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5.
I desire to draw your attention to one or two
special matters in connection with this Working Agreement, and to
ask your kind assistance and co-operation in regard to them.
6. Clause I which embodies the Loan Agrement between the Chinese Goverment and the Britäh and Chinese Corporation and
incorporates it as an integral part of this Agreement has been inserted at my personal instance and I consider it of special
importance since it secures that a British Engineer-in-Chief and
a British Chief Accountant shall be maintained on the Chinese
Section. This pledge thereby becomes one between the two Govern-
ments irrespective of the Loan Agreement made between China and a Financial Corporation which may be of a temporary nature.
Dr. Chao at first demurred to its inclusion, but looking to the fact
that His Excellency Liang Shi Yi in his conversations with me in
Poking based his oppositions to my proposals largely on the fact that they were (as he alleged) incompatible with the Loan Agree-
ment, I trust that you will have no difficulty in respect of this
clause which has been agreed to by the Chinese negotiator after
reference to his Government. In fact Mr. Chao received on the
9th. instant a telegram from the Director-General of Railways
stating that "the Board agrees to append the Loan Agreement to
the present Agreement, although it seems unnecessary to do so".
7. Claude 37-A (now 38) is as I have said reserved,
since Mr. Chao stated that it was beyond his competence to agree
to it.
Your Excellency will see at once how very advantageous it would be to obtain the consent of the Chinese to its insertion.
I have so drafted it as to avoid the appearance of any unrequited concession on their part and as merely the natural corollary of the present Agreement. His Excellency Liang Shi Yi insisted to me that the Canton-Kowloon Railway could never pay until it was linked up with the Canton-liankow line, and I sincerely trust that Your Excellency may therefore succeed in incorporating this
clause.
I would draw your attention to the phrase "Administra-
tions