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XNX SECRET.

MAR 1956

{

20

18

GOVERNMENT HOUSE,

HONG KONG,

4th February, 1936.

Sir,

I have the honour to acknowledge the

receipt of Mr. Malcolm MacDonald's Secret despatch

dated 26th September, 1935, transmitting a copy of a

letter from the War Office with which was enclosed a

copy of a letter addressed by the War Office to the

Admiralty regarding the surrender to the Colonial

Government of the Naval Arsenal Yard at Hong Kong.

2.

The position of the Colonial Goverment

in regard to the aerial ropeway was set out in Sir

William Peel's Secret despatch dated 29th December, 1931,

and I am unable to find in the War Office letter to the

Admiralty of 9th September, 1935, any ground for modifying

the conclusion stated in Sir William Peel's despatch,

namely, that the Colonial Government is entitled to

receive the Naval Arsenal Yard free from incumbrances

and that the diversion or substitution of the ropeway

is a matter for settlement between the Naval and Military

Authorities.

3.

The War Office letter appears to be based

on two main assumptions :-

(i) That the proposals for reprovisioning the

THE RIGHT HONOURABLE

J.H. THOMAS, M.P.

&C.,

&C.,

&C.

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