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that a Chinese-owned line should exist in British territory.

He agrees as to the expediency of transferring the telegraph

line to the Railway, and he appreciates my desire that the

revenue of the Colony should profit, by what he says "would in

normal circumstances be a natural source of revenue". There is

therefore no difference in the way in which we regard the

present undesirable conditions.

3.

Sir J. Jordan, however, points out and

emphasizes at great length on pages 2, 3, 4, and 5 of his

Despatch that the admittedly "abnormal circumstances" in which

Hongkong has been placed whereby the revenue which should

accrue to the Colony goes to others and the undesirable anomaly

exists of a Chinese Government Department naving an office and

a telegraph line in Hongkong was created and still exists in

order that the Eastern Extension Telegraph Company may derive

advantages elsewhere in China which are of great pecuniary

value to them. "Clearly (he says) the Company could not have

obtained the arrangements they considered essential at Shanghai

had they not been in a position with the countenance of His

Majesty's Government to offer corresponding advantages to the

Chinese Administration in Hongkong". This is precisely my view.

The "advantages" were offered at the expense of the taxpayers

in this Colony and the Government of this Colony was not only

not

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