effect a junction with a continuation of the Russian Central Asiatic railway from Tashkend by Vernoe and Kuldja.

On the other hand, the correctness of this view is somewhat discounted by the fact that some time ago the Russo-Chinese Bank assigned all their rights under the concession to an independent French Syndicate, so that whatever may have been the original object with which the concession was secured, there is no particular evidence at the present time of the existence of a Russian scheme to invade Peking from this quarter.

(b) THE KAIFENGFU-HONANFU-HSIANFU RAILWAY.

The right to construct this line was granted in the autumn of 1903 to the Compagnie Generale des Chemins de Fer et Tramways en Chine, a Belgian company whose interests harmonise with those of the Compagnie d'Etudes, the concessionnaires of the Ching-Han Railway.

Under the contract,1 which was signed by Sheng Ta-jen and M. Armand Rouffart, the company's representative in China to whose energies the grant of the concession was mainly due, the company have the right to construct a line from Kaifengfu, the capital of Honan, which lies to the south of the Yellow River and east of the Ching-Han Railway, to Honanfu, and thence to extend to Hsian-fu in the heart of Shensi. The conditions are generally similar to those of the Ching-Han Railway. The loan is a 5 per cent. gold loan guaranteed by the Imperial Government, and issued at 90 per cent. The length of the line to be constructed between Kaifengfu and Honanfu is approximately 225 kilometres, and the estimated cost of construction is 110,000 francs per kilometre, or approximately £7000 per mile. In the first instance, therefore, the amount of the loan was put at 25,000,000 francs, but provision exists for increasing the amount to meet future requirements in respect of the section beyond Honanfu into Shensi.

Since the agreement was concluded the line has been constructed between Kaifengfu and Chengchow, where it connects with the Ching-Han Railway, and opened to public traffic in April last (1907).

The prospects of the railway commercially are exceptionally good. Connecting with the Ching-Han line, it will traverse a fertile

1 1 Appendix F, No. 3.

and populous country, ultimately penetrating and assisting in the development of a province which by repute is one of the most wealthy regions in China. Furthermore, in the event of the German scheme for the extension of the southern fork of their Shantung line to Kaifengfu maturing, the development of a valuable traffic may be confidently expected. Competition will be set up between Hankow and Tsingtau as the port of entry for the province of Shensi. This should induce low rates, which again should re-act favourably on the trade, resulting in a rapid increase in its volume and swelling the traffic receipts of the line immediately serving it. Again, extension in a westerly direction to link up with the Russian system of Central Asia, if an improbable, is not an impossible, development, or, as hinted in the note in regard to the Chengting-Taiyuanfu Railway, the Russian system might in the fulness of time be continued into China from the west and link up with the Chinese system at Hsianfu. In either case an increase in traffic must necessarily ensue.

(c) THE SWATOW-CHAOCHOWFU RAILWAY.

The Treaty Port of Swatow, in the province of Kwangtung, opened to foreign trade by the treaty of Tientsin, is the starting point of a small local line that runs through easy country to Chaochowfu, the seat of the local government, some 30 miles inland. The enterprise, which was undertaken at the instance of Mr. Cheung Yung, a native of Swatow, who amassed a vast fortune in the Straits Settlements, was completed at a cost of $3,000,000. The necessary capital was subscribed entirely by Chinese, the work of construction being in the hands of Japanese engineers. Matters were somewhat delayed in the earlier part of 1905 owing to serious friction that arose between the Japanese and the natives in connection with the expropriation of land for the railway. The difficulties, however, were in due course settled, the railway being completed and opened to traffic at the end of 1906.

The object of the line is to bring Chaochowfu, which is a prosperous city and the chief centre of trade for the eastern portion of Kwangtung and Western Fuhkien, into direct communication with the sea. It is a line that with reasonably good management should yield a fair return and give a considerable impetus to the trade, both export and import, of Swatow.

(d) THE CANTON-KOWLOON RAILWAY.

The island of Hongkong became a British Crown Colony in 1843. In the years that followed it became obvious that the acquisition of territory on the adjacent mainland was essential to the existence of the colony. In the first place, the cramped conditions of life on the island promised to form an obstacle to its development; and secondly, from a strategic point of view, with the mainland in hostile hands the island was virtually untenable, or as Mr. Wingrove Cooke put it, "if any other Powers should take Kowloon-and what is to prevent them ?-the harbour of Hongkong is lost to us."

Wingrove Cooke was not the only man who saw the necessity that had arisen. Sir Harry (then Mr.) Parkes was also acutely conscious of it, and very shortly after the Canton Provisional Government was established in 1858, he took the opportunity, which his position as one of the Commissioners gave him, to arrange with the Governor of Canton a perpetual lease of an area of four miles in the Kowloon Peninsula. The lease was subsequently confirmed by the Imperial Chinese Government in the Peking Convention of 1860. In 1898 a further area of mainland was brought under British jurisdiction by the grant of a lease for ninety-nine years.

