not indicate any aggressive tendencies in the direction of the shores of the Mediterranean.
    I may say that in giving such an I assurance on the part of His Majesty's Government we were careful to add that what we most desired was that there should be no departure from our well-known conventional obligations, among which stands in the first rank the desire that the existing condition of things in the Mediterranean should not be disturbed. That assurance was readily accepted by the Italian Government. If I wanted further evidence to show that our relations at this moment are certainly of a friendly character, I would refer to the fact that we are now receiving support from the Italian Government in the somewhat difficult operations which are ! proceeding at this moment on the Somali-land coast. An Italian officer accompanies the British force, and Italian ships of war are endeavouring to put a stop to the nefarious traffic in arms which prevails so much in these waters ! and which so greatly adds to our difficulties. I wish, in conclusion, to express my concurrence with what was said by the noble Earl with regard to the recent understanding which has been arrived at between Italy and France. I feel with him that that is not a matter which need occasion us any misgiving. It has been represented sometimes as an aggravation of our misfortunes that we have driven Italy into the arms of France. I refuse altogether to admit the correctness of that description. On the contrary, I say that we regard it as perfectly natural that Italy should desire to stand well with her powerful neighbour. We regard it as natural, considering her geographical position and her commercial requirements, that she should wish to be on terms of friendship with her French neighbour; and as for us, desiring, as we do, that she should prosper and that her international position should be as secure as possible, we should be the last to complain if by means of such an arrangement as she has arrived at she has improved and strengthened that international position. I shall sum up with

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    regard to Italy by saying that there is no Power with which we desire to be on more cordial and friendly terms; and, so far as I am aware, there is 110 Power with which we are on more cordial and friendly terms than we are with Italy at the present moment.
    House adjourned at ten minutes past Six o'clock to Monday next, a quarter past Four o'clock.