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proposal to provide free land already in the possession of the Colonial Government would be considered.
I further pointed out that it would not be possible for the Colonial Government to pay interest on issued capital during the period of construction, when practically no revenue would be accruing, which period Mr. Keswick estimated at 4 years. He then said that this would necessitate the amount of the interest being provided for, out of the capital raised, and that the Company would require some legislative authority to pay interest out of this enhanced capital.
He told me that the cost of the line, of which the length, according to the flying survey, was 115 miles, exclusive of any branch to Walchow was estimated at a million and a half sterling and that the proportion of this required for the line within Hong Kong New Territory was something like £900,000. I then said that the guarantee of interest at the rate of 3 per cent, that is, of the amount to make up the excess of receipts over expenditure, to £30,000 per annum, would be considered and that the Colony would probably prefer to guarantee rather more than this amount to cover a greater capital than agree to pay interest during construction. I also pointed out that in no case could the Colony make itself liable to pay anything in addition to the full amount of their guarantee of interest to cover excess of cost of working expenses over profits should the line not pay its expenses, and Mr. Keswick said that it was distinctly understood that in no case should the Colony be called upon to pay anything in excess of the 3 per cent on the issued capital.
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