9
realise a return for capital outlay. That in order to do so the rates, and the amenities offered by the railway must 'be such as will enable it with some degree of success to comnete against Water transport; that as suggested by His Excellency Liang Shi-y1 the British section in order to obtain an approxi- mately equal return on its outlay must levy higher rates, but that in the statement of Capital outlay (*.g. "Construction Account") every item should be eliminated which was not strictly necessary to the building of the railway, or immediately naces-
sary for its working • [To this we have given a very liberal
ru
and generous interpretation. Every foot of railway reclamation (the result of spoil taken from a railway cutting) which in not actually raquired by the completed railmy has been
valued and deducted. The cost of doubling the track, the cost of certain bridges which failed and were re-constructed, and other similar items have all been deducted though I doubt whether they would have been in any ordinary negotiation.]
That since the combined through rate must be limited by the water competition, this thigh rate (apart from local slow rates) must be assessed proportionally, the profits being divi-
ded in the fixed proportion and the Chinese rate conforming to
the agreed proportion. That a fixed minimum number of though
trains shall run each day with as little delay, inconvenience,
and trouble to passengers as possible. To affect this the
Hongkong Government is willing to go to considerable exponse
in regard to ferrics from the Island, convenient piers and
terminal, ote and to allow the Chinese Customs to collect all
dues at Kowloon, and seal goods in transit, etc the Chinese
on their side undertaking not to delay trains at the frontier
and not to charge any duce which are not leviablo on water-
borne goods.
r
6. The proposals are onerous to Hongkong for they in-
volve the upkeep of a complete railway staff for a section only
22 miles long and also the provision of customs examination
platforms and sheds, and permission for the officals of a
foreig