CO537-3702 — Page 138

PERSONAL.

Dear Sidebotham,.

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Government House động tông

19th May, 1948.

6

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Thank you for your letter of the 10th May. You have visited Hong Kong so recently that there is little fresh that I can write to you.

2. I am sorry that the financial settlement offered by H.M.G. for Hong Kong's war liabilities was received with so little enthusiasm by the Unofficials. Apart from the fact that the settlement leaves the Colony with heavy liabilities of an indeterminate amount, their attitude is a reflection of the general critical view which they take of H.M.G., so far as Hong Kong is concerned. The main cause of this is H.M.G's refusal to make a statement on the future of Hong Kong. This makes them fear that in a showdown with the Chinese, H.M.G. would climb down and desert the Colony. They will therefore scrutinise very closely the Kowloon City settlement, when it is made.

3.

You mentioned in your letter that a fresh approach had been made by the Chinese over Kowloon City and that a telegram would reach us before your letter.

However, no telegram has arrived so I presume there has been a hitch somewhere. The legal nundits seem to he taking a long time making im their minds as to whether or not we have a good case to go to an Inter- national Tribunal. Meanwhile everything is quiet but this is unsatisfactory from our point of view because it means that the Chinese can re-create an incident whenever it suits them.

4.

As regards the morale of the Civil Service, you were able to judge of this when you were here. It is not particularly high. The Salaries Commission Report did them very bare justice, and the whittling away that was done at Home was unfortunate. It is ironical that the whittling away was done so that the Hong Kong scheme should fit in with the Malayan and Singapore schemes, which I now understand have been thrown overboard by those w Governments which are proposing something far beyond what the Salaries Commission recommended. Then there is the question of housing which remains critical and causes much dissatisfaction. In this connection we have telegraphed to you a proposal that we should purchase 25 houses of a housing estate scheme. I sincerely trust that this will be approved,

5.

We hope to reply to your telegram on the Deep Bay Airfield project fairly soon,

but you will appreciate that this is a tricky subject, and we have got to be very careful from the political angle how we go about it. The arguments of the Chiefs of Staff to retain Kai Tak strike me as singularly unconvincing, and in fact if they are allowed to do so the whole scheme may be jeopardised. But we will be replying officially to your telegram.

6.

Herklots departs for the U.K. in two days' time. And we have no

J. B. Sidebotham, Esq., C.M.G.,

Colonial Office.