CO129-622-3 War damage compensation- requisitioned railway stores and materials 19-1-1948 - 31-12-1948 — Page 123

+ On the question of the mode of settlement of these claims as between the Chinese Government and H.M.G., we must, I think, agree with your view that H.M.G. could not 'make an unconditional cash settlement of whatever sum is ultimately agreed with Jardine's in respect of the requisitioned railway material, without any guarantee that H.H.G.'s claim in respect of the Kowloon properties would ever be met by the Chinese. Nevertheless, an arbitrary set off of the one claim against the other hen the subject matter of the claims is quite unrelated would be open to objection on political grounds. I take it therefore that what is contemplated is an approach to the Chinese authorities concerning both these claims with a suggestion that the simplest course would appear to be for settlement to be effected by a net payment by H.E.G. Subject to any views of the Foreign office, we should see no objection to an aproach on these lines.

S of the three separate claims enumerated in the fifth paragraph of your letter the interest of Hong Kong is confined to the first which relates to the return by the Chinese.of coaches and wagons belonging to the

We should British section of the Kowloon-Canton kailway. attach more value to the actual return of the rolling stock than to the receipt of compensation, and we should like to suggest to the Governor that their return would be a necessary prerequisite of the net settlement which the ar Office propose to make.

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..e cannot, however, approach the Governor of Hong Kong on these points without saying something about the progress of the claims of the Hong Kong Government themselves in respect of their own railway material shipped to the Middle East in 1941. My letters to Dyer of 14th May and to Golämmith of 9th June refer. The documents which we sent to the war Office on 23rd April, 1947, covered, in addition to Jardine's claim on

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