CONFIDENTIAL
Shanghai Bank on the other hand, would undoubtedly have assets outside Hong Kong, even if the Chinese were to overrun the Colony, and he wishes to be clear in his own mind whether you would wish to exercise your guarantee upon these in the event of a political
Cowperthwaite is also doubtful whether the Hong Kong and Shanghai Bank would agree to a several guarantee of any sort.
take over.
6.
It is hoped to reply to the Secretary of State's telegram No. 99 by February 11 the delay being caused by the Governor being busy with other matters at the moment.
7. I hear that Clague is raising fresh capital for the Hutchison Group. I believe that he has made arrangements to issue HK$50 million of cumulative convertible preference shares. He has hinted strongly to me that this will mean that he is in a position to put more capital into the tunnel scheme, and I imagine you will agree that such a happening would be a welcome step forward in this rather under-capitalised undertaking.
8. I am diffident about commenting on the present state of play as I cannot know the whole picture. I hope you will not mind if I make the obvious point that the tunnel has a political significance here, however much you may stress the commercial grounds on which your decisions have been and are based. The Governor and his Executive Council regard the tunnel, and such things as the airport loan, as weathercocks by which one can judge whether Hong Kong is in or out of favour in Whitehall and Westminster. In taking this position I think they accurately reflect the feelings of senior commercial and banking men here. I realise that this will immediately provoke the retort that the Hong Kong Government could easily make the weathercook turn in the right direction by a forthcoming attitude on such matters as the several guarantee.
But this really
is a Colony whose mental and emotional attitudes are those of 50 years ago in such matters; they expect the Mother Country to behave in a certain way and fell the political foundations slipping when she proves to have a mind of her own.
9. I labour this point because I feel that the unusual emotional situation in this unique Colony may have caused personalities on both sides to get at cross purposes. Clage, for instance, is as rich as Croesus and aims to be richer, but he is a typical product of the colonial mould and therefore feels distinctly ashamed of ever thinking of placing this contract with a non-British company. One does not have to be a psychologist to know that his feelings of shame make him brash and pompous. He and his like do, however, have very considerable influence in the import policy of their international companies and improve our balance of payments by many millions of pounds annually. If ever the time comes when you wish to gain a final point from Clague, then a meeting in a good olub after a good lunch and a lot of talk of horses and a brisk wave of the Union Jack and you should see him thaw.
10 I am copying this letter to Bunny Carter in F.C.0. and to John Gowers in C.R.E.D. of the Board of Trade.
MPVH: kbw
M.P.V. Hannam
Principal British Trade Commissioner.
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