CO129-337 - Public Offices & Foreign Office - 1906 — Page 76

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responded to the Governor's views in a manner which has

the approval of the Colonial Office.

There was never any intention and it would be

against our interests to issue more Bonds than would be

necessary to complete the Railway and enable the Chinese

Government to comply with the terms of the Working Agree-

ment to be entered into with the Colonial Government,

but it was thought well to suggest a safe figure, as the

Loan Agreement makes no provision for what is to be

done in the event of the Loan proving insufficient.

The cost of the land is at present an unknown quan-

tity and from our experience with the Chinese in connec-

-tion with the Shanghai Nanking Railway we feared that

the acquisition of land might under Chinese methods be

a formidable item.

The contemplated Agreement between the Government

of Hongkong and the Chinese Government moreover stipu-

lates for the provision of Working Capital and for im-

provements from time to time, which stipulation had

also to be borne in mind.

And further although our Engineers estimates of

the cost and period of construction are we believe ample

Chinese

Chinese land jobbery and obstruction to which the enter-

prise is so exposed might be so effective as to upset the

calculations and involve not only additional expense in

actual construction but in additional Interest during con-

struction in the event of the period of construction ex-

ceeding the estimated two years.

In view of these contingencies we hope Sir Edward Grey

and the Governor of Hongkong will realise that our proposal

that the amount of Loan should be fixed so as to include

a very large margin for issue only in case of need, was

based upon serious considerations.

In regard to the Governor's opinion that the Loan

should be issued in instalments of not more than £500,000

each we beg to point out that there are objections to the

adoption of this course.

Every issue will be the subject of negotiation with

the Chinese and the opportunity to them of making demands

and creating obstruction, even to the point of causing a

suspension of operations by blocking the issue of Bonds

+

It seems therefore to us that the number of such opportun-

ities should be limited as much as possible.

The Corporation having to take the Loan at fixed price

the

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