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Northcote, in his note at on this file, also raises the question of general policy in respect of expired leases throughout the Empire, and perhaps Mr. Calder would say whether someone from the General Department should attend at the discussion with Mr. Looker.
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I have attached a resumé of the Chamber of Commerce Special Committee Report and of the Financial Secretary's memorandum thereon enclosed in No. 6. These give the respective viewpoints of the protagonists in this discussion at Hong Kong. has been a lot of talk on this question which has sometimes branched out into Side issues, but the point really under discussion is what terms are to be granted to the holders of 75 year leaseholds which will in the comparatively near future run out. Chamber of Commerce have asked that these leases should be renewed for 75 years on payment of a fair rent for the second period to be determined by an Arbitration Board failing agreement between the leaseholders and Government. Their case for this is weak, even by their own admission. They do not try to press home arguments based on the passage from Mr. Joseph Chamberlain's 1898 despatch since I think they were fairly well aware that the leases referred to therein were not those which formed the subject of their Report, and they rely mainly on a not very definite "moral right" behalf of the existing leaseholders. The alternatives put up by Government are those apparently approved by the Secretary of State in 1924 (for some reason the papers containing this important decision have been destroyed under Statute) and the suggestion put up by Mr.N.L. Smith that the sitting tenant might be offered, on expiry, a new lease at a full economic rent calculated on the value of the land and the building.
We are indebted to Sir Geoffry Northcote for reading these papers and putting up the alternative proposal in paragraph 4 of his note enclosed in No.12 which seems to me a very equitable solution since it offers an opportunity for Government not to take "its pound of flesh" in respect of tenants whose lease has been developed in a manner satisfactory to the Government.
Sir Geoffry Northcote raises, however, the question of general policy throughout the Colonies. The Precedents Clerk is unable to trace anything on this point, and the enquiries which I made whether it had arisen, particularly in the Straits Settlements where conditions are very similar to Hong Kong, were equally fruitless. This problem will come up in more and more Colonies as time goes on, and there seems to be much to be said for considering it on some general principle. For the moment, however, I do not think we need do more than hear what Mr. Looker has to say.
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