507
$1
in any circumstances to be completed. It appeared to us therefore that by issuing the new Loan as an addition to the existing line of Stock and by subsequently making use of the power of paying off the Loan to which I have referred the risks of the Colony and the period within which its debt would be unnecessarily inflated could be brought within comparatively narrow limits and that this
could be effected by the further arrangement which I now proceed to explain.
6. We propose that the whole of the monies received from the Chinese Viceroy on account of his debt to the Colony, whether in respect of interest or repayment of principal, shall be remitted to us from the Colony and be paid into a special fund to be under our control, and that this fund shall be administered in the following manner:
(1) The payment of the interest required for the Stock raised to provide the £1,100,000 to be the first charge on the fund.
(2) The monies required for building the Colonial section of the Kowloon Canton Railway estimated to cost $500,000 to be provided out of the fund, the Colony paying into the fund interest, at the rate of its public debt on the amount of all advances so made.
(3) All further monies remaining in the fund including the interest earned on monies in the fund to be considered as being earmarked towards paying off the debt created to provide the £1,100,000.
7. If this proposal is carried into effect we estimate that there should be in the fund in April 1918 a sum of about £700,000 which could be applied towards liquidating the Stock created to provide the £1,100,000 and this sum together with the further sum of about £100,000 which will