OUTWARD TELEGRAM
48
This document must be paraphrased if the communication of its contents to any person outside Government Service is authorised.
Qt
94003/10/49
Typex
Copy for 53652/60 Why
TO HONG KONG (Sir A. Grantham)
Sent 11th October 1949. 19.45 hrs.
20.
10 1392 Secret
Hong Kong contribution towards cost of reinforceme: -
As you will doubtless have realised, scale of additional expenditure already incurred and which will have to be incurred in future as result of reinforcement of Hong Kong is of grave concern to H,M.G., especially io light of U.K.'s present financial position. Tetai additional expenditure to be incurred by three Services is estimated to be £5 million in 1949/50, including £2 million capital expenditure; recurrent expenditure there- after may be £2 million a year as long as emergency lasts and total capital expenditure 5 mill100.
2.
While I am aware of the Colony's financial position, and of course have no wish to depart from attituds indicated in Sidebotham's personal telegram No. 1281 of 11th December, 1948, I feel sure you will agree that it would oo ocarcely equitable if Hong Kong were not to take some share (according to her means) of this heavy burden. Defence of Hong Kong is of great Imperial importance, but it is also of importance to the inhabitants of the Colony. Nor should it be overlooked that much of this expenditure will take place in Hong Kong, with consequential benefits to trade and revenue; Service Departments estimate that some 80% of the total will be spent in Hong Kong. I hope therefore that after taking into account these considerations and those outlined below you will be able to put forward proposals for a contribution representing the maximum possible effort by Hong Kong in her present circumstances. Such proposals would of course raise the question of the means by which Hong Kong should meet this extra liability; I have yet to address you, as promised in my telegram No. 1135 in connection with the Estimates, on implications of the various demands on your financial resources, and I shall naturally take the present question into account in my promised communication.
3.
Before the war Hong Kong made a fixed annual contribution to the cost of imperial defence, stabilised in
9 at $6,000,000. It is possible that you may consider A similar arrangement to be an appropriate way of implementing Suggestion in preceding paragraph, or you may think some other method more suitable in present exceptional circumstances. Dossibility might be for Hong Kong to agree to assume responsibility for certain categories of expenditure as suggested in paragraph 4 below. I should be grateful to learn your views.
4.
Meanwhile following tentative suggestions as to possible categories of expenditure are put forward for your
One
/comments