CO129-491 - Public Offices - 1925 — Page 314

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the actual outlay on rolling stock --assuming that this is purchased in Great Britain, and not manu- factured in existing railway work- shops in China-amounts to from one-sixth to one-third of the total construction cost, the average for all Government Railways being approximately one-quarter. The average cost of the track, which includes sleepers, rails and fasten- ings, track-laying, and ballasting, is just over one-fifth of the con- struction cost. Assuming that the entire cost of the track and rolling stock had to be paid to British manufacturers (which would not, of course, be the case) this would represent a total outlay of $20.- 250,000. Tenders would presum- ably be called for, and the orders awarded on a competitive basis. If we estimated the profits of the British manufacturers at fifteen per cent, the total profit on the transaction would amount only to $3,037,500 less than £400,000 out of a remitted indemnity of eleven millions sterling. It could hardly, therefore, be

that contended, British industrial interests would receive extortionate profits. Fin ally we may state that careful cal- culation of the cost of the projects we intend to put forward reveals that the sums available from the British share of the Boxer Indem-

nity from now until the date of the final instaiment, would suffice

to meet interest and amortization charges on an outlay of $25,000,- 000 for Conservancy work, and a loan of interest charges on $45,000,000 for the railway scheme in addition to providing a sum of over $35,000,000 spread over 23 years, for the support of education. And provision of funds of work so urgently needed as the improvement of the Chihli River system would dispose of the criti. cism that the interests of South China were being subordinated to the those of North China, in allocation of the Indemnity.

III,

WE shall now proceed to unfold in as much detail as possible, the project which we intend to urge for the apportionment of the British share of the Boxer Indem- uity, dealing successively with : (a) Educational Grants, (b) The Canton-Hankow Railway, (c) Chihli River Conservancy.

(a) EDUCATIONAL GRANTS.

Assuming that our readers share our view that the annual amounts released by the remission of the British portion of the Boxer In- demuity between now and 1945 are too large to be usefully expend- ed on the promotion of the educa- tion of Chinese on British lines, and too small to reorganize the national system of education, we propose that educational grants be restricted to the support of exist ing and future higher educational institutions under British auspices in China and Hongkong. On the basis on which our calculations are made a total amount of $35,000,000, odd, will be available for this pur pose during the Indemnity period. Two years instalments of the Indemnity have already accumu. lated, amounting approximately to $8,261,280. We suggest that four million dollars of this amount be set aside for capital expenditure in existing Colleges whose scope is restricted by lack of suitable build. ings and equipment. This would permit a sum of at least $1,500,000 per annum to be devoted to educa tional purposes for the next twenty This is fifty times the years, amount that the British Chambers

of Commerce have been able to expend

in educational grants. And out of such a sum it ought to be possible to make liberal grants to Hongkong University and ex- isting British Colleges and Medical Missions, and also to create endow ment funds for those institutions which are never likely to be abso lutely self-supporting. Hongkong University would, presumably, re. ceive the lion's share in order to enable it more successfully to achieve its purpose of providing a first-class University Education, at reasonable fees, to Chinese who have not the means or the inclina- tion to proceed to Europe America. If we earmark $500,000 per annum for Hongkong, and treble the grants amounting to $123,900 naked for by British Colleges in China, there would still remait. a sum of over $628,000 per annum for endowment funds, subsidies to Mission Hospitals, and a limited number of scholarships to British Universities.

(b) THE CANTON-HANKOW

RAILWAY.

or

This railway, construction of which was begun by an American Syndicate more than twenty years ago, bas 273 miles in the middle section, to be completed. In the South 140 miles from Canton to Shiukwan, 69 miles from the Hunan border, have been built by

a Provincial Syndicate. In the North, from Wuchang, with funds derived from the Hukuang Loan, 260 miles have been constructed, to Chuchow. Between Chuchow in Hunan, and Shiukwan in Kwang tung, there is a gap of approxi- mately 273 miles. The estimated cost of completing the Kwangtung section of 69 miles, where there is heavy tunnelling work to be done is about $9,000,000, or approx- imately $130,000 per mile. This estimate does not include equip- ment.

The average cost per kilometre of the construction and equipment of Chinese Government Railways, works out at just over $90,000, or $145,000 per mile. On this basis, and after allowing an additional $100,000 per mile for the uncompleted Kwangtung section, the total cost of compler ing the railway would be $46.465,- 000. It might be rather more, cr alightly less, but it is obvious

deal only approximate figures, and even if the actual cost of completing and equipping the railway prov- ed to be ten million dollars

that we can

with

in excess of our estimate it would be possible so to adjust the scheme we are putting forward as to cover this additional outlay. Taking $45,000,000 as the sum required, we Fuggest the raising of a loan of this amount, secured, as to in- terest only, on that portion of the Customs Revenues earmarked for the payment of the British share of the Boxer Indemnity. Interest at the rate of seven per cent, per annum during the amortization period would absorb $33,074,500. Amortization spread over a period of twenty years would require an annual payment of $2,250,000, or five per cent. of the total outlay, which would be a charge on the railway itself. A well-managed trunk-line in China ought, of course, to earn a great deal more than five per cent, on its capital, and we suggest that after amortiza- tion charges have been met, any available surplus during the first twenty years of operation should

be set aside for the construction of a feeder-road system in Hupeh, Hunan and Kwangtung. No trunk line yet constructed in China has been adequately supplied with a road-system tupping the country on either side, yet the cost of road construction in China-especially in the neighbourhood of stone- quarries is probably lower than in any other country in the world, owing to the comparatively low wages required for unskilled lab

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our.

con-

If we were to assume that the Canton Hankow Railway would earn sufficient only to meet inter- est and amortization charges, and that macadamized roads could be built at a cost of $10,000 per mile, the earmarking of $33,074,500 (the equivalent of 7 per cent, in-. terest for twenty years) for road construction would enable 3,300 miles of first-class roads to be con- structed by 1945. It would be taken for granted that the main- tenance of the roads, once structed, would be provided for by special taxation. If the new Rail- way, like the Peking-Mukden line were to yield a final proft of $9,151 per kilometre (after paying 5% interest on capital) a sum of over four million dollars per annum would be available for road con- struction, enabling eight thousand miles of macadamized roads to be constructed over a period of twenty years. (Although we have calcu lated on a basis of seven per cent. interest it should not be forgotten that as the capital is paid off the amount payable for interest will be reduced, so that an expenditure on interest of $33,074,500 spread over twenty years averages less than four per cent, per annum on $45,000,000).

obstacles to the carrying through There are, we recognize, certain

of the railway project, notably the vincial Railway Company, which, existence of the Kwangtung Pro- though unable to complete the line itself, may raise objections to its transfer to the Chinese Govern- ment. It might, however, be hoped that Chinese public opinion could be rallied to the support of a project which is likely to remain unfinished for an indefinite period unless some such scheme as We have proposed he adopted, especial- ly if the road-building scheme were extended to Southern Kwangtung. As regards the Hukuang Loan Agreement, it would not, think, be violated by the com- pletion of the Railway from the British share of the Indemnity, as provision is made for the meeting of any deficiency, "in the first place, from such Chinese funds as may be available so as to permit of the uninterrupted continuance of the work of construction." The completion of the railway on the basis we suggest would be by means of a loan secured on Chinese funds; it would not affect the security given for the original Hukuang Loan; and it would im- mensely enhance the value of the completed Northern section.

we

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