(i) a loan for railway works.
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(a) could not be open to public subscription.
(b) would have to be confined to Kwangtung Province
as otherwise we would be exposed to a charge by signatory Powers of infringement of consortium agreement.
(ii) See Peking telegram No.133.
The rights of Peking Government to sanction all financial contracts made with local authorities in China have hitherto been recognised by His Majesty's Covernment.
(iii) Any proposal that an endeavour should be made to secure the participation of His Majesty's Government in such loan (whether by guarantee or otherwise) would in view of present financial situation result almost inevitably in delay which would defeat your purpose.
In these circumstances it would not appear that a loan would be practicable unless firstly it was devoted to works (preferably other than railway) within Kwangtung Province and secondly the sum required was within the resources of Hongkong. It is possible that arrangements could be made for a portion of the balance of the trade loan to be made available for this purpose.
If you consider that this modified procedure would servė purpose in view please telegraph estimate of sum likely to be required. I imagine that in order to ensure good behaviour over maximum period the procedure would be to dole out advances from the loan as slowly as possible. In the meantime so far as immediate negotiations are concerned you are authorised at your discretion to take the line that if the Canton Government on their
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