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of the Hankow-Canton Section is therefore a direct loss to
Hongkong and moreover owing to the growing opposition in
China to foreign intervention in railway construction or
finance, is daily increasing the difficulties of the
position. In such circumstances it would seem that this
Colony owing to the favoured position it had secured by
lending the money for the redemption of the line, should
rightly be able to exercise the option of making a further
loan to give effect to the objects only partially secured
by the first. The right to exercise such an option appears,
however, to have been taken from it by the pledge given by
His Majesty's Government to support French participation.
With regard to (b). French control
in the line even though the Chairman be British is
entirely opposed to the interests of this Colony. This
was so fully recognised by Your Lordship's predecessor
that I need not enter into details.
(c). Nor is it, I think, necessary
for me to point out that any incentive to French influence
in the Liang Kwang Provinces would be viewed as disastrous
to British interests in South China and to the interests of
Hongkong in particular: while with regard to the feeling
of the Chinese in this matter, I would remind Your Lord-
-ship