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Eastern Extension Telegraph Company to purchase the section of the Chinese telegraphs which is in British Territory or to erect a new office on the frontier, if the line is to be superseded in about a year's time.
4. There remains the question of the conditions under which the Railway Telegraph should be operated. This will form an issue in the negotiation of the Joint Working Agreement for the two Sections of the Railway and doubtless the expert adviser who is being procured by the Indian Government will be able to give valuable assistance in this matter. As the matter presents itself to me at present, it would seem to be advisable for this Government to construct and operate the whole line from the frontier to Victoria, Hongkong, as a Sub-department of the Post Office, and it would probably prove to be a very lucrative source of Revenue. It may, however, possibly prove to be feasible to utilise the agency of the Eastern Extension Telegraph Company by granting them a lease on terms advantageous to Government or by imposing a royalty, but in that case the danger lest this telegraph should practically become independent under Chinese control though nominally under the Eastern Extension Telegraph Company would remain, and precautions must be taken to