CO129-512-5 Boxer Indemnity Settlement 21-5-1929 - 21-5-1929 — Page 129

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Committee's Report.

But it is also being asked to

give an assurance that it will, if necessary, take steps to invest the money not in the construction of new railways, but in the rehabilitation of existing railways. The existing railways are believed to be in a state of complete breakdown. Their rehabilitation and this can not be attempted

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as a general measure until China is not only at peace, but also under the effective authority of a central Government will at best restore the railways to the earning capacity which was theirs', when they were first constructed. It would seem as if the first claims on the earning capacity of the reconstructed railways, would be the payment of interest on the capital originally subscribed. I completely fail to understand how this suggested transaction is to form an endowment fund for educational purposes.

9. It is rumoured that the Chinese Government is negotiating with various American firms for the establishment of a general system of air

communication which is to extend all over China.

This policy would be quite intelligible, for

obviously the Chinese Government can not hope within any reasonable period, to control the country by means of a system of railways. The Chinese Government may be prepared to spend some of the China Indemnity money, which it is proposed to remit, on railway rehabilitation but, as I have already said, I do not see how money sunk in this rehabilitation is to produce an

endowment fund for education, and I believe that the

system