CO129-606-4 Hong Kong Loan- government grant 1-4-1947 - 2-3-1948 — Page 14

14

not surprising as they are all represented through their heads in the Councils of Government.

The proposals which it is now desired to place before the Treasury explained Hong Kong's request for financial assistance by the inclusion of provision for the University and the Airport, The latter of which has strategic implications.

As I see it the problem is shortly, what should Hong Kong pay and what should it not be required to pay for its share in the war, and that hinges on the whole question of its military contribution and I should like to elaborate this aspect.

•

Until the end of last century the

The War Department position was as follows: laid claim by prescriptive right to certain lands in Hong Kong which it used as capital to finance any development or alteration in its programme. About 1898 Mr. Joseph Chamberlain, then Secretary of State for the Colonies, addressed Hong Kong with the suggestion that the position should be regularised by the substitution of an annual monetary military contribution in place of the military lands. I went into this matter throughly in Hong Kong though the papers are probably now destroyed, and I can state that Hong Kong accepted a military contribution in substitution and not as an addition to the military lands arrangement and started paying on the basis of 1/6th of the gross revenue from about 1901.

That the one scheme was in substitution for the other seems to have been forgotten or overruled though I could never trade any papers on what occurred, but in the twenties Hong Kong was most anxious to recover the military lands, part of which are situate in the very centre of Kowloon peninsula and of the commercial district in Victoria, Hong Kong, preventing,inter alia, the Peak tra m from descending to harbour level. was assessed in the Oakley Reward at a figure which I forget but which was I think between 18 and 25 million dollars, The dollar

The value

being then roughly 2s.6d. Hong Kong under

protest agreed to pay but its financial resources were exhausted in the general strike which occurred and the transaction was never put through.

when

Sir Sidney Caine, then Financial Secretary, Hong Kong took a hand in this matter and arrangements were proceeding to transfer the military from the central areas to outlying areas on the basis of a transfere of land. I cannot recollect whether the arrangement was on area or value basis, but the War Department are little likely to have agreed to anything that they did not consider entirely in their own interest.

The

}