Mr. Lucas,
I saw Mr. Keswick this afternoon and discussed with him the draft proposal for a guarantee from the Hong Kong Government to the British and Chinese Corporation, Limited, for a railway from Kowloon to Canton.
I pointed out to him that for political reasons it would probably be considered undesirable that the Colonial Government of Hong Kong should acquire land and rights to construct and work a railway within Chinese territory, and also that it would be scarcely possible for that Government to give a guarantee for the part of the Kowloon-Canton line which would be outside its own jurisdiction. It would be far better from my point of view if this part were constructed under the original agreement with the Chinese Government.
Mr. Keswick pointed out that there would be inconvenience in the working of a line partly under Chinese and partly under British administration, but that there would be no insuperable difficulty to such working, though it would involve some modification of the original agreement with the Chinese Government so as to secure more British control. I said that no doubt the Colonial Office would, through the Foreign Office, assist the Corporation to secure this modification.
I also said that in view of the present state of the revenue and expenditure of Hong Kong, the Colonial Government could not go to the expense of purchasing land in the New Territory to hand over to the Corporation for the construction of the railway, but that the proposal