CONFIDENTIAL.
Government House, Hongkong, 15th January, 1904.
FOR USE IN
COLONIAL OFFICE
No. 88
I have the honour to transmit for your consideration the enclosed copy of the heads of a discussion which I recently had with the Chief Manager of the Hongkong and Shanghai Banking Corporation, on the subject of a proposal that the Hongkong Government should guarantee the payment of interest on the capital subscribed for the construction of the Railway from Canton to Hongkong.
2. Mr. Smith's reason for making the proposal is that there is difficulty in raising money in London on the guarantee of China alone. If there were an additional guarantee behind that of China by this Colony or the Imperial Government, the money, which after all is a comparatively small sum, could be raised and the line constructed at once.
3. I have already in my Despatch No. 577 of the 17th ultimo expressed the opinion that the realisation of the scheme of connecting Hongkong with Canton by a Railway is of pressing importance to the interests of this Colony. I would here particularise one consideration. Last year, I regret to say, more than one rich Chinese Merchant resident here removed their families to the neighbouring Colony of Macao where Sanitary measures are less irksome and Chinese family life enjoys
THE RIGHT HONOURABLE
ALFRED LYTTELTON, K.C., M.P.,
&c., &c.
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