CO129-492 - Governor Sir Clementi - 1925 [12] - 1926 [1-5] — Page 509

through the project of the loop line connection.

Before the war the question was raised in connection

with the negotiations with the Canton authorities

for an agreement providing for the joint working

the British and Chinese sections of the Canton-

of.

Kowloon railway. Joint working was, in fact,

turned down by the Chinese, but a modus vivendi was agreed to after protracted negotiations, though, from point of fact, the agreement was never signed. During these negotiations it appeared that the Chinese authorities had looked on the question of

connecting the two railways as settled, the only

subject for further discussion being the manner in which the funds were to be provided.

After the war the constantly changing political situation has prevented anything from being done.

Various attempts have been made from time to time

to prove that there is actually an obligation on

the Canton Government to make the connection, but

the these have never carried much weight and have

been abandoned. It has also been suggested that

the article in the original Loan Agreement with the British and Chinese Corporation in which the respective Governments undertook that no line competing with

either the British or Chinese section should be built

to the detriment of either section, etc., might be made a peg on which to hang further representations (the idea being that in default of the loop line

it wỗ, nQ-Si qan to the Cantonin to develop the para connection,

of Canton aut Whampoa by meam of railway tracks) but this suggestion has also been considered of

little value.

Before any progress can be made, the first step

is to obtain the consent of the Canton Government.

This

It was believed, quel Croncandy, in dem tut if my sk

· póbayTM resist the Sunlifantry Canton on the groun

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491

This might have been easier in the past, but is not

likely to be an easy matter now. As shown in

enclosure 3 to this despatch, the Canton authorities

are fully aware of the importance of the railway to

Hong Kong, and the attitude which they appear inclined

to adopt is to insist on the development of Whampda

ae a quld pro quo. If the latter port were developed,

they hope that they will be able to rival Hong Kong,

and it would be immaterial to them, in these circum-

stances, whether the two railways were connected or not.

On the other hand, the need of the Canton Govern-

ment for money is such that it may be possible to

devise means for carrying this project through in epite

of the public utterances of their leaders, and it may

be doubted in any case whether they would go so far as

to refuse a grant for the purpose from the Boxer

Indemnity.

A

Apart from such a grant, two alternatives suggest

themselves: (1) a loan from the British and Chinese

Corporation under a private guarantee from the Hong

Kong Government; (2) a loan from the Hong Kong

if an orhinay loan was unacceptable Government itself. As to (1), a similar procedure

might be followed to that adopted by the Japanese in

connection with the construction of the Taonam-Tsitsihar

railway (13132). In that case a contract for the con-

struction of the line was entered into by the South

Manchurian Railway Company and the Chinese authorities,

on the condition that should the cost of the constructio

remain unpaid in whole or in part upon the expiration of

six months from the date on which the entire line

Should

have been completed and transferred to the Chinese

authorities, a loan agreement should be concluded between the Chinese authorities and the Company to

cover