While I find it difficult to criticise these proposals, which could hardly have a more convincing backing than that in the Governor's despatch at
12, they represent a large demand on the Treasury, and it would be unfortunate if we conveyed the impression that we have not given them full examination here.
It is, of course, impossible, without devoting days to the process, to examine in full detail all the items which go to make up the Governor's claim. There can be no dispute (even if one does not accept literally some of the claims, e.g. that in paragraph 4, that H. M. G. should not recover salaries paid to Hong Kong civil servants during the occupation) that the Colony has a valid claim for substantial assistance in meeting the immense burdens resulting from its fate as an outpost of the Empire which could not be defended. individual items must inevitably lose their identity in assessing that claim in terms of cash.
The
Mr. Mayle has already, in 13, given the Treasury an intimation of the order of assistance to Hong Kong which we might propose. The figure which he then gave is increased by £1,313,000 over and above the sum of various items of war expenditure which we are asking that H.M.G. should meet. The Treasury will, I feel sure, expect more explanation than the draft contains of this charge, which appears to be due to the inclusion of provision for scorched earth claims. By and large, however, the total figure of £8,500,000 free grant, plus a loan of £3,500,000 for the new airport, if that is eventually embarked on, is moderate measured by what Hong Kong has experienced. It is also reasonable, compared with what is being asked for for Malaya on account of war damage claims (£15,000,000 free grant plus £29,000,000 loan), and I understand that we have reason to believe that the Treasury have accepted in principle that there is an obligation on H.M. G. to help in meeting this claim, although the figures have still to be argued about.
The Hong Kong proposals rest, however, on two assumptions, the first of which is not easy. The second, that Hong Kong should not contribute towards the cost of military administration (when there was a large deficit), is probably one that will have to be accepted if only because Hong Kong could not pay. But the assumption that Hong Kong will not at any time put in a claim for war damage compensation, despite what is said in paragraph 10 of the Governor's despatch, must be accepted with some reserve. If the proposals for Malaya are accepted on anything like the scale we have suggested, there is bound to be some outcry if Hong Kong gets nothing. The ease with which it could be met will depena to a large extent on the generosity of the general settlement now roached.
Possibly