CO129-538-1 Hong Kong University 31-12-1931 - 6-8-1932 — Page 206

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instalments of the indemnity, are to be handed over to the Purchasing Commission for the purchase of railway material

in England.

The remaining half of all future payments is to

are to

be handed over to the Board of Trustees, but even that com-

paratively small amount is not to be at the Board's unfettered disposal for the purpose of financing educational and cultural

activities, for it is expressly provided that "the accumula-

ted funds now on deposit and all future instalments "

be invested in "rehabilitating and building railways and in

other productive enterprises in China." It is true that the

funds spent in the United Kingdom are to be "regarded as loans,

bearing interest and providing for eventual amortisation, from

the Board of Trustees to the Chinese Government railways or

other productive enterprises concerned", and that "the amounts

attributable to the service of such loans will be paid to the

said Trustees and by them applied to educational purposes at

the earliest opportunity"; but no provision is made for en-

suring that interest will actually be paid or amortisation

provided for, and no mention whatever is made of the express

stipulation in the Willingdon Report that no railway project

in which it was proposed to invest N indemnity funds should

be definitely adopted until it had been "favourably reported upon by impartial experts, as being feasible, as a reasonably safe investment for trust funds, and as likely to produce a steady and adequate return on the capital invested."

The fact is that the particular railway projects which the Willingdon delegation had in view for endowment-fund purposes are by no means the same as those contemplated in the Exchange of Notes. What that delegation proposed was to apply the money to the construction of a new railway or new section of a railway. Hence their alternative suggestions of the completion of the missing middle section (445 kilm. in length) of the Henkow-Canton railway, or the construction of a new line across the provinces of Hunan, Kwangsi and Kwangtung, or through