MR. CARTER, Curtis Green.
CONFIDENTIAL
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Copies to:
Sir A. Galsworthy
Mr. Godden
Sir Albert Rodrigues had a good talk with the Secretary of State on July 10th. The object of the visit, as you surmised, was to get some more positive statement about Hong Kong's future out of the Secretary of State. Sir Albert argued that the key to the situation was to retain business confidence and, more important, mass confidence. If people were continually told that the Chinese were going to come in anyhow some day and if they did not co-operate now they would be in trouble when the Chinese did arrive, eventually they would begin to reinsure. As far as the business people were concerned, there was not much movement of capital as yet, but a.lot of them were thinking of moving to Taxwan. It was important to keep reiterating in positive terms that the British meant to stay. Secretary of State authorised Sir Albert to say, if he thought it necessary on his return, that he had had a talk with the Secretary of State who had authorised him to say that what Lord Beswick said in the House of Lords still represented H.M.G's policy.
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The
In a general discussion of the situation, Sir Albert said that the Chinese were looking for a paper victory. The Hong Kong Government had won the first two rounds and the Chinese had to find some way out of the impasse. They had been frustrated at every turn. What worried him was the fact that a large number of "bad hats" were now out of work and ready to make trouble. He thought that the deportation of four or five of the top leaders at the right moment was probably the best next move, The communists had good organisation but not much in the way of experienced leadership. If the deportees refused to cross the border or the Chinese refused to accept them, this would be a considerable propaganda victory for the Government. Otherwise, morale was terrific and he had never before found such a response from the ordinary people. Chinese pressure on water and food supplies had been a great mistake and had alienated the ordinary people. The police had been quite excellent and, in consequence, had retained the sympathy of the man in the street,
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