CO129-566-21 Military contributions 7-5-1938 - 31-1-1939 — Page 22

SEEN

BY DEPT

30112

No. CONFIDENTIAL (2)

05538/38

19.

22

28 DEC 1938

GOVERNMENT HOUSE,

HONG KONG.

10th December, 1938.

Sir,

14

I have the honour to acknowledge the receipt of

your confidential telegram No. 222 of 15th November, 1938,

informing me of the acceptance by His Majesty's Government

of the proposals for a fixed contribution of $6,000,000 a

year, subject to review every five years and to the conditions

proposed in paragraphs 17 and 20 of my confidential despatch

of 22nd June, 1938, and subject also to the following further condition viz. that the acceptance of the system of fixed annual contribution is to be regarded as experimental,

subject to review at the end of the first quinquennium, with

the proviso that if the experiment is found to be unsatisfactory His Majesty's Government or the Colonial Government may propose

to revert to the present basis of calculation of contribution

at the end of the five-year period 1939-43. I note, with

regard to paragraph 18 of my despatch, that the observations

there made would be borne in mind when the time comes for

negotiation of the re-assessment of the contribution but that

His Majesty's Government do not wish to be committed at this

stage to acceptance of the suggested basis of re-assessment

so far in advance of the date of review.

2.

I submit for approval a draft Bill of an Ordinance

to amend the Defence Contribution Ordinance, 1901. Clause 5 of this bill has been included with the object of setting out formally the agreement reached as to the terms of revision of

THE RIGHT HONOURABLE

६

MALCOLM MACDONALD, M.P.,

&C., &c., &c.