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than the British Group to fold their tents and assume their wonted freedom of action. But we are a long way from that yet,
and the dissolution of the Consortium at the present juncture in China would, I believe, be a disaster both for China and Great
Britain.
19.
To sum up:
(a) The proposal to use the British Indemnity Fund in
order to finance the incomplete section of the Hankow-Canton Railway does not involve the public issue of a loan and does
The not therefore fall within the ambit of the Consortium,
Groups would have no technical grounds for objection. (Par. 9).
(b) They might, however, feel aggrieved at an act which had the effect of depriving them of part of the financial and industrial benefits to which they were legitimately entitled
by the Hukuang Loan Agreement.
(Par.10).
(0) The supply of British material as a condition of the project would certainly meet with the strongest opposition from the Groups as a violation of the Inter-Group Agreement of
May 23, 1910, which established the principle of 'open tender'.
(Par.10).
(a) A monopoly of supply would not be in the interests of China since it would shut her out from the benefit of competi-
tive prices. (Par. 13).
(0) Great Britain could not gain any permanent advantage from a monopoly which would deprive her manufacturers of the
incentive of competition.
(Par.14).
(f) It is doubtful if the monopoly could be made
effective.
(Par. 15).
(8) Great Britain is likely to gain more by open tender
than by monopoly,
(Par. 16).
(h) The alternative to the system of open tender is a
return to international competition and the delimitation of
spheres/