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Harbour Master, who, as Government Coaling Officer, was responsible for the very satis- factory arrangements in connection with the large quantity of coal handled.

25. Under date the 28th December, 1920, a circular despatch was issued from the Colonial Office to the Colonies regarding the recently passed Imperial Indemnity Act. It was provided in the Act that His Majesty in Council might apply its provisions to any of the Crown Colonies, but the Secretary of State pointed out that in the course of its passage through the House of Commons the Bill was so developed that in its final form it was closely bound up with conditions and transactions in the United Kingdom. It appeared to him that it was inexpedient to issue any Orders in Council under the Act, and the Colouies were invited to consider the alternative of local legislation. An Indem- nity Bill was accordingly introduced in the Council on the 1st September, 1921. It was opposed by the owners, who were represented by counsel, and it was then decided not to proceed further with the matter until the return from leave of Mr. Fletcher who had conducted all negotiations with the owners on behalf of the Government.

26. Mr. Fletcher came back to the Colony at the end of the year 1921, and, after further conversations with the owners, a proposal that half the money held by the Hongkong Government should be returned to them was put before the Unofficial Members of the Legislative Council. The owners were warned that in any event it was improbable that the Imperial Government would be able to accept the proposal; but the Unofficial Members rejected it, on the ground that, all British ships having been treated alike, it would be unfair to discriminate in favour of the ships which had been controlled in Hongkong. This matter was referred to at a discussion at the Colonial Office oa the 9th November, 1922, at which Mr. Burrows, a solicitor representing the owners, and Mr. C. R. Burkill, representing the S.S. Patriot and having an interest in the S.S. Wollowra, were present. The following note was taken :—

"Reference was made to negotiations with Mr. Fletcher and to an offer of divi- sion of profits on a 50/50 basis said to have been made by the Government of Hongkong but turned down by the Unofficials. Sir G. Grindle said that any offer on the lines referred to above, even if it had been decided upon by the Colonial Government, would undoubtedly have failed to secure the Secretary of State's sanction."

27. The Hongkong Government had now no alternative but to pass the Indemnity Bill, which accordingly became law by a unanimous. vote of the Legislative Council on the 18th August, 1922. The Hongkong Government's responsibility in the matter was clearly defined at the interview at the Colonial Office referred to in the last paragraph, the note of which reads as follows:

"Sir G. Grindle said that before the discussion went further it would in his opinion be useful if he were to state the general position of the Imperial Government in the matter. He stated that it had been necessary for war reasons for the Government of Hongkong to take the action which was taken as to requisitioning of ships. The Secretary of State's attitude as to this action was that either it was legal or if it were not-and for the sake of argument he was prepared to admit that it was hopelessly illegal-it must be made legal. The Indemnity Ordinance was not a device of the Hongkong Government to meet their own special difficulties, but was passed on the instructions of His Majesty's Government, as similar Ordi- nances were passed in Colonies similarly situated, and was intended to carry out the deliberate intention and decision of His Majesty's Government that shipowners in Hongkong and elsewhere in the Colonies must not be placed in any way in a more favourable position than ship- owners in this country. It had been suggested that the action of the Hongkong Government imposed a special tax on shipowners. Sir G. Grindle was prepared to admit this, but he pointed out that this was a disability shared in war-time by Hongkong with home shipowners, and that it could not be avoided. He observed that it was only for technical reasons, not specially affecting Hongkong, that it had been decided not to apply the Imperial Indemnity Act to the Colonies, and that as a matter of fact such a course had been very seriously considered. The Hongkong Ordinance was a piece of Imperial policy which no Secretary of State was likely to reverse, and it was inconceivable that it should be disallowed".

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