through the project of the loop line connection.
Before the war the question was raised in connection
with the negotiations with the Canton authorities
for an agreement providing for the joint working
the British and Chinese sections of the Canton-
of.
Kowloon railway. Joint working was, in fact,
turned down by the Chinese, but a modus vivendi was agreed to after protracted negotiations, though, from point of fact, the agreement was never signed. During these negotiations it appeared that the Chinese authorities had looked on the question of
connecting the two railways as settled, the only
subject for further discussion being the manner in which the funds were to be provided.
After the war the constantly changing political situation has prevented anything from being done.
Various attempts have been made from time to time
to prove that there is actually an obligation on
the Canton Government to make the connection, but
the these have never carried much weight and have
been abandoned. It has also been suggested that
the article in the original Loan Agreement with the British and Chinese Corporation in which the respective Governments undertook that no line competing with
either the British or Chinese section should be built
to the detriment of either section, etc., might be made a peg on which to hang further representations (the idea being that in default of the loop line
it wỗ, nQ-Si qan to the Cantonin to develop the para connection,
of Canton aut Whampoa by meam of railway tracks) but this suggestion has also been considered of
little value.
Before any progress can be made, the first step
is to obtain the consent of the Canton Government.
This
It was believed, quel Croncandy, in dem tut if my sk
· póbayTM resist the Sunlifantry Canton on the groun
((
491
This might have been easier in the past, but is not
likely to be an easy matter now. As shown in
enclosure 3 to this despatch, the Canton authorities
are fully aware of the importance of the railway to
Hong Kong, and the attitude which they appear inclined
to adopt is to insist on the development of Whampda
ae a quld pro quo. If the latter port were developed,
they hope that they will be able to rival Hong Kong,
and it would be immaterial to them, in these circum-
stances, whether the two railways were connected or not.
On the other hand, the need of the Canton Govern-
ment for money is such that it may be possible to
devise means for carrying this project through in epite
of the public utterances of their leaders, and it may
be doubted in any case whether they would go so far as
to refuse a grant for the purpose from the Boxer
Indemnity.
A
Apart from such a grant, two alternatives suggest
themselves: (1) a loan from the British and Chinese
Corporation under a private guarantee from the Hong
Kong Government; (2) a loan from the Hong Kong
if an orhinay loan was unacceptable Government itself. As to (1), a similar procedure
might be followed to that adopted by the Japanese in
connection with the construction of the Taonam-Tsitsihar
railway (13132). In that case a contract for the con-
struction of the line was entered into by the South
Manchurian Railway Company and the Chinese authorities,
on the condition that should the cost of the constructio
remain unpaid in whole or in part upon the expiration of
six months from the date on which the entire line
Should
have been completed and transferred to the Chinese
authorities, a loan agreement should be concluded between the Chinese authorities and the Company to
cover