CO129-551-4 Canton-Kowloon Railway Working Agreement 16-11-1934 - 5-12-1935 — Page 32

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cement factories were also enraged by the fact that native

cement had not been purchased. Cantlie wondered how the

purchase was affected by our Indemnity agreement and the

promise given by the Ministry of Railways that Indemnity

funds would not be used outside the British Empire.

I was rather vague on the first point, as although

Calder-Marshall is fully aware of the position, I did not

think it necessary to tell Cantlie that according to the

Foreign Office interpretation of the agreement, we could

not demand that purcahses out of loans raised on the

security of the China half of the Indemnity installment s

should be entirely restricted to the British Empire.

The assurances given by the Minister of Railways (to Calder-

Marshall) are another matter.

Cantlie says that the story of these purchases

appeared in the Shanghai Chinese Press (Hsin Wen Pao, he

thinks) during the past few weeks, but I have been unable to

trace it, though I had the files of the newspaper in question

for several weeks past searched when Calder-Marshall mentioned

it to me.

Calder-Marshall tells me that he has spoken to

Han Lih-wu about the matter, in the hope of getting payment

out of the Indemnity loan funds stopped by the Board, so as

not to create an undesirable precedent.

will have to find the money elsewhere.

In that case, Ling

Calder-Marshall

also proposes to tackle Yen Teh-ching, head of the Technical

Department of the Ministry about it. I understand it was Yen

who passed on to Calder-Marshall the original assurance of the

Minister of Railways in regard to the purchase of sleepers

(see Peking telegram to the Foreign Office No. 1088 of

November 4 1933.

Yours sincerely,

(Signed) A. H. George.