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sub-committee, a majority of whom it is suggested should be Chinese, might be selected after consultation with the chinese goverment. As we are now dealing with a lump sum and not with a series of annual payments allocation could be effected once and for all, i.e, the total sum could be split up among so many universities or institutions. The sub-committee's responsibility could either cease as soon as the lump sum had been allocated or it could continue to exercise administra- tive responsibility. The latter alternative seems undesirable as it would protract our statutory control over funds which we cannot control effectively without giving offence to the Chinese.
3. We are faced by difficulty owing to the accidental separation and difference which have grown up between the paid and unpaid balances. It is impossible to treat the two in exactly the same way. This imposes a certain amount of awkwardness on our gesture such as might, if we are not careful, spoil the whole effect. Please telegraph your observations
on the above, together with any alternative suggestions. If we were to declare willingness to remit unpaid
balance, will we be forced by circumstances simultane cus- ly to declare our intentions regarding the paid
deposits?
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