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(1) a loan for railway works.
55
(a) could not be open to public subscription.
(b) would have to be confined to Kwangtung
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as otherwise we would be exposed to a chare by signatory
Povers of infringement of consortium agreement.
(ii) See Peking telegram No.133.
The rights of Pekin · "overnment to sanction all financial
contracts made with local authorities in China have
hitherto been recognised by His Kajesty's "overnment.
(111) Any promosal that an endeavour should be made to secure the participation of His Kajesty's
Government in such loan (whether by quarantee or
otherwise) would in view of present financial sitaation result almost inevitably in delay which
would defeat your purpose.
In these circumstances it would not appear that a
loan would be practicable unlessfirstly it was devoted to works (preferably other than railway) within Kwangtung Province and secondly the som required was within the resources of Hongkonɛ. It is onsible that arran ements could be made for a mortion of the balance of the trade
loan to be made available for this purpose.
If you consider that this modified nrocedure would servé murnike in view olease 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
side
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