573
does not provide for what is to be done in the event of the Loan prov
ing insufficient, and in this case it is not only the completion of
the line which has to be provided for but also the provision of the
working Capital from time to time and for improvements. Therefore
as they view the situation at present they think two millions should
be provided for, but of course they would not think of issuing it
all in the first instance. Another point which may or may not be
worthy of consideration is the probability that the Chinese would
value their proposed partnership with Hongkong more highly and prove
aasier to work with hereafter if they found from a short experience
that their own section of the railway was by itself unprofitable.
With regard to Section 16, this is a clause on which I antici.
pate much discussion. Our own experience however in dealing with
Chinese Officials is to ask for more than we expect to get, so 28
to leave a margin for concessions later on, and possibly the Colon-
ial Office in passing this clause held somewhat similar views.
I have wired to Hongkong for the Engineer's report on the pro- posed line, and it should reach me within the next ten days, mean-
while I am engaged on the short summaries of the Loan Agreement and
Schedule, which I must confess I do not find as easy a matter as I
anticipated.
Yours truly,
C. H. ROSS.