CO129-571-16 New Territories 13-4-1938 - 12-12-1938 — Page 49

I

Kong contribution.

While it is true that the

retention of the New Territories is essential to

Hong Kong, as it is to-day, the original acquisition

of the area was due, as you know, solely to defence

+

requirements which in turn were based on the wider

considerations of the necessity of ensuring the

security of Hong Kong in the interests both of our

prestige and of our trade in the Far East. In these

circumstances, it seems to us that the acquisition of

the New Territories as an integral part of Hong Kong

cannot be regarded as simply a matter of domestic

concern for the Hong Kong Government alone.

5. We shall continue to exercise a prudent

finance in Hong Kong as well in the matter of

general surplus funds as in that of the currency

surplus, but in present conditions there is not

likely to be much chance of increasing the general

it is more likely that it will be necessary

reserves;

to draw on them to some extent to maintain the

Colonial Government's present essential social and

other (including defence) expenditure in the Colony.

Yours sincerely.

Ј

D. R. Cowell