receiving a free grant. This criticism itself could be disposed of without much difficulty when it as pointed out that grant was conditional on unjor part of compensation being found from local resources, but if not, it is certain to court more powerful opposition over payment in suspense. You will, I am sure, realise that in spite of any effort of mine, geature of His Majesty's Government will completely lose its value. I feel it inemabant upon me
*
10 the circumstances I have explained, to urge that offer should be modified in some degree.
I am
ito If it is felt that acceptance of actual liability of war cost is impossible, I must earnestly recommend for your approval an ex gratie grant of £1,000,000 which could be announced to the public as a token payment to Hong Kong Government in recognition of the part played by the Colony in the war effort. convinced that something on this line would go fur to meet criticism by appealing to local pride and it could, no doubt, be justified by emphasis on grave difficulties which His Majesty's Government are now facing. It would, in fact, clear suspense account over which there is so much feeling, but His Majesty's Goverment would not repeat not be committed to acceptance of liability of volunteer pensions for future.
5. I should be glad to learn whether your rely rules out all hope of waiving claims in respect of sms 11 craft supplied during military period to replace pre-war harbour craft removed or rendered unserviceable by Japanese, see paragraph (corrupt group) of my despatch
(12) || No. 292 and my despatch No. 19
54026/6/47 6. I shall telegraph urgently coments on draft
statement.
Copies sent to:-
Treasury
**
Correction received 23rd April,1948.
Board of Trade Foreign Office
Mr. Crombie.
Mr. D.R. sergell, 0.2.E,
Mr. Pitblado.
Mr. Marker.
Mr. Scarlett.
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