Colonial interests exclusively of mainly,

and a

great part at any point

fall upon

the colonial

state

rat, of which will

of

exchequer.

"This Foreign Office letter can be, I think, very conclusively answered but I do not know how far Mr Chamberlain would be prepared to continue the

argument. The great point is to put an end to the present

state of things and though by withdrawing from Sham Chan we lose our lever for demanding compensation from China, I think we must lose no time in withdrawing. We had better write to the War Office

stating that H.M. Govt. proposes to withdraw & resume the boundary provisionally fixed and that Mr Chamberlain proposes with Lord Lansdowne's consent to telegraph to the Governor at once to that effect - and for

reply.

I have decided

on immediate

To the Foreign Office we should write,

stating

that as soon as we hear

from the War Office the telegram

draft of which is enclosed

be sent; we should add that

We do not accept

as passed

the version of what

as stated in the letter,

that in Mr Chamberlain's opinion,

XCR(86-7-0002-2619) 68-1-0007-SETE-12

The Sham Chan occupation

was mainly

an Imperial matter and the cost should therefore be borne by Imperial funds; that the

Governor

will be asked to

furnish a full statement of that expenditure and when received a further representation will be made when it is hoped Salisbury will invite the Treasury to make a large change

to

the cost; and as

to the Gap Breach that, when its complete cessation is asked for and Mr Chamberlain does not wish to press the point further- there is no use in disturbing existing arrangements, and add that as new

Lordship Order in Council will, with his Lordship's

concurrence,

be

prepared

and issued,

amending the Order in Council of

20

Oct. 98 and declaring Kowloon city to be in all respects and for all purposes of the law incorporated with the rest of the territory, and express satisfaction that

a communication will be made to the

Peking government

in the sense

of the

last paragraph of this letter and say the Secretary of State is instructed to make a similar communication to the Viceroy

Canton. Send the Foreign Office for concurrence the enclosed draft of Telegram

to the Governor C.Pd.

Cut out 20

20 Oct.

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