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As to the form in which assistance should be
granted, the proposal in January 1942, was that it
should be by way of loan, and in view of all the
uncertainties of the future outlook, we should
willingly agree to that on the understanding of
course that the question of just how much of the
could be
total assistance could be granted should actually
be recovered from the future Hong Kong Government,
or whether the whole or any part should be converted
into a free grant, would be a matter for consideration
after British administration has been re-established
in the Colony.
We assume that in any case the
advance would be free of interest.
On this basis, and since the expenditure
undoubtedly arises out of the war, it would seem to
us preferable that the money should be provided
under the Vote of Credit, and not by way of
ordinary grant-in-aid.
That is the more desirable
because it would no doubt be easier under that
procedure to adjust the methods of control to the
somewhat unusual conditions under which we are
working.
I am sure you appreciate that we have
no desire to escape any proper control in this
expenditure, and we have in fact kept in the closest
touch with you as regards commitments already
incurred, in view of the probability of Treasury
assistance being required before long.
The
erdinary machinery of grant-in-sintral is, mer
however, applicable. Even the cases of Burma an d
British Somaliland are not really parallel because
machine
in those cases an effective Government/still existed
after the enemy occupation. So far as there is still a Government of Hong Kong, it resides in the Colonial Office. The application of anything
approaching the ordinary grant-in-aid procedure
would
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