60
2.
I reiterate that my considered opinion is that the inclusion
of Article V, would, as a matter of fact, in the end prove
harmful to British prestige by encouraging the prostitution
of the British flag in Chinese Inland Waters by bogus British-
registered Chinese Companies. (3) "....the omission of
"Article V. might be considered by China as tantamount to an
"acknowledgment that the Chinese Government as represented
"by the Customs Administration had a right to function in
"Hongkong on their own terms". In the early days of the
Colony the British Authorities themselves recognised the
propriety of conceding facilities to China in Hongkong it-
self in order to enable her to protect her Revenue interests.
But it seems that our present-day local "die-hards" are more
Royalist than the King!
In regard to Peel's expressed desire to re-open
di scussion on the subject in Hongkong, I am prepared to meet
his wishes and I intend to proceed South about the middle of
next month. I trust that a definite decision one way or the
other will result: I am advising the Chinese Government that
if Hongkong finally rejects the Agreement in the amended
form, the Customs must inaugurate forthwith such Preventive
measures as may be deemed necessary to protect our interests,
and /