FO371-46258 — Page 131

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paramount and FIC surplus is limited. Because they aro uneconomic and unsuitable for the trade 13 foot draught coasters are not the answer to meet Hong Kongs needs and solution obviously is provision of adequate lighterage facilities to enable ships for Hong Kong to load outside

the bar.

5.

The situation regarding other foodstuffs is equally dangerous and equally vague. It is more than six weeks since we indicated we could accept delivery from Australia of the first consignment of our allocation of flour, sugar, milk etc., but even now all we know is that a vessel has been allocated.

6.

So far we have been able to carry on by improv- ising but this has come to an end. Around us particularly in Shanghai is growing indication black markets, Arab strikes and labour unrest and we cannot expect to hold the situation here much longer unless by the arrival of supplies and the consequent pugging of prices we can demonstrate some stability to counter the present growing insecurity.

7.

Please signal urgently whether FIC rice can be allocated to us and advise reference para. 5.

8.

Circulation

War Office pass to Colonial Office.

Defence Office First Sea Lord Foreign Office C. 6. Tels. A.M.C.S.

S. of S. India

S. of S. Dominions S. of S. Colonies

TOO 051120

+ Not received this office

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