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3. In reply I put forward alternative proposal for a Committee of Custodians (your telegram No. 139 paragraph 3), and pressed him as hard as I could to accept it, adding that a joint statement could be issued, in which it would be made clear that both sides maintained their claims intact but agreed for the sake of good relations to shelve the issue. He consented to reconsider the matter in the light of this alternative proposal and to give me a reply in a day or so. He seemed to be attracted by the suggestion of a joint statement but gave no (repeat no) indication that the Chinese Government would be able to accept the idea of a joint Committee of Custodians. I said that I hoped to be able to show him very shortly a draft statement. I would therefore be glad if the 161 text promised in paragraph 5 of your telegram No. 139 could be telegraphed to me as soon as possible. It should provide for the appointment of Custodian Committee.

4. I also raised the point of the removal of the squatters, speaking on the lines of paragraph 4 of your telegram No. 139. Minister for Foreign Affairs said that in the event of agreement being reached it was obviously to the advantage of the Chinese Government as much as of His Majesty's Government that it should be put into effect without causing trouble. method of procedure should be discussed and agreed between the two Governments. (I do not think we can avoid this though it may well give the Chinese Government an opportunity to be troublesome.)

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