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2576

Mr. Gorell Barnes.

Mr. Paskin.

Sir S. Caine.

They

In the despatch at No.3. on the 1947 file, the Governor of Hong Kong submitted proposals for the expenditure of one half of the Colony's allocation (£1 million) under the C.D. & W. Vote. I need not, I think, go into very full details of the schemes included in these proposals. are confined to the rural areas, and their scope is clearly indicated in the summary on pages 2 and 3 (flagged) of the enclosure to the despatch referred to above. Subsequent pages of the same enclosure go into greater details regarding the individual schemes, which are also freely commented upon in the minutes on the 1947 file. I would invite particular attention to Mr. Harding's minute of 31.12.47 and Sir Frank Stockdale's minute of 1.1.48 thereon. The schemes have found general favour in the Colonial Office, though with regard to some of them, which are of a remunerative character albeit experimental in the early stages, it has been said that finance by loan would be more suitable than C.D. & W. grant. It will be seen that one of the functions of the draft despatch now submitted opposite is to convey considered comments on the various schemes as such.

2. The other and perhaps the main purpose of the draft despatch is to indicate our general, if tentative, views on the theory and practice of Colonial Development as applied to Hong Kong. There is a certain amount of history behind this matter, which should perhaps be briefly explained. At the end of paragraph 3 of his despatch referred to at the beginning of this minute, the Governor of Hong Kong said that the Colony had no foreseeable means of supplementing Colonial Development Fund Grants. This sentence duly came to the notice of the Treasury (see No.5. on the present file), and appears to have thrown them into something of a turmoil. I should explain that the Treasury have a long standing feeling, which is undoubtedly partly justified, that the Hong Kong Government have not been energetic enough in taxing the surplus money which is bedly flowing about in the Colony, and that they consequently regard with a suspicion verging on paranoia everything that Hong Kong puts forward, Judging the matter against this mental background, they regarded the Governor's statement about supplementing C.D. & W. grants as just another piece of spineless

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inactivity/

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