cover the outstanding amount.

in the case This,

of Canton, might merely amount to a free gift to

the Canton Government, but it is arguable that it would, none the less, pay Hong Kong to have the loop line built at their own cost rather than run the risk of its not being built for years.

consortium

As to (2), there is the difficulty which we have already pointed out to Hong Kong, and any

such loan would have to be within Hong Kong's own

resources and not open to public subscription.

We have considered the possibility of such a loan

in connection with the current negotiations, and

it was decided that, in view of the difficulties,

any offer of assistance from Hong Kong to Canton

should be, if possible, directed towards other than railway works (7200/26”).

In these circumstances, a grant from the

Boxer Indemnity might well be the easiest way of

making some progress with this much debated

-

Feb 26 Mad espy

To for ith atid.

$ mi circulation with

question. The F.O may possibly produce some objection on political grounds, but we should be able to overcome them. It is certainly the case

that the Indemnity is intended to be used for the

mutual benefit of British and Chinese interests,

and it is certainly the case that the loop line

connection would serve the interests of both parties.

Moreover, the principle of allotting part of the

funds for railway development appears to have been recognised by the proposal to make a grant of five

million dollars for the completion of the Canton-

Hankow railway.

I have already sent an advance copy of this

despatch to the Foreign Office. I understand

that

+]

Sefparate bmuka sur

copy 126.

A.

(

Sao cho 13 giá

492

that a meeting will take place there on the 21st

at which the proposals made for the disposal of the

Indemnity funds will be discussed. and it appears

important therefore that we should send an official

letter supporting the Governor without delay, so that

this proposal can be considered at the same time.

Oft. submitted

Pallutasuck

16.7.26.

We are bound to put the N. Kong

Lost's view fr

To view forward,

Key

much better

.

it would be

that this loop should

be built (or the frends for building it embezzled !) out of the Boxer Indemnity than out

But the wiidence

7

H. King

J. James

at the dump. th. Co very much

shook

in the advantage to

my belief

H. Gong of a through commectin wither

Hankow, or

the possibility of

Sulting the loop builts

There is

a natural watershed

between Canton Hanken which

L

must prevent Koffie coming to

Page 510Page 511

Canton from the Hank to live,

The 200 miles or so

of the commeation

sole would naturally bring traffic to Canton go through homes corewhy.

The rica-guild at Cantons have always

hitherto been able to block

any

railway project that would

pewent their bathing nice to Whampion

2 then afforts

are not likely to be

len successful under the parent-

forr

G.G

17-2-26

!

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