CO129-591-7 Estimates for 1946-1947 12-12-1945 - 14-3-1947 — Page 26

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55178/10/46

to

point is developed more fully in paragraphs 1 and 18

of No. 38, on which I regret no action has so far been

taken owing to the pressure of other work. The point

is also referred to in Mr. Lloyd's minute on

55358/46. Since that minute was written the question

of assistance to the Malayan Governments to meet the

cost of compensation for war damage has been raised

with the Treasury and the Treasury attitude has not

indicated any readiness to consider a gesture on the

lines of the grant to Malta. On the other hand it

must be remembered that Hong Kong has had to receive

advances towards meeting administration deficits since

1944 and these advances have so far amounted to about

£3,000,000. In deference to Treasury insistence on

the point the advances have been described as loans

on terms to be settled later. In a conversation with

Mr. Serpell on the telephone he expressed his personal

seemest view that there

little point in treating these

advances as loans as the prospect of Hong Kong being

appeared 16 be somewhat

able to repay seemed/Temote after taking into account

Hong Kong's other liabilities both actual and

potential. This was of course purely a personal view,

but it does perhaps indicate that Treasury are

beginning to recognise that the advances will in fact

have to be treated as free grants. In addition H.M.G.

will, as far as can be seen at present, have to assist

Hong Kong in meeting the cost of compensation for war

damage claims. In spite of Treasury attitude on the

question of similar assistance to the Malayan Union

Government, it is doubtful whether they would be able

to maintain the same attitude in respect of the

assistance required by Hong Kong.

Thus in my view, whilst it is unlikely that

Treasury would agree to any gesture similar to that

made in the case of Malta, nevertheless Hong Kong has

/received