CO129-571-16 New Territories 13-4-1938 - 12-12-1938 — Page 29

enable her to support her currency.

We then suggested to the Foreign Office that an Inter-

Departmental meeting should be convened.

In the

last few weeks, however, a decision has been taken

by H.M.G. adverse to the grant of a Govt. Loan to

China, although the London Money Market is of

course open to the Chinese for raising money on

any economic proposition which can be made

sufficiently attractive. The chief arguments

responsible for this decision were, I think:-

(1) the political risks vis-à-vis Japan

of British Govt. financial assistance

(2)

to China in present circumstances;

the doubt whether such a grant to China

would be effective in saving her.

The Far East Dept. of the Foreign Office

have semi-officially expressed doubt whether this

attitude of H.M.G. gives any promise for pursuing

a cash the suggestion of ourselves making offer to

China to make themAMAGRODKANAM RE for an

extension of our period of sovereignty in the New

Territories.

However, after discussion, they

agreed that the New Territories question itself

should be fully examined at an Inter-Departmental

meeting (which they suggested might be held over

until September), so that at any rate we should be

ready with a policy on that matter if the Chinese

Government itself made a proposal to us offering

such extended rights in return for a cash payment.

In