CO129-556-12 Naval Arsenal Yard- hand over to Hong Kong Government 4-2-1936 - 21-12-1936 — Page 21

4.

21

Enclo.No.3.

12

53547

35

proposed for the transfer of the Royal Naval Armament Depot as between the Colonial Government and the Admiralty set out in the letter (noted in paragraph 2 of the War Office letter) from the Rear Admiral at

Hong Kong to the Governor, copy of which is enclosed, only one remains unfulfilled, apart from the retention of £5000 in the hands of this Government pending the settlement of the question of the ropeway, namely the evacuation by the Naval Authorities of the Naval Arsenal

Yard.

7.

The contention of the War Office, stated in the sixth paragraph of their letter, that the value of the property to be surrendered has no connection with the purchase price of $2,000,000, agreed to and paid by the Colonial Goverment, can scarcely be seriously maintained. The value of the land to be acquired was always a factor in the mind of this Government in consenting to the arrangement with the Admiralty. As already pointed out in the fourth paragraph of Sir William Peel's Secret despatch of 29th December, 1931, the loss to this Government entailed by the retention of the ropeway in its present position is estimated at over half a million

dollars. In the present financial condition of the Colony it is perhaps unnecessary to stress the seriousness

of this fact.

8.

I should add that a conference between

representatives of the Military Authorities and the

Government has recently been held to explore the

possibility of rendering unnecessary the retention of the ropeway by the provision of road access to the Kennedy Road