54126/14/50
PRIORITY
SAVING
From the Secretary of State for the Colonies
To the Officer Administering the Government of HONG KONG
Date 25th March, 1950
64
NO. 320
Saving
2.
CONFIDENTIAL
Reference my telegram No. 422.
In paragraph 6 of my telegram No. 456 of 16th April, 1948 I stated that further discussions would take place between His Majesty's Government and Hong Kong on the apportionment. of the expenditure incurred on goods
supplied by His Majesty's Government after civil government had been established. It would be useful if Follows could bring with him the best appreciation possible in the circumstances of the manner in which the stores in question were disposed of e.g. by sale (the proceeds of which have already been paid over to His Majesty's Government) possibly by free distribution, and by retention for Government use. The points referred to below have also some relevance to this question even if a separate decision were to be reached on this particular question of "hangover" stores. I fully realise the difficulty in all the circumstances in arriving at ever an approximate estimate of the amounts involved both on this particular point and on the points referred to below but nevertheless it is essential that such an attempt should be made in order that both Governments may be aware of the approximate amounts involved in a settlement. Moreover the Comptroller and Auditor General has referred to the question of these relief stores in his Report to Parliament; and accordingly my Accounting Officer will probably be required by the Public Accounts Committee to supply the information asked for in paragraph 3 below.
3. Receipts by the Government of Hong Kong in respect of British Military Administration supplies, and from the supplies referred to in the previous paragraph, probably cannot be separated from a strict accounting point of view, from receipts from the sale of supplies purchased with the assistance of His Majesty's Government "loans in aid" subsequently converted into a free grant, referred to in paragraph 3(b) of my telegram No. 456 of 16th April 1946. So far as information on the above points is available in this country the position appears to be approximately as follows:-
/A.