ww
12
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Government in respect of their period of internment. The se latter payments totalled $10,210,845.7%. 516
127635
(13) on 54113/1/47 progress (your savingram No. 686 of the 19th September)
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34.
I have already, in paragraph 4 of this despatch, explained that the view will be taken locally that His Majesty's Government should not seek to recover sums advanced to moot the balance of liabilities, such as the salaries of officers during their internmont, which the Colony was unable to moot after utilising its only remaining asset during the occupation period, namely, the income from the Exchange Fund. There is a further item which I consider should in equity be taken into consideration in reaching any decision regarding the repayment of this advance. This is a claim of £19,695.10.0 relating to a shipment of rice. Correspondence is still in
regarding this shipment which was consigned to the Military Administration in November, 1945. It was sold before the re-establishment of Civil Government and the proceeds were credited to Military Administration funds. No account was received until November, 1946, and in spite of the general ruling that accounts received after the close of tho military period should be met by the Civil Government, it hardly seems equitable that Hong Kong funds should be required to pay for supplies when the War Office has received the full proceeds of salo. If, therefore it is proposed to claim a refund of this final advance of £750,000, the above two items $10,210,845.77 for salaries to permanent officials and ex gratia payments to temporary officials in respect of their period of internment and £19,695.10.0 in rospect of the shipment of rice should, in my submission, first be deducted. This would leave a balance due by this Government to His Majesty's Government of £92,126.12.9.
35.
I earnestly trust that you will find it possible to approach the Treasury with a view to a settlement on terms at least as favourable as those which I have proposed. A free grant is still hoped for by the general public, but the gravity of the economic crisis in the United Kingdom is realised. Hong Kong is growing up politically. There will soon be a vocal Municipal Council and a barc unofficial majority in Legislative Council. In duc course, it is likely that that majority may become more substantial. There can be littlc doubt that the manner in which a settlement is roached now over this question of war expenditure will influence the unofficial attitude for years to come. If the terms of that sottlomont are reasonably gonerous, both officials and unofficials will go forward along the path of political development in a real spirit of co-operation. But if a niggardly attitude is displayed, this will be remembered in the years to come when the unofficial element is exercisin a much creator dopres of control. It is therefore most important that Hong Kong should at least be enabled to commone . its new poriod of British rule with a clean slate, freed of the commitments piled up through the war years in the common cause, over which it had no control. British rule in Hong Kong has many unfriendly critics and if a more generous settlement than that proposed proves possible, perhaps including the waiving of any claim in respect of the balance of the last advance of £750,000, an offer to meet the charges on the now rehabilitation loan for a period of, say, 5 years or a grant towards the cost of the reconstruction of Government buildings, such a posture would not only have a value politically out of all proportion to its intrinsic cost, but would be received with profound gratitude by the people of Hong Kong
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I have the honour to be,
Sir,
Your most obedient, humble servant,
Alhatic
GOVERNOR.