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3. It was in fact Mr. Blackwell's proposal that we should instruct him to change the policy though Mr. Blackwell recognised that in that event we would be morally bound to compensate Hong Kong for any extra expense which might be involved. The Department primarily concerned (the D.T.I.) is not prepared to support this course and in the circumstances we could hardly be more Royalist than the King. It may be of course that the Governor's reply will not give us sufficient material of which we can make overt use in briefing British firms. If so a new situation arises and we have material to take quite a tough line with him in a formal despatch of 14 January 1958 (on file 489/400/01) in which Lord Boyd (then Colonial Secretary) agreed to relaxation of formal control over the financial affairs of Hong Kong on the understanding that the maximum use would be made of the process of informal consultation before decisions were taken on financial matters on which he might reasonably be expected to wish to comment or might say from time to time that he would wish to comment. This railway clearly falls into such a category. We did consider indeed whether we might make an explicit reference to this despatch at this stage but Sir David Trench is so hyp-sensitive to what he thinks may be criticism from here that we thought it better to keep this in reserve in case we were not satisfied with his reply.
4. I would still prefer to play it this way but, as will be seen from Mr. Laird's minute of 28 January, it is now urgent that I should write to the Governor by the bag closing tomorrow.
28 January 1971
(L. Monson)
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