copy at (3) was prepared some time ago as an annex to a memorandum on British foreign policy in the Far East. (This memorandum did not in fact reach the stage of being considered by the Far Eastern Committee). The difficulties to which the termina- tion of the lease of the New Territories will give rise and some suggestions for meeting these difficulties are set out in paras.11 and 12 of (3)
In the paper at (1) Mr. N. L. Smith has advanced a further possible line of compromise with China namely that in consideration of the premature termination of the lease we should try to get China to agree to a modification of the boundaries of the Colony by ceding to us the built up area of New Kowloon. I understand that the Foreign Office are about to send us a paper proposing that we should forestall the anticipated approach by China by ourselves offering to surrender the lease of the New Territories on compress If so the suggestions made in Mr. N. L. Smith's memorandum at (1) as well as those made in the paper at (3) will require very careful consideration and the detailed information given on page 2 of (1) will be invaluable.
Mr. Mayle may care to know of the papers on this file and I have made a note on 25400 on which is registered the original (3) recording that any revision of that paper should take count of (1)one on this file.
?Await F.0.proposals.
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