If she were to make a spontaneous proposal to
His Majesty's Government we must of course be
prepared with a policy, but I must say that
at this stage I am inclined to think that the
recent adverse decision of His Majesty's
Government as regards a loan to China does
not encourage the hope that a cash offer on
our part to the Hankow Government for a more
secure position in the New Territories will
be favoured. The defence aspect of the case
may also have been weakened by the recent
decisions on the defence policy in Hong Kong.
However 11 the pros and cons will be
carefully examined and your own views are
most helpful and will be fully considered.