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Liang Shi Yi insisted to me that the Kowloon-Canton Railway could never pay until it was linked up with the Canton-Hankow line, and I sincerely trust that Your Excellency may therefore succeed in 3 incorporating this clause. I would draw your attention to the phrase "Administrations of the Railway", which occurs first in clause 4 and is defined in Clauses 1 and 2. Therever it occurs throughout the text it is intended to denote the actual manage- -ment of each Section as opposed to the two Goverments, and in several places powers have been entrusted to the two Administra- -tions to act without reference to their respective Govern.ents. I hope in this way that in course of time a practical method of joint working may grow up. I may add that Mr. Chao wrote on the 7th. ultimo that he had received a telegram from the Railway De- -partment of the Board of Communications in the following terms:- *As regards the words 'the Railway Department of the Board of **Communications has agreed to construct as soon as possible a *'connection of the Canton-Kowloon Railway with the Canton-Haukow **Railway', this Board has already considered the matter which *need not therefore occasion the British Government any anxiety. *The junction with the Canton-ilankow line can be separately dis- "-cussed when the working arrangements for the Canton-Kowloon line "have been satisfactorily made".
8.
Clause 32. The original clause as first printed in A after having been agreed to and initialled by Mr. Chao was objected to by him on the ground that it might prove dis- -advantageous to tue Chinese Section: and, although I felt that the original draft contained the simplest and most convenient method of dealing with the difficulties presented by the currency problem, and although the chaotic state of Chinese
a fault from currency may be said to be the fault of China which this Colony suffers great loss I did not dear to the clause being redrafted which appears in the final copy B in a manner which safeguarded the interests of the Chinese, not less
than of the British Section.
9.
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