treated such expenditure as "recurrent" i.e. that
the expenditure to date had in fact been met with
the assistance of the "loan in aid" but it now
appears that the expenditure has been charged to a
suspense account pending a decision as to the
incidence of charge (see copy of telegram No.589 enclosed).
5. In the light of the position referred to
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above there are good rounds for supporting the Governor's request in paragraph 16 of his despatch No.48, repeated in paragraph 11 of his despatch
No.164, for a grant from H.M.G. on the lines of
the £30,000,000 grant to Malta. Before, however, considering the submission of such a proposal to the Treasury officially we should like to get, so far as possible, more precise information as to Hong Kong financial outlook for (say) the next five years including the revenue prospects, and a more precise estimate of the total "war damage compensation" bill and estimates of other special liabilities
arising out of the war such as those referred to
in paragraph 4 of this letter, without prejudice, to the decision as to ultimate incidence of charge of the expenditure.
6. I enclose a draft despatch to Hong Kong dealing with the Governor's request that H.M.G. should be asked to agree to a grant on the Malta lines. We should be glad to receive your agreement on the terms of the draft.
7. I am replying separately to paragraph 4 of your letter of 12th December 1946 (S.50169/04) regarding the form of control over Hong Kong
expenditure. I regret not having replied before.
Yours sincerely,
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54/54126/1/46
H
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