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that the negotiations which may be protracted should be begun in ample time, for if they were not completed when the line or any part of it was open to traffic each section would naturally retain its own profit and it would be difficult to then introduce any division based on a recognition of the much greater proportionate outlay by this Government.
10. I have indicated in the 2nd paragraph of this despatch the steps which at present appear to me to be advisable to take, and I would venture in this connection to remind Your Excellency that the interests of the Hongkong Government and those of the British and Chinese Corporation are not identical in this matter. When the railway is completed the interests of the Corporation are limited to obtaining prompt payment of the interest on the bonds, and to this end (and in order to establish their reputation with a view to further railway business) they are concerned in obtaining for the Chinese section the maximum profit vis-a-vis the Hongkong section.
I have &c.
Sd/
F.D.Lugard.
Governor &c.
P.S. Since drafting the foregoing despatch, I have received from the Consul-General at Canton a copy of his letter to Your Excellency, No.31 confidential of July 25th. This despatch confirms what I have suggested in my paragraph 8 and adds point to the views expressed in paragraph 2 since it shows that the disastrous and unnecessary charges for land (as well as the delays caused by placing futile orders with Chinese firms) are consequential upon the action of the Central Authority in depriving the Provincial Government of the control which was contemplated by the loan agreement. The views of Mr.Fox, and of Mr.Grove appear to coincide with my own, that it is essential for the interests of this railway that the control should be vested in the Viceroy. They refer chiefly to the financial aspect, while I have referred in this despatch chiefly