view about the Tung Wah Hospital proposal or to came to definite decisions on your other despatches before they visit Hong Kong, since we gather that their present view is on the whole unfavourable to Hong Kong's case, and it can only be hoped that the impressions which their delegates will receive in the Colony will alter this.
2. There are, however, one or two points which we should have to ask you to elucidate before we could accept the analysis given in your despatch of the University's financial needs. We should like an estimate of the effect that raising the fees to 50% over the 1941 level would have on the number of students, and how any fall in that number would in turn affect the University revenue. Your despatch assumes an increase in the number of students, and on that the plans for an increased number of lecturers in paragraph 10 are based. Some doubts have been expressed about the justification for these proposed appointments, and we think that further consideration should be given to whether the uncertain situstion in China, the institution of the University of Malaya, and the deterrent effect of increased fees will not between them keep down the number of students below the level at which the expansion envisaged would be justified.
3. We note that it is proposed to invest H.M.G.'s grant in the rehabilitation loan to be repaid to the University by equal annual drawings of capital and interest over fifteen years; and that these amounts should be used to meet the greater part of the annual cost of the increased staff and expenses.
The effect of this proposal would be that £250,000
/ provided
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