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is likely to take and I merely send them to you to il- lustrate line on which my own mind is working and to
We have also to con-
give you something to build on. sider terms of our replies.
I am rather in two minds about board of (?trustees). United States Minister told me recently that he (?found)
On the whole I now incline it an essential safeguard.
to the view that provided that Chinese favour it (we neither can nor should insist if they do not) we had better have board of trustees as contemplated in (?col- lective note) but acquiesce in their being practically
We shall thus at under control of Chinese government.
least be kept informed through British members of what is going on and in the event of return to civil war and political chaos Chinese themselves would be probably glad to make what use they could of board to protect funds. Moreover existence of board would perhaps enable existing arrangements for custody of funds by Hongkong and Shanghai Bank to continue at any rate for a time.
With regard to investment of funds in railway re- habilitation including payment of railway debts I realise of course that in any case no surplus railway revenue will be available for endowment fund seeing that bond- holders with their coupons already heavily in default
But given would almost all certainly claim prior lien. a period of peace once railways are reconditioned they ought soon to start paying their way again so that pay- ment of interest to endowment fund would only be tem- porarily held up.
If you will let me know how Wang responds to your overtures it might be well that I should come south to deal with final stages of negotiations. But I await your report before considering this further.
Repeated to Foreign Office.