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not do well and the increase of dock accommodation in the Far East promises severer_com- petition in the future. As regards other industrial undertakings, though there was no heavy fall, only in a few unimportant instances was there any advance on the value of shares at the end of the preceding year.
The maintenance of existing and the creation of new industrial undertakings are be- coming a matter of very great importance to the Colony, threatened as it is by serious com- petition from other places in some of its principal sources of wealth in the past. A satisfac- tory feature of the year was therefore the initiation of arrangements to start one such new enterprise in the New Territories; a flour mill on a large scale is in course of construction at a favourable site in Junk Bay and is to be combined with an extensive farm for the rearing of pigs on the refuse material. Serious attempts to prospect for metals in those Territories were also put in hand during the year. If these prove the existence of minerals in quantities that will pay for their extraction the future development of the Territories will be greatly
assisted.
Various projects that have been mooted for the construction of railways to ports on the mainland of South China have maintained and enhanced the desire of Hongkong to have as soon as possible a trunk line through that country with a terminus in the Colony.
An opportunity occurred during the year of getting rid of the foreign control of the projected railway from Canton to Hankow on which no progress was being made and which it was feared would under such control neither advance British or Chinese interests or the interests of Hongkong. On the 6th October with the approval of H.M.'s Government and under sanction of an Imperial decree the Government of Hongkong lent and the Viceroy of the Hu Kuang Provinces borrowed a sum of £1,100,000, repayable in 10 annual instal- ments. The security for the loan was the opium revenue of Hupei, Hunan and Kwangtung and the interest on it 4% payable half-yearly. The money was advanced to Hongkong by the Crown Agents at Bank rate-then 4%-and on being paid over to the Chinese Ambas- sador at Washington was at once utilized to redeem the Canton-Hankow railway concession from the various persons who had acquired interests in it from the original concessionaires. With the object of raising a loan to repay the Crown Agents' advance and at the same time to provide funds for the British section of the Canton-Kowloon railway and to meet other railway needs that might arise an Ordinance (No. 11 of 1905) was passed on the 16th October to empower the Governor to raise as occasion required loans not exceeding two mil- lion pounds in all. No loan was however raised before the end of the year.
Throughout the year attempts were being made in conjunction with H. M.'s Minister at Peking to get the Chinese authorities and particularly the Viceroy of the Liang Kuang Pro- ces to negotiate arrangements for the construction and subsequent working of the Chinese tion of the proposed Canton-Kowloon railway on the basis of Loan and Joint Working eements which had been drafted by the British and Chinese Corporation in consultation n the Colonial Office in London. These attempts had not succeeded at the close of the
year.
In the meantime, however, the Hongkong Government with the approval of the Legis- ative Council, expressed at a meeting on the 21st September, decided that the British section of the line should be put in hand without waiting for the conclusion of the negotiations with regard to the Chinese section. By that date a preliminary survey and estimate of alternative routes had been completed by Mr. J. C. BRUCE, an engineer who had been sent from Eng- 'and for the purpose and had arrived in the Colony on the 16th June, and a route 21 miles n length, which passed through the Kowloon hills by a low level tunnel 2,460 yards long, long the west shore of Tide Cove and South shore of Tolo Harbour and by the villages of` Tai Po, Ha Wai, Fan Ling and Sheung Shui to the Sham Chün River near the Lo Fu ferry, ad been selected as the most economical both as regards construction and working expenses nd as best answering the requirements of a section of a trunk line through China.
Pending the completion of the final survey it was decided to commence throwing up ie bank as soon as the centre line was located along the part of the line, 7 miles in length, hich traverses the low-lying ground north of Tai Po. The negotiations and clerical work volved in the resumption of the large number of small padi fields required before construc- on could be started was expeditiously carried out by Mr. C. CLEMENTI, the Assistant Land fficer, and the first sod was turned on December 9th. The decision to use labour supplied the elders of the surrounding villages for the earthwork was found, as had been antici- ted, to obviate local difficulties arising from removal of graves, "feng shui" prejudices,