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He is at present engaged, at the request of the Director-General in Peking, in drawing up a detailed estimate of the cost of construction.
Materials have been accumulated, and all preparations made to commence the building of the permanent way as soon as the rainy season is over, which will probably be about the beginning of September. Unless, however, the rate at which land is at present being acquired can be considerably accelerated, work will be stopped in a few months' time for want of land.
Mr. Grove has brought this state of affairs to the notice of the Director-General in an official Report.
The progress of the railway is being hampered in another direction, in this case due to the action of the Chinese Administration.
The Director-General, relying on the clause in Article 9 of the Loan Agreement, which provides that, with a view to encouraging Chinese industries, Chinese materials are to be preferred, insists that all orders for railway materials shall first be submitted to the Tong Shan and other iron and steel works for tender. As many of the materials required cannot be supplied by these works, it simply means that the placing of the order with a home manufacturer is delayed, while the local manufacturers are being communicated with. As a case in point, Mr. Grove mentioned that he had requested permission to purchase some steel caissons for bridge work from a firm in England who made a speciality of these articles, the steel plates of which the caissons were composed being unobtainable in China. The request was refused by the Director-General, who, quoting the clause above referred to, instructed Mr. Grove to place the order with a local firm. This will be done, and as a consequence the delivery of the caissons will be delayed by at least two months, as the plates must be imported from England.
With regard to a paragraph in the "China Mail" newspaper of the 23rd July, intimating that things are not as they should be on the Chinese section of the Canton-Kowloon Railway, and stating that the Board of Communications had requested the Viceroy to hold an inquiry, Mr. Grove informs me that, unless the difficulties with regard to land purchase are referred to, he is unable to understand the meaning of the paragraph.
His relations with Taotai Wei Han, the Managing Director, are excellent, and, as far as the local administration of the line is concerned, there is complete harmony between the Chinese and foreign staffs.
I am sending a copy of this despatch to the Governor of Hong Kong.
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the performance of its contract, and either Government would have a right to remonstrate if it saw that the other was not carrying out its work in a manner calculated to give effect to the Agreement. It is satisfactory to learn that, so far, Mr. Grove has not been interfered with by the Chinese authorities in the technical part of his work, but I can feel no confidence that this will continue to be the case if the cost of acquiring land (a matter of which I was not in ignorance, though I did not touch it in my despatch) should prove to be so heavy that the total funds provided upon will not suffice for properly building and equipping the line. I do not think that the Hong Kong Government could be content to rely on action by the British and Chinese Corporation in defence of the interests of the bondholders (assuming that any action were possible beyond protests addressed to His Majesty's Government), nor can those interests be regarded as coextensive with the interests of the Colonial Government,
I have, &c. (Signed) CREWE.
I have, &c.
(Signed)
HARRY H. FOX.
(Secret.) Sir,
Inclosure 5 in No. 1.
The Earl of Crewe to Governor Sir F. Lugard.
Downing Street, October 2, 1908.
I HAVE the honour to acknowledge the receipt of your Secret despatch of the 6th August, with its inclosures, respecting the negotiation of a Joint Working Agreement for the two sections of the Canton-Kowloon Railway.
2. As stated in my despatch of the 26th June, I shall leave this matter entirely to your discretion.
3. I observe from the third and seventh paragraphs of your despatch to Sir J. Jordan of the 25th July that you have derived an erroneous impression from certain portions of my despatch of the 26th June. I am well aware that the Consulting Engineers of the Chinese section would have no voice in settling the terms of the Working Agreement. What I had in mind was that, so long as Sir John Wolfe Barry was the Consulting Engineer we might be confident that the line would not be built otherwise than in accordance with the best modern system, as provided in the Loan Agreement, and that the interests of the Hong Kong line, under any working agreement that might be concluded, would not be impaired by faulty construction or equipment of the Chinese section. The alteration in the arrangement as to Consulting Engineers appeared to me to remove our chief safeguard in this respect, and I considered that the best guarantee for a proper construction of the railway was now to be found in the early negotiation of a Working Agreement, for if the Hong Kong and Chinese Governments bound themselves to do certain things when the line was opened, it would follow that each Government had bound itself to construct and equip a line adequate to
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