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the railway company should be promoted by the British and Chinese Corporation in return for a proportion of fully paid-up shares, stock, debentures, &c., without payment or liability.

3. After very full consideration, Mr. Lyttelton concurs in the opinion which he understands was expressed by Sir M, Nathan, that it is undesirable for the Hong Kong Government to ask for rights to construct and work a railway in Chinese territory, and also for that Government to give any guarantee with regard to an undertaking beyond its own jurisdiction. At the same time he sees the advantage which the proposal was doubtless designed to secure, viz., the working of the whole line by one company.

4. It appears to him that this object, as well as the prompt prosecution of the undertaking, which is doubtless desirable in the British interests for which the Corporation obtained the agreement of the 28th March, 1899, might be attained in another manner, which would still enable that agreement to be adhered to.

5. He accordingly desires to put before the directors of "The British and Chinese Corporation, Limited." as a counter proposal, the suggestion that that part of the whole line which will be in British territory, and is understood to be by far the most costly part of the undertaking, should be constructed by the Hong Kong Government, and when completed, leased to the Corporation (or to the railway company promoted by it, which must be a British Railway Company), to be worked in conjunction with that part of the line which will have been constructed within Chinese territory under the existing agreement.

6. Should this suggestion be favourably viewed by the Directors of "The British and Chinese Corporation, Limited," Mr. Lyttelton will be glad to receive any observations they may have to offer with regard to it.

15912

25

No. 18.

COLONIAL OFFICE to Mr. G. TURNER.

SIR,

I AM directed by Mr. Secretary Lyttelton to acknowledge the receipt of your

Downing Street, May 16, 1904. letter of the 3rd instant, with regard to the proposed Hong Kong-Canton Railway.

I am, &c.,

18667

(Paraphrase.)

No. 19.

ACTING-GOVERNOR MAY to MR. LYTTELTON. (Received 9.30 a.m., May 28, 1904.) TELEGRAM.

C. P. LUCAS.

I have received private information that the Hong Kong and Shanghai Bank

is inviting subscriptions for debentures for the Shanghai-Nanking Railway."

I venture to urge that pressure should be brought upon the British and Chinese Corporation to make similar arrangements for the Canton-Hong Kong Railway.

The Chamber of Commerce and China Association have both recently urged upon me the necessity of demanding that the Corporation should either utilize or resign its concession.

I am, &c.,

C. P. LUCAS.

18667

PUBLIC RECORD OFFICE

Reference :-

C.O. 882

bulu

16531

No. 17.

ACTING GOVERNOR MAY to MR. LYTTELTON.

(Received May 9, 1904.)

(Confidential.)

SIR,

Government House, Hong Kong, April 8, 1904. REFERRING to my cypher telegram of this day's date, I have the honour to inform you that since sending it I have had a conversation with Mr. Byron Brenan, late of His Majesty's Consular Service, and at present employed by various British syndicates that have obtained concessions for railways and other enterprises in China. He informed me that, in his opinion, the Belgians are, in the matter of the Hankow Canton Railway, acting largely on behalf of the French.

If this is so, the danger to this Colony of the line falling into the control of the Belgians is not smaller than that previously indicated by me. of the French in South China are well known to you, and should the control of the The ambitions line fall into their hands, they would assuredly use the power thus given them to the injury of this port.

This can be accomplished by giving the line an outlet on the Canton River, and it is this danger which everyone interested in the prosperity of this Colony and in British commercial interests in China, views with such apprehension.

I have, &c.,

F. H. MAY,

Officer Administering the Government.

• Nu. P.

SIR,

No. 20.

COLONIAL OFFICE to MR. W. KESWICK, M.P. (BRITISH AND CHINESE CORPORATION, LIMITED). [Answered by No. 21.]

Downing Street, May 28, 1904.

WITH reference to your letter of the 6th instant, I am directed by Mr. Secre- tary Lyttelton to enquire whether you are yet in a position to state the views of the Directors of the British and Chinese Corporation on the suggestion made in the letter from this Department of the 3rd instant‡ with regard to the Kowloon-Canton Rail- Mr. Lyttelton considers the matter to be one of urgency, and trusts that it may receive very early attention.

way.

19796

No. 21.

I am, &c.,

C. P. LUCAS.

THE BRITISH AND CHINESE CORPORATION, LIMITED, to COLONIAL OFFICE.

SIR,

(Received June 3, 1904.)

[Answered by No. 23.]

3, Lombard Street, London, E.C., June 3, 1904. Kowloon to Canton Railway.

1

On the 6th ultimo I acknowledged the receipt of your letter of the 3rd idem, No. 13052/1904, in which, after expressing views adverse to the proposal relating to the above named projected Railway, which had been submitted to you by the Corporation, you invited the Directors of the Corporation to consider a counter pro- posal made by yourself and specified in Clause 5 of your letter.

• No. 16.

† Not printed: attached to 13052.

↑ No. 16A.

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PUBLIC RECORD OFFICE, LONDON

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