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to your able Address and also the remarks in support of it by Mr. Stewart. It is a matter which any one connected with the Colony and British interests in South China must recognise as of vital importance. It is the most vital question that confronts us at the present time. I have put the matter before His Majesty's Government from every possible point of view. I have pointed out the danger of the trunk line from Hankow to Canton falling into the hands of those who are not friends to England, and I have emphasised the absolute necessity if we want to ensure the predominance of this Colony as the great centre of trade in South China that we should have this connection with Canton. I was also desirous of putting forward, like you yourselves, some concrete proposal to His Majesty's Government, and I calculated that the Colony itself without any assistance could easily guarantee five years' interest on the expenditure on the line from the date of the completion of the line, and I asked that the Imperial Government might guarantee interest at three per cent. for another period of five years. That was a modest proposition. I have had no answer as yet to that or to any other of the representations that I have made, but I know that the Secretary of State has taken the matter of the railway into consideration, and I have been promised a communication from the Secretary of State at an early date. As far as I can make out a difficulty lies in the way of the completion of the agreement for this line between the Chinese Government and the concessionaires. The final terms appear to be dependent on the final agreement arrived at for the construction of the line from Shanghai to Nanking, and that line has never been built. Mr. Brenan was here the other day, and I asked him why that was and he said that capitalists in London would not touch anything which was absolutely guaranteed by the Chinese Government alone. He said they had tried to get money and that they could not get it. It seems to me unless you get a

new kind of concession for this Canton railway that this millstone which is tied round its neck will continue to hamper you.

Hon. GERSHOM STEWART said:-Your Excellency, the agreement to which you referred was signed in July of last year and I did not understand that the construc- tion of this line was to be dependent on the construction of the other.

HIS EXCELLENCY:-I am not quite clear on the subject of what it is that is stand- ing in the way. But whatever it is I thoroughly agree with you that it ought to be swept aside and in thinking over the matter it seems to me that the best proposition that one could put before His Majesty's Government is that they should seek the same privileges that have been granted to the French Government in the construc- tion of the Yunnan railway. I understand the form of the concession is permission granted to the French Government to extend their colonial railway into Yunnan. It is therefore different from other concessions. If it was granted to the French I do not see why the British Government should not get for this Colony the permission to extend a railway from Kowloon to the border on through Chinese territory to Canton. I think it is a great pity that this concession was not obtained by a purely local company. It is only just now I have received a report from the Registrar- General that a Chinese has just passed through this Colony on his way to Shanghai to negotiate the final terms for the construction of a railway from Maçao to Canton, and that the shares in that undertaking appear, as far as one can learn, to be held by Chinese, and that there are many of them who hold property in this Colony. It seems to me that if Chinese invest their money in an undertaking like that, plenty of them would be found to invest their money in a railway from Kowloon to Canton, especially if it were in the hands of this Government. In finding one and a half million sterling I do not think there would be much difficulty. Gentlemen, it seems to me that that is the line one might take in forwarding your representation which I shall have much pleasure in doing. I thoroughly agree with you that no time ought to be lost. This Colony is a rich one, growing richer every day, and if the Imperial Government would only consent to stand behind us in the matter of guarantee, and allow the Colony to guarantee the line with the Imperial Govern- ment backing it in case of financial difficulties, I do not see any trouble at all. I have gone into the matter somewhat carefully and have taken the opinion of men who know, and those who know believe the Canton line would pay well. 'I know there are others who think it would not, but I think these are few. I do not think the Colony would run any risk at all in guaranteeing this railway. (Hear, hear.) I do not want to go into the question of Military Contribution. That would only com-

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plicate matters. But we must have some assistance from the Imperial Government. We have got very heavy expenditure in front of us-water-works, resumptions of insanitary property, and other sanitary improvements in the City; and there are other pressing needs the enlargement of the harbour and the opening out of our New Territory, These are all matters that will involve very heavy expenditure, but as I have said before, and you seem to agree, my opinion is that it would be a fair financial risk to take in guaranteeing this railway if only the Imperial Government would consent to stand behind us. and I trust that we can bring them to adopt that view. Gentlemen, as soon as I receive any news from home on this subject, if it is such that I can communicate to you I shall most gladly do so; and of course anything I have mentioned to you about the reports I have made I would like you to keep private. As I have not yet received any answers to them I do not know what view the Secretary of State holds on the subject.

Hon. GERSHOM STEWART Said:-Your Excellency, I omitted in my remarks to point out the absolute necessity there is that the Colonial Government should have control of the whole line throughout its entire length. If this is not secured there will be a danger of switch lines being run down from the main line to points just outside our borders.

Mr. Wilcox said:-On behalf of the Committee I beg to thank Your Excellency for the kind way in which you have received us and the assurances you have given us.

The Deputation then withdrew,

(Confidential.)

SIR,

Enclosure 2 in No. 24.

Registrar-General's Office, Hong Kong, May 17, 1904. I HAVE the honour to report, for the information of His Excellency the Officer Administering the Government that Mr. Yung Sing-kin left for Shanghai on Wednes- day last as agent for the promoters of the Maçao Canton Railway to make the final arrangements with Sheng, head of the Railway Department.

2. The syndicate formed to build the railway consists of 15 persons, 14 of whom are Heungshan Chinese, the chairman being Chan Fong, the father of Messrs. Dougles, Lapraik and Company's compradore. There are 22 shares, of which five are held by Chan Fong and two by the Portuguese Government. It is rumoured that Mr. Ho Tung has been endeavouring to purchase these two shares, and I have been told on very good authority that the French Government is doing its best to obtain an interest in the railway, but the Heungshan Chinese are naturally shy of permitting the French to obtain a footing in their district.

3.

The promoters of the railway are all closely connected with Hong Kong, and if no longer actively engaged in business' here, are owners of property and interested in various undertakings. It is reasonable to suppose that they would have been anxious to assist in promoting a railway from Canton to Hong Kong if such an investment had been open to them.

4. Evidence of the anxiety of France to get a firm foot-hold in the Canton Province has been constantly manifested of late years. Every visitor to Canton notices the number of junks which fly the French flag. tonaises were running steamers between Hong Kong and Canton the Chinese owners Before the Messageries Can- of the steamships "Kwong Chow and view to inducing them to fly the French flag, and I know one Chinese merchant, a "Kwong Tung" were approached with a native of Hong Kong, but interested in industrial undertakings in Canton and else where in the province who was offered the fullest assistance and support if he would place himself under the protection of the French Government.

I have, &c.,

The Honourable A. M. Thomson, Colonial Secretary.

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A. W. BREWIN,

Registrar-General.

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