CO129-545-5 Purchase of new passenger coaches for Kowloon Canton Railway 10-11-1933 - 31-1-1934 — Page 12

Encl. No.1

now attachito

يرة

و

arh.

2.

of

the agreed sum has been appropriated.

Secondly the system of credits for depreciation which may jeopardize the repayment of the locomotive loan will not be adopted for these coaches which will be treated on arrival and

erection as the property of the Chinese Section.

This

may seem to derogate from the security provided in the case of the locomotives but the security afforded by the technical ownership of the British Section in these

locomotives is largely illusory. If the Chinese Authorities

mean to honour their bond the ownership is immaterial. If not they can seize the locomotives at any time while on

the Chinese Section.

I should add that although repayment for the locomotives did not commence until July 1932, since that date $10,000 has been repaid monthly. The account now stands at $160,000 received and $307,298 outstanding.

Payments are made direct and not by deduction from credit

balances.

3.

The

These proposals and those regarding interest (6% per annum) are set out in the enclosed rough draft of instructions for the preparation of an Agreement. Agreement itself will have to be carefully examined by this Government and the Provincial Government of Kwang Tung whose signature will be essential in this case as in that

of the locomotives; but the Chinese Section is pressing for tenders to be obtained at the earliest possible date

and as I am anxious that this opportunity shall not be diverted to non-British suppliers I would request, if you approve of the scheme, that the Crown Agents for the Colonies may be instructed to obtain quotations as early as possible and the results cabled to me.