CO129-606-5 Hong Kong Loan- Financial settlement 2-3-1948 - 4-10-1948 — Page 27

ten Answers

26 APRIL 1948

troduction of a compensation scheme would inflict an altogether crippling weight of taxation upon local community. In the circumstances, and in view of the fact that the Colony did not participate in a war damage insurance scheme prior to outbreak of Pacific war, and of the fact that rehabilitation of industry and

commerce

does not appear to be hampered to any material extent by lack of financial resources, the Government of Hong Kong has recommended that no compensation from public funds should be paid for war damage.

3. His Majesty's Government, after most careful consideration, have decided to accept this recommendation by the Government of Hong Kong. Neverthe-

less, they are anxious to give practical assistance to the Colony, as evidence of good will. The extent of such assistance must necessarily be determined by the ability of His Majesty's Government to help having regard to conditions in the United Kingdom following the crippling losses entailed by the war and the heavy burden of taxation falling on the United, Kingdom taxpayer. In spite of these factors, they have felt able to offer sub- stantial assistance to the Colony, and have accordingly agreed to ask Parliament for the necessary authority to implement the following decisions.

4. As regards expenditure arising out of the war it has been agreed that:

(a) In the first place, His Majesty's Government will not seek any contri- bution from Hong Kong towards the cost of the military administration; and (b) His Majesty's Government will treat as free grants the advances made

Written Answers

20

prior to and after the establishment of civil government in Hong Kong, amounting to £3,250,000 in all, except in so far as that sum has been used for the purchase of stores for re-sale which has resulted in cash receipts by the Hong Kong Government.

(c) His Majesty's Government will give a further free grant of £1,000,000 to assist the Colony in resolving prob- lems arising out of expenditure con- nected with the war.

5. As a further expression of their will- ingness to assist Hong Kong, His. Majesty's Government are prepared:

(a) to make an interest-free loan to the Colony up to a maximum of £3,000,000 to supplement any funds available to Hong Kong for the con- struction of a modern airport of inter- national standards;

(b) to £250,000 University.

make a free grant of for the Hong Kong

6. Further discussions will take place between His Majesty's Government and the Government of Hong Kong on the ap- portionment of the expenditure incurred on goods supplied by His Majesty's Gov- ernment to Hong Kong after civil govern- ment had been re-established,

7. Having regard to the financial difficulties with which the United Kingdom is itself faced as a result of losses incurred during the war, and having regard to the heavy burden which the United Kingdom taxpayer is called upon to bear, the above proposals represent a great effort and a very real proof of sympathy and good will.

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