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matter the Secretary of State has lost sight of the fact that
the Loan Agreement atipulates that "the line shall be bullt
and equipped in accordance with the best modern system" (Article
2) and the Engineer-in-Chief is responsible for its "efficient
construction" (Article 6). Emphasis is laid on the fact that as
the Railway itself forms the lat. mortgage security of the
and
British/Chinese Corporation it is essential to their interests
that it should be thoroughly officient. That they will safe-
-guard those interests is the guarantee to this Government. As
regards a change of gauge, I should maintain that such an act
would be a violation of Article 18 which plodges the Chinese to
the Joint Working of the two lines as two sections of the same
line. It will moreover hå essential to their interests that
their line should have access to the sea. In the natter of
efficient and economical construction, I have every confidence
in the Chief Resident Engineer, Kr. Grove, Hitherto at any rate
he has received support from his colleague, Ar. Wei Yun, and I
have no reason to think that the Chinese Authorities are
inclined to interfere with his technical work, or to bring
pressure to bear upon him to make it of a less efficient
character.
wah or eutha
8.
There is, however, a danger which appears to
me to be of a more tangible and real character. The Chinese
Government are offering what appear to be exorbitant prices
for the land required. In this connection I enclose a Memorandum
regarding the rates offered in the British and Chinese Sections
respectively. Since it is alleged that the peasants refuse even
thone offers it is conceivable that they may be increased or
purchase indofinitely postponed and since all land has to be
paid for out of the Loan, the contingency is not remote that the
available capital would be insufficient for the completion of
the construction. The raising of further capital whether by Chinese subscriptions or by a further loan from the British and Chinese Corporation would probably afford opportunities for
interminable