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Sir John Macpherson
I am sorry to have delayed this over the week-end but I wanted to consider whether we could use Field-Marshal Sir Gerald Templer's intervention at (229) as a lever with the War Office and Treasury on the money issue. After discussion with Mr. Campbell and on further reflection, however, I have come to the conclusion that we cannot do this and that the reply to Field-Marshal Templer should be on the lines of the draft opposite.
The Governor has indeed come a long way to meet the Treasury and War Office view on how the costs of the two extra units should be met. It may well be that we shall end up with nothing better than the formula at A in Mr.Wallace's minute of the 6th May. But I agree with Mr.Campbell's
recommendation in his minute of the 7th May as to the line to be taken in the further official meeting which is fixed for Wednesday. Although I feel certain that this will not be acceptable to the other Departments conaerned, it will give the Secretary of State a freer hand in the discussions in Defence Committee which must follow this meeting with the least possible delay.
If he has then to fall back on the formula in paragraph 4 of the Governor's telegram at (229) or even on the weaker formula which Mr. Wallace regards as the probable one, we shall end up with, he will at least have put his colleagues on warning that we shall fight the lands issue when it comes up in an effort to reduce to a minimum the compensation which the military authorities seem likely to demand over and above the cost of repovi sioning.
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Hong Kong telegram No. 412 is a little ambiguous.
It
is difficult to know whether it amounts to a withdrawal of the proviso which the Governor put in para. 4 of his telegram at (226) or not. His proposal in the telegram at (226) amounted to trying to keep the matter of compensation for military lands and the payment of the units separate, but the proviso in fact linked them because he made it clear
connected with the Kandhich he would seek that there were certain circumstances/in to recover from H.M.G. any money which he paid for the units.
2. When Mr. Ashton and I attended the meeting at the Treasury to take this matter further today we were faced by the War Office with a paraphrase of the first paragraph of Hong Kong telegram No. 412 which they had received from C.B.F. We had not intended to refer to this and it embarrassed us to have it thrown at us. We therefore left it that we would have a look at the telegram and see whether any further reference to Hong Kong was necessary or not, and if we decided that it wasn't then the Treasury would draft a paper to the Chancellor setting out the difference that still existed between the Departments and putting the matter up to Defence Committee for a decision.
3.
On looking at telegram No. 412 however of 28think that
and I it does raise a point on which we need clarification,
/have
1