CO537-(1262-1649) — Page 199

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CO 537/1369

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(1/65) (4421B) Wt. 18047/424 50m: 7/45 C.N.L4. 748

C. O.

Mr.

J.B. Williams

2

Mr.

Caine.

Mr.

Mr.

00 163

16117/36/46. Economic.

Permt. US. of S.

Parly. U.S. of S.

Secretary of State.

159

February, 1946.

2

cms

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DRAFT.

SIR DAVID WALEY,

C.B., M.C.,

Treasury.

(77 in 19222/68/45)

K.C.M.G.,

28 Janna

78 in 19222/68/45Y

Note of discussion

(4)

FURTHER ACTION.

For Mr. Caine's signature.

My dear Waley,

In continuation of my letter of 23rd

January about Hong Kong duress notes

I write to say that in view of Morse's

illness and as there was clearly no

prospect of reaching any agreement with the

Hong Kong and Shanghai Bank in correspon-

dence (in this connection I enclose copy

of a letter sent me by Morse on 28th

January setting out the Bank's views), we

arranged a further discussion here with

representatives of the Bank on 5th February.

I enclose a copy of a record of the talk.

I should explain that It was clear

from this talk that it would be very

difficult indeed to arrive at any agreement

•

with the Bank which involved them in

taking any proportion of the liability

which Government could accept as adequate. Is was 13 be expelled,

was clear, of course, that the

representatives of the Bank were particularly

concerned with the explanation they would

have to give to their shareholders in

justification of the acceptance of a

substantial liability.

On the other hand, it was clear that

the Bank as well as ourselves would much

/prefer