CO129-503-2 Tenure of new territories in view of Chinese situation 19-1-1927 - 8-8-1928 — Page 6

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magnificent harbours which were capable of development, and which, if developed, would prove either a valuable adjunct or an unpleasant rival to Hong Kong.

It is, of course, quite clear and I think

fully appreciated by the Foreign Office that Hong

King and the New Territories stand or fall together,

and that there can be no question of giving up the

latter if we are to retain the former. Opinion in

the Fighting Services is now inclined to recognise the immense strategic importance of Hong Kong, and it

is unthinkable that we should ever consent to return

it or the New Territories to China. In these

need

circumstances, we now have no hesitation in authorising

Sir C. Clementi to go ahead with the development of

the leased area provided, of course, that he refrains

from any public pronouncement on the subject. Indeed,

the more fully the leased area is developed and the

more closely its life becomes interlocked with that

of Hong Kong, the stronger will be our case for its

retention if and when the issue arises.

The question of the form of lease to be given

is, however, more difficult. It must be expected that

legal opinion will take the view that a lease cannot be

beiod

granted fora longer than the title of the lessor, and

that if the New "erritories are only ceded for 69

more years Hong Kong can only grant leases running

for those 69 years. The question really resolves

itself into whether political outweigh legal

considerations.

As regards the former:

(a) Sir ^. Clementi made it clear that private

owners would not sink money in development if they

had no security of continuin g beyond the 69 years

now