which it would be very difficult to resist finding a terminus at the sea, if in fact such a terminus with sufficient depth of water can be created. Mr. Grove informs me that, if the requisite land can be secured towards the end of the year, he hopes to complete in two and a-half years from this date, but if a delay occurs in securing land it will be four years from now before he can hope to finish construction.
9. Lord Crewe considers that "it is essential that steps should be taken without further delay to obtain from the Chinese Government satisfactory assurances on the points raised, and the method in which he suggests that this should be done is detailed in paragraph 7 of the despatch. Any representations of the nature indicated must be made through yourself, but I am inclined to think that the questions specified, the replies to which, so far as they can at present be given, are already known to us, would be categorically answered without bringing us any nearer to the object in view which is, in brief, the organization of the joint working of the two sections and the determination of the basis on which profits are to be shared. In this connection I may observe that in a conversation which I had with Mr. Grove (Chief Resident-Engineer of the Chinese section) early in January last, he informed me that it would be a year or eighteen months before he would be ready to discuss the details of a working agreement. He added that any proposals for joint arrangements at the present stage would render the Chinese suspicious. For my own part it appears to me very essential 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 profits 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 second paragraph of this despatch the steps which at present it appears to me to be advisable to take, and I would venture in this connection to remind your Excellency that the interests of the Hong Kong 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 profits vis-à-vis the Hong Kong section.
I have, &c.
(Signed) F. D. LUGARD,
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 the 25th July. This despatch confirms what I 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 to the political-(the negotiation of the Joint Working Agreement and the complications which may arise with the Hankow line in case of protracted delay)-but our conclusions are the same, and coincide with the views expressed by your Excellency to myself in conversation.
Mr. Grove has also called on me (on the 1st August, 1908) since this despatch was written, and I spoke to him regarding the Working Agreement. He referred again to the letter which he had received from Peking authorizing him to settle any questions which demanded adjustment with this Government and submit his proposals for approval. Acting on this letter of which he informed me some months ago, the Chief Resident Engineer of the British section under my authority has communicated already on such matters as the point of junction of the two lines, the proportionate cost of the bridge at this point, the type of rolling-stock, &c. The larger question of workshops was also raised, but led to no satisfactory conclusion. I pointed out to Mr. Grove that questions of this class stood in a different category from the larger questions (appointment and construction of a Board of Management, basis of profit sharing, &c.), which must be decided by the two Governments concerned. He then suggested to me that these matters also should be discussed between himself and the Chief Resident Engineer of the British section (which amounts to a discussion between himself and this Government), and that when a basis of agreement had been reached, which he felt that he could recommend to the Chinese Government, he should submit it in the same way as minor questions. In point of fact, this suggestion amounts to a proposal that this Government shall negotiate with an unauthorized agent, who, feeling that he represents the Chinese interests, will naturally put forward those interests, and the agreement arrived at would be taken by the Chinese Government as the full demands of the Hong Kong Government to be whittled down and delayed indefinitely. It would no doubt be a more dignified position for this Government to negotiate when the time comes with a duly accredited Representative of the Chinese Government, and I am in doubt whether preliminary negotiations through Mr. Grove would result in any hastening of the result.
Inclosure 3 in No. 1.
Memorandum.
F. D. L.
For purposes of land settlement in the new territories of this Colony, it was decided that 1 mou equals 2/8 acre, i.e., 4/8 mou equals 1 acre; and I was informed by the Hong Kong and Shanghae Bank on the 17th July that the rate of exchange on that morning was 74 taels equals 100 dollars. This means that the rate at which the Chinese Government is resuming land for the railway is $4.51 dollars per acre, i.e., 10.3 cent per square foot.
The rates paid by this Government for railway resumption were ... cent per square foot for first-class land, ... cent for second-class land, and ... cent for third-class land. It is apparent, therefore, that the average price of more than 1 cent per square foot now being paid by the Chinese Government is considerably higher than the rates paid in the new territories.
The resumption of land for the railway between Taipo and the frontier commenced on the 9th November, 1905, and was practically completed by the 21st idem, the Assistant Land Officer reporting that "the work went through rapidly and without a hitch." The resumption of land between Taipo and the Kowloon tunnel began on the 23rd December, 1906, and was practically concluded on the 30th idem.
Inclosure 4 in No. 1.
Acting Consul-General Fox to Sir J. Jordan,
(No. 31.) Sir,
July 25, 1908.
I am confidentially informed that the Administration of the Chinese section of the Canton-Kowloon Railway are experiencing considerable difficulty in obtaining the land required for railway purposes.
Article 7 of the Loan Agreement states that the necessary land shall be acquired by the Viceroy, but, as the control of the line has been taken away from the Viceroy and placed in the hands of a Director-General in Peking, the former official, not unnaturally, declines to afford the Administration any assistance in the matter. The local officials taking their cue from the Viceroy, adopt a similar attitude, and refuse to bring any pressure to bear on native owners to make them surrender their land. The Administration are, therefore, obliged to make the best terms they can, with the result that land is being acquired very slowly, and, in most cases, at exorbitant rates. Not only are they being charged at an average rate of over 100 dollars a mou for land which is, for the most part, waste ground, but they are often forced to buy land they do not require. In one case where the line runs through the outskirts of a small village, necessitating the removal of a few houses, the Administration have been obliged by the local gentry to buy up the whole village.
Mr. Grove, the Engineer-in-chief of the line, to whom I am indebted for this information, estimates that at the present rate of purchase a sum of not less than $120,000 will be required on this account, and he fears that this unexpectedly heavy expenditure will make it impossible for him to construct the line for the sum originally agreed upon.
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