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Mr. Seel
Mr. Serpell rang up this morning and somewhat to my surprise said that he thought we could regard Mr. Pitblado's letter at No.50 on 54147/47 as conveying Treasury agreement to the expenditure now proposed (H.K. 4 million capital and H.K. 1 million recurrent in 1948/49), and that it was not necessary for us to seek any further agreement with the Treasury on this point.
I did not, of course, argue, but I certainly thought from paragraphs 6 and 10 of Mr. Pitblado's letter that there were at least two points on which the Treasury were not satisfied, namely, whether it was necessary to restore to the extent of H.K.4 million and whether the increase in recurrent expenditure which would be provided for by a grant of H.K. 1 million was justified.
Unfortunately, the Treasury require further time to consider the terms of the draft statement, which I hoped they would be able to deal with quickly, and there is therefore no chance of our putting our suggestions for revising the draft statement to the Governor forthwith.
I have dictated a further draft, now submitted, and agreed it with the Treasury and the Foreign Office.
The file should be recirculated to me quickly after this telegram has gone.
3.48.
14 Stang Kong
Tel 328 Imm. Scout 9/3/48
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