CO129-628-13 Compensation- requisitioned railway materials and stores 1-2-1950 - 30-4-1951 — Page 53

51

consists

- 2

of a letter from Mr. L. C. Su, Managing

Director of the South China Iron Works Ltd., to the General Manager of the Kowloon-Canton Railway.

Contracts totalling approximately $900,000 are believed to have been placed with this firm and with

Messrs.Liu Ho Kou Iron Works Ltd. and Mr.Su indicates the type of article which his firm was asked to manufacture. This clearly shows that the Kowloon- Canton Railway in preparing the 600 wagons for fabrication, had more to do than "sorting, marking, preparing and delivering to ship". Furthermore, it is known that the requirements of the War Supplies Board were considered of sufficient magnitude to justify the engagement temporarily of a Chinese Engineer to super- vise their supply and in particular, to ensure that the 600 railway wagons were properly completed and shipped.." I attach a copy of the letter to which the Governor refers.

The War Office on the other hand, maintains that this interpretation of the matter is not correct and that Hong Kong did not in fact incur the cost of manufacturing the missing materials to complete the fabrication of these 600 wagons. They say that the missing materials were not manufactured or obtained in Hong Kong but in India and that therefore they are not liable to Hong Kong for the cost of any materials but only for £28,650 being £3 per ton for 9,550 tons in respect of services, i.e. stripping, assembling, sorting, marking and delivering.

We have been in touch with Lt.Col.Walker, who was in 1941 anager of the Canton-Kowloon Railway and whilst he came down firmly in favour of the Governor's

/point....