CO882-(6-8) — Page 365

PUBLIC RECORD OFFICE

Reference :—

TELEC.O. 882

8 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

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not

to be

(h) Rolling stock to be jointly provided and owned in proportion to the inileage; commission payable to the Corporation in respect of the proportion provided at the expense of Hong Kong.

(i) Any capital necessary for working to be provided by the two Govern- ments in proportion to mileage: the Chinese proportion for this and for rolling stock to be provided out of their loan, and to be earmarked for the purpose.

() Each Government

to provide the necessary land for the railway at its own cost, and to make its own arrangements as to the funds re- quired therefor.

(4) The line to be worked by a Joint Board of six members appointed, two by the Chinese Government, two by the Colonial Government, one by the Corporation, together with a General Manager to be nominated by the Corporation with the approval of the Colonial Govern- ment. [The necessity for our pre- vious approval should come into our agreement with the Corporation, and not into the Joint Agreement.]

After the redemption of all Chinese Bonde, &c., the representative of the Corporation would disappear from the Board.

In the absence, &c., of any of these Members, the party who appointed them to appoint a substitute.

Three to be a quorum; the decision of the majority to be final on all points not ultra vires or contrary to the Agreement.

(1) Receipts and working expenses to be pooled; net profit or loss thereon to

be divided between the two Govern- ments in proportion to the actual cost of building and equipping the 1 respec- tive sections apart from cost of land and any commissions of whatever kind paid by either party to the Corporation or others.

(m) The Consulting Engineers and the Contractors to be the same for both sections, and to be selected by agree- ment between the Crown Agents, as representing the Colonial Govern- ment, and the Corporation. This is necessary

in order to secure economy

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and avoid friction, especially as the point of junction has to be settled by agreement between the two parties. (n) Work to be begun on the two sectious

simultaneously.

the

If the Secretary of State approves principle of these proposals, we will have another meeting with the Directors and en- deavour to obtain their assent, to be embodied in formal correspondence,

When this is obtained the subsequent steps will be :-

(1) For us to draw the Joint Working Agreement, in concert with the Corporation, for presentation by His Majesty's Government to the Chinese Government simultaneously with the submission by the Corpora tion to the latter of the Final Loan Agreement.

(2) For the Corporation to prepare and submit for our approval the text of the Loan Agreement.

(3) For us to obtain from the Foreign Office an assurance that they will give us the necessary support in negotiating these two Agreements.

(4) For us to get the Consulting Engineers to take the necessary steps for deter- mining the trace and preparing the estimates of the Hong Kong section.

(5) As soon as the agreements with the Chinese Government have been con- cluded, to provide the necessary funds for this section by a Colonial Loan,

Sir Cecil Smith brought up the question of

the gauge of the proposed line. He pointed out that the narrow gauge would save enormous expense, and would meet all the requirements of the traffic, as was proved by similar lines else- where. In my opinion it was very extravagant to adopt the 4 ft. 8 in. gauge for China; but as it has already been decided on for the trunk line to Canton, I think-looking to possible con- tingencies in the future-that it would be in- expedient to have a break of gauge at Canton for the sake of the economy to be effected by having a smaller gauge for this southern section. Moreover the preliminary agreement stipulates for through cars and rates in connexion with the Canton-Hankow line. Sir Cecil Smith does not share my view as to the objection to a

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break of gauge, while Messrs. Keswick and Macrae stated that it had not been considered by the Corporation. It is right to add that, so far as we know, no work has been begun on the projected line from Canton northward.

25th October, 1904.

G. V. F.