In the same year the British and Chinese Corporation obtained a concession for the construction of a railway between Canton and Kowloon, it being one of the five lines exacted from the Chinese Government by Sir Claude MacDonald on the grant of the concession for the Peking-Hankow line to the Belgian Syndicate. Until quite recently, however, nothing had been done since the preliminary survey nearly seven years ago.

This inaction on the part of the British concessionnaires became the subject of strong criticism by the late Governor of the Colony, Sir Henry Blake, by the Hongkong Chamber of Commerce, in the columns of The Times, and other places, it being strongly felt that if Hongkong was to remain the distributing centre for South China railway communication between the colony and Canton was essential.

In order to show the importance attached to this line by those in a position to form an opinion, the following remarks by the Hon. Gershom Stewart of Hongkong, speaking in October 1905 in

support of a petition to the Governor in this connection, may with advantage be reproduced.

After dwelling upon the length of time that had been allowed to elapse by the concessionnaires without making any attempt to work the concession, he continued:

"Whatever the reason, the fact remains that a big financial body like the British and Chinese Corporation have utterly failed to utilise the concession that they have held, and it is unreasonable to suppose that this colony will sit still and run the risk of tremendous injury without endeavouring to do something to protect itself. . . .

"I would be averse entirely to urging the colony to pledge its revenue in the spirit of adventure in any enterprise, however hopeful the result might look, but this is a matter of exceptional interest entirely. I would consider any expense the colony might go to as advisable as any outlay on water supply or for sanitary purposes. It is necessary to protect ourselves. As any individual man who is attacked by his enemies will gladly accept a blow on a non-vital part if it saves him a blow on a vital part, so, I think, we ought to be willing to undertake some risk in laying out a portion of our revenue, so that we may save the whole. I think it would be perhaps fair, if Your Excellency agrees with the prayer in our Address, to point out that this colony annually subscribes a very substantial sum for Imperial purposes. Kiaochau has cost Germany £3,500,000, and the French have spent millions in Tonkin, and they are allowing that colony to increase its liabilities by guaranteeing interest on their railway into Yunnan. The case, as put before you, is put in the worst light because it is perfectly likely that, if the colony is allowed to take a hand in this enterprise, people might offer to build the railway at a less guarantee than we have asked for. . .

"This proposition is not put forward by us as the best possible one. If any better one came forward this Association would give it its entire and hearty support. What we would like to see laid down is the broad principle that for the preservation of this colony, and the safeguarding of British interests in Southern China, the colony be empowered, if necessary, to pledge its credit to ensure the making of this railway and securing the terminus in Kowloon."

As has been remarked, these observations were made in October 1905. Before the end of that year serious steps had been taken to secure the early construction of this important line.

At the risk of repetition, it should be observed that the line falls into two clearly defined sections. For an estimated distance of about one hundred miles, between Canton and the boundary of the Kowloon territory, the line runs through a country which is subject to Chinese jurisdiction. At the Kowloon boundary, however, it falls within British jurisdiction, the distance between

this point and the port of Kowloon being rather more than twenty miles.

The arrangement arrived at in principle between the Chinese Government and the British and Chinese Corporation in 1898 was confined, of course, to the former, or Chinese, section, the British section being a matter for the consideration of the Government of the colony of Hongkong.

This being the position, Sir Matthew Nathan, who succeeded Sir Henry Blake as Governor of the Colony, proceeded to address himself to the subject of the railway, with the result that in the early part of 1906 the construction of the section in the Kowloon territory was undertaken.

In the meantime the British and Chinese Corporation had opened negotiations with the Waiwupu on the subject of the Chinese section of the railway, and after a series of vexatious delays they succeeded in negotiating an agreement on the 7th of March 1907.1

By the terms of this document provision was made for a loan of £1,500,000, redeemable within thirty years from the 7th of March 1907, by annual drawings commencing in 1920, in accordance with the amortisation table annexed to the agreement. The price of the bonds to the Corporation was 94 per cent. of their nominal value; while the loan, which bears interest at the rate of 5 per cent. per annum, is to be secured by a mortgage on the whole undertaking and unconditionally guaranteed by the Chinese Government. The administration of the railway is vested in "a Chinese managing director (appointed by the Viceroy) with whom will be associated a British engineer-in-chief and a British chief accountant"; provision being also made for working arrangements to be entered into between the Governor of Hongkong and the Viceroy of Canton for the joint operation of the British and Chinese sections.

With these matters satisfactorily settled, the loan was issued to the public in April last, the bonds being taken up at par,—a circumstance which affords a sufficiently striking testimony to the value of the security presented by the undertaking.

Construction has now commenced, and in the opinion of Sir John Wolfe Barry and Mr. A. J. Barry, consulting engineers to the Corporation, "the line offers no serious engineering difficulties, and can be completed in all respects as a first class railway of a standard gauge within a period of three and a half years, at a 1Appendix F, No. 4.