4
is rather more to be said for the Governor's proposal. According to my calculation, if it were adopted, H.M.G. would contribute other than from C.D. & W. funds, £500,000 capital and over the ten years about £400,000 in recurrent grants, i.e. a total of £900,000. The Hong Kong or Colonial development contribution would be £200,000 capital and about £700,CCO recurrent, total £300,000. I do not suggest that the fifty-fifty split is sacrosanct, but these figures do give us a case for putting the Hong Kong proposal to the Foreign Office and the Treasury and, on balance, I would rather do that than turn the Governor down. I suggest, therefore, that we inform the Foreign Office that, as a result of representations from the Governor and a re- examination of the figures, we should be glad if they would consider the increase of H.M.G's recurrent contribution on the basis suggested by the Governor.
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12. 11. 46.
Firmin Mic
I have no objection to trying the Governor's proposal on the Foreign Office. But if they object, we shall, I think, have to go back to the figures mentioned in the Secretary of State's letter to Mr. Bevin, namely a contribution of £ million towards the capital expenditure and £30,000 per annum towards the recurrent expenditure.
The present position is that we are waiting for Major Mayhew (in Mr. Bevin's absence) to authorise the officials concerned in the Foreign Office to work out with us the details of a joint approach to the Treasury. I would not, therefore, send a further letter to the Treasury, as Mr. Caine suggests. The Governor's proposals can be included in the memorandum of our detailed proposals (originally registered at No. 81 on Part I of this file) which should now be revised as soon as possible, so that we shall be ready with our detailed proposals when the Foreign Office are authorised to go into the matter with us. In this connection, perhaps the Private Secretary would try to find out from his opposite number in the Foreign Office when the Secretary of State is likely to get the further letter promised in Major Mayhew's letter of the 28th October (No.91).
Reverting to the memorandum, the terms of the telegram to Hong Kong (No.83) as well as the modification suggested in the Governor's reply should, of course, be taken into account in revising the memorandum as it at present stands at No.81. In particular, our proposals should no longer be based on making provision for a 10 year period only. We can, of course, show what will be the effect of our proposals over the next 10 years so as to bring out Mr. Caine's point.
We might perhaps make the further point that as the period under consideration is extended, the proportion of H.M.G.'s contribution to the aggregate expenditure becomes progressively smaller, in view of the relatively high proportion which the proposed contribution from H.M. G. towards capital expenditure
bears