D16.an 54126/6/48
Cypher (0.T.P.)
OUTWARD TRA
5178/21A/48
TO HONG KOAM (Sir & Grantham)
FROM S of S.. COLONIES.
Sent 16th April, 1948.
18.00 hrs.
INMEDIATE
No.456 Secret
Addressed Governor, Hong Kong.
Repented Secretary-General, Singapore, So.299.
High Commissioner, Federation of
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Melaya, No.492.
Governor, singapore, No.456 (Secretary
General please pass;. Governor, North Borneo, Ro.160, Governor, Sarawak,
NO.LLS.
The
Consideration of proposals in your despatch No.292 has now hoen completed. H.N.G.accept for the reasons given in your despatch No, 281, your recommendation, following the report of the War Damage Comiceton, that no compensation should be paid for war damage in Hong Kong. question of H.M.G.roviding any adaistance towards e compensation scheme for Hong Kong under the doolane Pion of October, 1942 (see peregraph 2 of my telegram vo Socretery- Geloral, Singapore No. 303 vepeated to you son Mc.457) dess not therefore anise.
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2% 3.A 0,ure however anxious to give practies. eseistance to Hong Kong as evidence of good-9132. end of thetr beliot in the Colony o future .. The oIteam of such assietance must ef course be determined on the one hand by X.M.G's abilavy to help in the light of conditions in the United Kingdom following the cappling van losses cafferod by United Kingdom Government and the extremely heavy burden of taration falling upon United Kingdom taxpayer, and on the other by the rapid recovery and present prosperity of Hong Kong. E.M.Q.are accordingly prepared to agree to a financial settlement as set out in paragraph 3 balos which would in their view be a reasonable and indeed a generous
one.
3. The Buttlement would be as followe!«
(a) In the first place B.N.G, will not seek sny contribution from Hong Kong towards the cost of the military administration:
(b) H.M.G、will treat as tree grents the advances mele prior to and after the establishment 2 civil government in Hong Kong, amounting to £3,250,000 in all, except. insofar 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),
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(e) H.. G. are prepared to make an interest-free loan to Eong Kong up to a maximum of £3,500,000 to supplement funds available to Hong Kong for the construction of the projected international airport at Deap Bey. (For your
information
(2) "the funds available to Hong Kong" would Include the cum received by Eong Kong if Kai Tak sarodroms were sold plus the $500,000 to be mat from K.K. loan funds, referrud to io paragraph 25 of your despatch No.292.
(1) The terms of the loan will need to foru the subject of further discussione aad in particular H. 1. Q. would requiro repayment of the loen in an appreciably shorter period then the 50 yuore suggested by you).
(1) E... are prepared to make a free grant of £250,000 for the Hong Kong University. (The precise uge to which that sum is to be applied would be the subject of further discussion between the two Governments.)
Au ragardo expenditure incurred on goods supplied· to Hong Kong by H.M.G. after the civil government had been re-established, as you are aware hitherto arrangements have only been tade for the Hong Kong Government to pay over to E. M. G. the cash receipts from sale of the storse, H. M. G. now feel
though they are not repeat not disposed to adopt an uncompromising attitude in the mattor) that the time has comp to consider further the apportionment between Hong Kong and H.M.G. of total expenditure incurred. They therefore conster that further discussions should take place between F. N.G. an Hong Kong on the matter and a further communication on this subject will be sent as soon as possibls
5. The proposala in your deepatch No.292 for assumption by R. G. or certain liabilites were fully considered bus in the clocvmetaness referred to in paragraph 2 H... regret that they did not feel able to meet your request that they should fake over the responsibilities listed in your despatch.
6. I trust that you will be able to inform me in the voar futuro of your acceptance of His Majesty's governmʊat's offer which I should emphasise I regard as generous in present Circume toacss. It is in my vica cosential and you will no doubt agree that the public announcement in Hong Kong ns to the details of the settlement should be issued to coincide with that b2 Malaya which as you will observe from my telegram No.457 anet be made before April 27th. This telegram is therefore being Solloved by another setting out a draft public announcement for Hong Kong on which I should be grateful for your early
observations. I am sure bat 1 can rely on you to make every effort to ensure that H. M. G. 's antion in these dificult times (the gravity of which have not purhaps always been ALLY appreciated) shall be taken by the population of Hong Kong as evideo of good-wi12 which it is in fact intended to be.
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