2.
Extract from a semi-official letter from Mr.S.Caine,
Hong Kong, to Mr.Clauson, Colonial Office, dated 29th
October, 1938.
188
3.
We are at present waiting anxiously to see
Just how Hong Kong is likely to be affected by the
Japanese occupation of Canton. I introduced a rather
expansionist budget on the day following the landing and
we have since had to make some drastic pruning and prepare
for more if revenue should be seriously affected by these
developments. The business community were at first
inclined to be very pessimistic but I understand they
are now much more confident that a fair amount of trade
will continue to pass through Hong Kong and I hope that
our revenue will not in fact suffer very badly except of
course that the realization of any profit on the Railway 1s
distinctly problematical. We may even therefore be able
to restore in the early part of next year various items
of public works which have now been cut out of the
estimates.