CO129-606-4 Hong Kong Loan- government grant 1-4-1947 - 2-3-1948 — Page 87

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stage. But what Hong Kong actually pays will, 'I take it, be regulated by what the Colony can afford.

Finally, in paragraph 5, you say categorically that no provision need be made towards the net cost of the military administration before Civil Government returns to Hong Kong. I am afraid that we cannot agree with your reading of paragraph ? (iv) of the Appendix to the War Office letter, 16/Abd/1693 of 23rd February, 1945. This said only that the Treasury, having regard to the colony's remaining balances and its subsisting liabilities would determine, in agreement with the Colonial Office, the extent, if any, to which that Government should be called upon to contribute to the net cost of the military administration. We cannot, at this stage, agree that you should go so far as to say that because the colony had no free balances on 1st May, 1946, there is no question of it making a contribution towards the cost of the military administration. Our view on this question is that attention must be paid to the colony's general, if untapped, financial resources as well as to its actual balances at a given date. In the circumstances, I feel that the colony must show among its liabilities, a contribution (even if undefined in amount) towards the cost of the military administration.

I shall be grateful if you will amend your draft despatch particularly paragraphs 4, 5 and 6) in the light of what I have

written here.

I am sending a copy of this letter to Trevaldwyn (War Office).

Yours sincerely,

X

The Super