CO129-606-6 Hong Kong Loan- Financial settlement 7-3-1949 - 23-12-1949 — Page 24

2:

G.R.

fact that the damage occurred and the general moral responsibility of Government, when losses have been incurred in its own territory by its own taxpayers,

to decide the extent to which it is proper that compensation should be paid to assist rehabilitation. As regards the moral responsibility for the fact that the damage occurred, in my view, which I am confident that you will share, this does not rest either with H. M. Government or with the Hong Kong Government even though the damage was done by U. K. British or by citizens of Hong Kong, but with Japan. As regards the second point, you have already reached a conclusion in deciding not to have an ex gratia War Damage Compensation Scheme. "

"7.

I consider therefore that this is a somewhat fortuitous legal liability arising from circumstances which were unfortunately not envisaged at the time when the legislation was passed. In this connection I must refer to (next two sentences as in your draft)."

"18.

a

at

ef

Consideration of whether H. M. Government would be prepared to give further assistance in this matter would depend partly on the actual size and incidence of the financial cost and cannot therefore be taken further until the actual cost of liability is known; that is, until the problem has finally been disposed of on the lines suggested in paragraph 4 above. It is considered improbable that all claimants will be able to prove their case and it would be necessary to take into consideration the fact that owing to the decision of the Hong Kong Government not to have a War Risks Insurance Scheme or a general ex gratia War Damage Compensation Scheme, the sum involved whatever it may turn out to be, may represent the total liability of Hong Kong for War Damage Compensation.

/I