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I am sure that Lord Shepherd will find it helpful to see this
I am not complete picture of where we now stand on this project. myself really sure whether even the explanations in the telegrams at flags D and E really will dispose of all the difficulties at the other end over the question of the several guarantees if Sir John Cowperthwaite is right, as Mr. Hannam reports in his letter at No. 51, in thinking that the Hong Kong and Shanghai Banking Corporation would be averse to giving a several guarantee of any sort. I think Sir J. Cowperthwaite is pretty sure to be well informed on this point; and if this does prove to be the Bank's attitude, and if there is substance in the report that the Chicago interests or the so far unidentified Swiss interests (and I wonder how firm their interest really is?) would not require among their financial guarantees those of the Hong Kong Government or the Hong Kong and Shanghai Bank, then there will be a built-in incentive locally for seeking this finance from these sources, provided of course that the rate of interest is not too high.
2. I think it is a great pity that ECGD proved so stubborn and unyielding over the question of guarantees up to the point at which foreign interests came into the picture. Even if the project does now go to British Interests, the whole episode will leave I fear a
and local most unfavourable impression locally of ECGD's attitude; sentiment will believe (not altogether incorrectly) that ECGD have only moved from their earlier rigid and inflexible position because of the threat of competition from foreign interests.
3. I still feel that the Hong Kong Government are right in not thinking the project to be a particularly attractive one from their
But it has point of view, or on its own commercial merits. obviously acquired something of a mystique now (this is due in no small measure to Colonel Clague's own assiduous efforts to identify
and I share the the project with confidence in Hong Kong's future); Governor's view that, if the project is to go ahead, it will be a pity if it is lost to Britain, having regard to the unpleasant impression this would cause locally of Britain's general dis-interest in Hong Kong. As Mr. Hannam points out in his letter at No. 51, this could well have unfortunate results on our trade relations with
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