289
the friendliness shown by the Chinese Government in granting them a loan of the territory adjoining Hongkong, and they see no arrangement so effective as the one now proposed for carrying out their pledges as to facilitating the collection of the Customs Revenue and preventing smuggling.
With regard to the statement in the telegram from the Yamen that in the Convention for the extension of Hongkong it is especially stipulated that within the city of Kowloon the Chinese Officials now stationed there shall continue to exercise jurisdiction, I have to observe that the reference to Kowloon City in the Convention does not appear to have special bearing on the Customs question, and that the Customs Station is apparently outside the city.
Mr Pauncefote's Government consider that there are grave objections to the maintenance of the Chinese Customs Stations in territory under British administration and to the patrolling of the coasts of that territory by Chinese Cruisers. Such an arrangement would be likely to lead to friction between
the