CO129-615-5 Harbour craft used by Hong Kong Government- financial arrangements 11-1-1949 - 27-1-1950 — Page 9

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that the early rehabilitation of the port of Hong Kong, for which these craft were essential, was in the interests of H.M.G. and that the

dmiralty did in face assume responsibility for a programme of 100 harbour craft which is in essence represented by the craft now under discussion (Admiralty letter M/SVP/ET 5127/45 to the Commander-in-Chief, East Indies Station, refers).

5. For these reasons, as well as for those advanced in the original Hong Kong despatch No. 19 of the 30th January, 1948, and in the present Savingram No. 992, we consider that the compromise settlement proposed in paragraph 4 of the latter is the most equitable and simplest way out. Hong Kong have spent over $1,800,000, or £112,000, on these craft, and are willing to hand over the proceeds of sale if any of them can be sold; that apart, the passing of cash would be avoided, and with it the consequent political outery in Hong Long, such as always accompanies any revival of these issues arising from wartime expenditure. This is an important consideration in present circumstances.

6. Should you, and other Departments concerned, feel unable to accept this compromise, we should of course have to go back to the Governor for a further expression of his views; and I imagine his reaction would then be to include this issue with those arising from the late war on which he has already announced his intention of sending us a compendious despatch, as a corollary to consideration of the proposals which at the instance of the service Departments we put to him for a contribution to the cost of reinforcing the Colony. For this reason the Service Departments may be

/interested