I have the honour to invite your reference to previous
correspondence regarding Portuguese Timor in general and the
mining concession held there by Mr A. J. Staughton [2] in
particular.

2. From information furnished to me by the Australian Trade
Commissioner at Batavia some three or four months ago, based on
your letter to him of April 12th, 1937 [3], it appeared that 'the
(Portuguese) Minister of the Colonies [4] had stated that the
Staughton concession was not in danger, but that he desired that
it should be utilised . . .'.

3. From the latest information I have received from His Majesty's
Ambassador at Lisbon [5], it transpires that the Portuguese
Government's attitude has been: that no transfer of Mr Staughton's
concession was recognised as valid, but that they were (i.e. when
the matter was discussed) ready to reverse the decision to revoke
the concession, if Mr Staughton appealed against that decision and
intended to spend money on development.

4. In the circumstances there would appear to be some risk, if
only the information referred to in paragraph 2 above had been
available, that Mr Staughton may not have taken the action
necessary to obtain reversal of a decision to revoke his
concession.

5. I have lately mentioned the subject of this concession to the
new Governor of Portuguese Timor (Major Neves da Fontoura) who
passed through Batavia a few days ago. I was glad to find that he
is quite sympathetically disposed to the concession remaining in
Mr Staughton's hands, though he indicated that it was certainly
expected of Mr Staughton that steps would be taken to develop it.

6. The latest information I have received from Portuguese Timor (a
confidential report from a Mr J. K. Stephenson) [6] conflicts
somewhat with this official attitude, although, read between the
lines, it seems to furnish some explanation of this inconsistency.

Mr Stephenson states that Mr Staughton asks an 'assurance from the
Portuguese authorities that he may develop his concessions without
let or hindrance, and that subject to performance his titles are
honoured and valid, and not subject to outrageous transfer as in
the past; and that his employees and servants may at all times
proceed on their lawful occasions peaceably and not detained (sic)
as was Mr Bryant, or keys and possession of assets demanded
without due process of law as in my own case'. This assurance, he
says, has been refused. Later in his letter Mr Stephenson suggests
that if a 'climb-down by the Portuguese authorities' can be
obviated and a specific assurance obtained from them, he is sure
Mr Staughton will remit the necessary money, send a drilling
staff, and start work. Mr Stephenson suggests that the question of
'saving face' may be an important factor, and that Mr Staughton's
representatives and friends do not appreciate the importance of
this point, and have shown much lack of tact in 'waving the big
stick, which will never get them anywhere'.

7. A high-handed or truculent attitude may well have been a
contributory cause of much of the trouble that has occurred in the
past, and the time seems to have arrived when a change of attitude
may obtain much better results.

8. As a first step I would suggest that Mr Staughton, or his fully
accredited representative, should seek an early interview with the
new Governor, and put his case before him in as friendly a spirit
as possible, being careful to avoid any semblance of high-
handedness or hectoring. It may also contribute to smooth working
in the future if he will avoid all unnecessary recriminations
against Portuguese officials as far as possible. I feel sure that
he will meet with a friendly reception, and that Major da Fontoura
will not want difficulties put in Mr Staughton's way as long as
his representatives try to maintain friendly relations with, and
show due consideration to, the Portuguese officials with whom they
have to deal.

9. I hope that it may be possible to convince Mr Staughton both of
the importance of a tactful attitude towards the Portuguese
authorities, and of the need of demonstrating his readiness to
develop his concession.

10. I shall be very grateful if you will kindly cause enquiries to
be made of Mr Staughton to ascertain the present position, and in
particular to elicit (1) whether he duly appealed against the
decision to revoke the concession; (2) whether that decision has
been explicitly reversed; and (3) what action he is now taking to
effect the development of his concession.

11. If I could be given this information at an early date, and if
Mr Staughton is taking any early steps to open friendly discussion
of the matter with the new Governor, I shall be happy, if desired,
to write to Major da Fontoura personally as a sequel to the very
friendly conversation I have myself had with him on this subject.

H. FITZMAURICE