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The Postmaster General had never entirely approved the agreement.
Naturally the Conglom Aling Kanz Gort demurred, but ultimately they accepted (without referring the matter to higher authority) a refund of about half the amount due. They should not have done this without referring the matter home.
The claim were untenable, and if Knable then (1) they could claim 1897 & 1898 (2) the Hong Kong Govt would be entitled to compensation from the Imperial Post Office, which determined the route and caused the loss when the mails were diverted to the new one.
Unfortunately the Hong Kong Govt has accepted the compromise.
I am sending a copy, marking the portions of the first letter bracketed in red and sending the second such in original for return, drawing their attention to the contention that the Indian P.O., not the Japan P.O., altered the route; and it is the Postmaster at Colombo who intercepted the mails and sent them via Tuticorin.
It does not seem equitable that the Hong Kong Colony should suffer any loss in a matter entirely outside their control. Mr Chamberlain regrets that the proposed compromise has been accepted without authority by the Hong Kong Govt and is saying that, although it is much to be regretted that the proposals of the P.O. were accepted without previous reference to the S. of S. by this Office and the Postmaster General, but that he has no alternative but to sanction the compromise.
There is no need to refer this matter to the C.P.O. or to the Postmaster General of this colony or to the General Post Office, as the Hong Kong Postmaster and the H.K. Post office have already been informed.
Approve the acceptance of the compromise, and so inform Audit throughout.
GPO L(x)-12435--2000-1-90 19231-3000-7-99