46
which he submitted to Sir C. Clementi. The main item
in these projects is of course the completion of the Canton-
Hankow line. Lord Passfield is aware of the extent to
which the completion of this line is subject to already
existing agreements, and it is still doubtful whether the
utilisation of Indemnity funds for this purpose, which is
admittedly the objective uppermost in the minds of the
Chinese Government at present, can be reconciled with the
obvious desirability of obtaining the maximum amount of
orders for railway material etc. to be placed in Great
Britain. An attempt to find a way out of these difficulties
has resulted in the plan outlined in the draft telegram
to Peking referred to in paragraph 1 above; and it is
only in so far as Mr. Choy's schemes can be reconciled
with this project that they present an acceptable basis
for agreement at the present time.
4.
As regards Sir C. Clementi's own recommendations,
it is clear that proposals for rehabilitation of existing
lines may find a place under the new scheme. The
building of the Canton Loop Line is, however, a more
doubtful project, since it involves new construction, and,
in view of the 'psychological' reasons referred to by
Mr. Choy, Mr. Henderson would be reluctant to press
this project upon the Chinese in connexion with the
Indemnity. In these circumstances the question of the
building of the Loop Line must be left entirely to the
decision/