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I answered that I had not come to him to demand the punishment of any person, but to ensure that the territory leased in extension of Hong Kong should not be allowed to become a prey to agitators pending the taking over of the territory by me, that I had postponed the taking over of the territory to the 17th instant for the purpose of having matsheds erected in which to house the officials and police who would be stationed there while proper houses and barracks were being built, and to give him time to arrange the stations for the Customs now that the boundary had been settled. On this His Excellency said that there was no occasion for erection of new Customs stations as the Customs would remain where they were. I answered that such a course was impossible. He said this country is only leased, it is China, and there is nothing about Customs in the Convention. I answered that whether leased, lent, or ceded, as soon as the British flag is hoisted it becomes for the time as effectively British territory as Government House Hong Kong, and the Chinese Customs flags must be hauled down. I pointed out that all the waters of Mirs Bay and Deep Bay as well as the coastline to the South becoming British under the Convention it was impossible that the Chinese Customs authorities could act, as even if a vessel were found in these waters with contraband on board she could not be seized for having them in Chinese waters or territory and if resistance were offered to search and life was lost the Customs officers would be put on their trial for murder.

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