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His Lordship concurs in the view expressed by Mr. Secretary Chamberlain with regard to the possession of Gap Rock, and he is prepared to instruct Her Majesty's Chargé d'Affaires at Peking to inform the Chinese Government, when announcing the withdrawal from Sham Chun, that Gap Bock, the lighthouse upon which was con- structed and is maintained by the Hong Kong Government, will be retained. It is however very doubtful whether the present is a favourable opportunity for pressing for a formal cession.

With reference to the indemnity question, I am to observe that, as Mr. Chamberlain is aware, it has been intimated by Her Majesty's Chargé d'Affaires at Peking to the Tsungli-Yamen that provided satisfaction were given to this country in other matters, Her Majesty's Government might be disposed to forego payment either in whole or in part. It is true that the conduct of the Viceroy of Canton was unsatisfactory in that no efficient measures were taken by him previous to the occupation of the leased terri- tory for the preservation of order, but the evidence since received tends to show that neither he, nor any other of the high provincial officials, instigated the disturbances in any way, or was indeed privy to them. It must also be remembered, as bearing on the question of making any further demands on China in regard to the leased territory, that it is not intended to allow the Chinese authorities to resume jurisdiction in Kowloon City, which the Chinese Government consider they are entitled to claim in accordance with the Convention of June 9, 1808. For these reasons Lord Salisbury is unwilling to press the Chinese Government for payment.

As regards charging the expenses of the occupation to the Imperial Government, His Lordship would only observe that Sham Chun was occupied by the Colonial au- thorities in accordance with their own judgment of what was necessary at the time for the protection of the leased territory; that they subsequently desired to retain the district permanently, and that it is only quite recently that any request was put forward by this Department, that the retrocession to China should be deferred for a short time. The Colony has obtained a large extension of territory, the acquisition of which has for a long time and most urgently been pressed upon the Imperial Govern ment; and it therefore seems not unreasonable that it should bear à considerable portion of the expenses incidental to its occupation. Lord Salisbury would, however, be glad to learn that a fair proportion of the expenditure in question will ultimately be charged to naval and military funds.

His Lordship agrees that it would be desirable to obtain from China some pledge that the people living outside the frontier, who may have shown friendliness to the British troops during the occupation, shall not be allowed to suffer on their withdrawal, and although in all probability this could be arranged more effectively on the spot by the local authorities, he is quite prepared to send instructions to Mr. Bax-Ironside in the sense suggested in your letter.

28428

(Confidential.)

361

No. 261.

COLONIAL OFFICE to FOREIGN OFFIĆE.

[Answered by No. 264.]

SIR,

Downing Street, October 21, 1899. I AM directed by Mr. Secretary Chamberlain to acknowledge the receipt of your letter of the 17th instant,* in regard to the retrocession of Sham Chun, and to request you to inform the Marquess of Salisbury that as soon as a reply is received to a lettert which has been addressed to the War Office on the subject, the telegram, the draft of which is enclosed, will be sent to the Governor of Hong Kong, subject to any objection on the part of His Lordship.

2. Mr. Chamberlain, while not wishing to prolong correspondence and invite con. troversy on the subject, is not prepared to accept all the statements connected with the occupation of Sham Chun, which are made in your letter under acknowledgment. The occupation, or at any rate its continuance, was beyond question in the main dictated by considerations of Imperial interests, and the bulk of the cost of that occupa- tion should therefore be borne by Imperial funds.

3. Sir Henry Blake will accordingly be requested to furnish a full statement of the expenditure incurred in this connection, and when it is received a further represen- tation will be addressed to Lord Salisbury upon the subject. Mr. Chamberlain trusts that Lord Salisbury will then see his way to inviting the Lords Commissioners of Her Majesty's Treasury to pay an adequate proportion of the cost.

4. With regard to the question of the acquisition of Gap Rock, I am to observe that unless its complete cession is asked for-and Mr. Chamberlain does not desire to press this point further-there would seem to be little use in disturbing the arrange- ments which exist at present.

5. I am to add that a new Order in Council will, with Lord Salisbury's concur rence, be prepared and submitted in due course for Her Majesty's approval, amending the Order in Council of the 20th of October, 1898, and declaring Kowloon City to be in all respects and for all purposes incorporated with the rest of the leased territory.

6. Mr. Chamberlain notes with satisfaction that a communication will be made to the Government at Pekin in the sense of the last paragraph of your letter under ack- nowledgment, and Lord Salisbury will observe that it is proposed to instruct Sir Henry Blake, in the draft telegram enclosed, to address a similar communication to the Viceroy of Canton.

I am, &c.,

H. BERTRAM COX.

I am, &c.,

FRANCIS BERTIE.

28428

No. 262.

25035.

No. 260.

Downing Street, October 19, 1899.

MR. CHAMBERLAIN to GOVERNOR SIR H. A. BLAKE.

(No. 240.) SIB,

I HAVE the honour to acknowledge the receipt of your despatch, No. 231, of the 18th of August last,* and to thank you for your explanations in regard to the omission of certain Ordinances from the Schedule of the Ordinances excluded from operation in the New Territory, which is attached to Ordinance No. 10 of 1899.

(Confidential.)

COLONIAL OFFICE to WAR OFFICE.

[Answered by No. 266,]

SIR,

Downing Street, October 21, 1899. WITH reference to the letter from this Office of the 9th instant,§ respecting the occupation of the Sham Chun district by British troops from Hong Kong, I am directed by Mr. Secretary Chamberlain to request you to inform the Marquess of Lansdowne that Her Majesty's Government have now decided to withdraw immediately from that district, and to retire within the boundary of the leased territory, which has been provisionally arranged with the Chinese authorities.

2. Mr. Chamberlain therefore proposes, with Lord Lansdowne's concurrence, to telegraph to the Governor of the Colony to the above effect.

3. I am to request you to move Lord Lansdowne to cause an early reply to be returned to this letter.

• No. 244.

I have, &c.,

J. CHAMBERLAIN.

I am, &c.,

H. BERTRAM COX,-

L.F. transmitting copies of Nos. 254 and 255.

• No. 259.

No. 262.

No. 270, the telegram as sent.

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