CO129-330 - Public Offices - 1905 — Page 79

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5.

We do not understand from your letter that the ar-

rangements with the British and Chinese Corporation set out

in the papers which you have communicated to us are to be

We turned into a formal contract, at least at present.

are therefore not taking any action in this direction.

6. There is, however, one point in the arrangement

with the Chinese Corporation which it appears to us might

with advantage be altered in the interests of the Government

of Hong Kong. We observe that it is proposed that the net

profit or loss on the whole line should be divided between

the Governments of China and Hong Kong in proportion to the

actual cost of building and equipping the sections belonging

to the two Governments respectively. I beg, however, to

point out that the effect of such an arrangement would be to

divert to the profit of the Chinese Government any savings

which we may be able to effect on behalf of the Government

of Hong Kong in carrying out the Colony's section of the

work. I would therefore suggest that the arrangement

should be altered to that which we understand exists in the

case of the Forth Bridge, and probably in other cases, where

the excessive cost of particular works or sections of a line

are compensated for by the particular sections being treated

as having a greater mileage than they actually possess and

as a set off by way of bonus against the higher cost of

their construction. Such a system would have the effect

of retaining in the interests of the Government of Hong Kong

any savings which we may be able to effect in the construc-

tion of the Colonial section of the line, as compared with

the probably extravagant cost of the Chinese section which

will be entailed by the manner in which it is to be financed.

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7.

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