What a shame that Britain has ignored the appeal to honor issued by the last governor of Hong Kong, Chris Patten, now Baron Patten of Barnes. Writing in the Financial Times last month, he called on the government to speak out against what he asserted is a violation by China of its commitment to democracy in Hong Kong.

Lord Patten wrote of Britain’s obligations under the 1984 Joint Declaration with China that transferred Hong Kong to the communist government in Beijing. Britain’s government, led by Lord Patten’s own Conservative Party, has stood silent during the student protests that have rocked the former British Crown Colony.

The story touches a nerve going back to the election of 1997. As a British and American citizen and an investment banker, I was appalled at how Prime Minister John Major, having knifed the Conservatives’ savior Margaret Thatcher and fearing the rise of Tony Blair’s New Labor, campaigned on a “Little Englander” plank of anti-immigrant bigotry.

The issue was whether to grant British citizenship to Hong Kong citizens of Chinese descent. It was a burning question because of doubt about whether China’s one-party system would honor its 50-year obligation, under the Declaration, to preserve Hong Kong’s special status as a democracy. Lacking means to enforce the pledge, at least Britain could provide an escape to its Hong Kong subjects.

Though many voices cried out for it at the time, the government defaulted. The decision was to deny Hong Kong Chinese this ripcord to safety. It was a morally reprehensible and economically boneheaded decision, and it didn’t even prosper in the polls. Labor won the election in a landslide. Canada picked up legions of productive immigrants from Hong Kong.

It’s rare in statecraft to get a clear shot at redemption. But Prime Minister Cameron’s Party has the chance to make good, by enacting legislation immediately to grant British citizenship to all — and their families — who would have been eligible in 1997. If they can’t vote for candidates of their own choosing in Hong Kong, they can vote with their feet.

It would be perverse to pass up such an historic opportunity both to right a wrong and to reap a benefit. It would give Britain a chance to win some of the world’s most energetic talent, right after persuading Scotland — a country of 5 million persons, where the leader of its Conservative Party claimed in 2012 that 88% of households were “living off state’s patronage” — to keep the Kingdom united.

The politics of immigration are even worse today than in 1997. But this is what leadership is for. Hong Kong’s people aren’t welfare tourists from the European Union or jihadists bent on imposing religious rule. The Hong Kong Chinese would rather stay in a free Hong Kong, and Britain should be so lucky as to tempt some of them to immigrate.

That China might retaliate in the commercial sphere is a worry beneath the dignity of a democracy like Britain. It would be allowing commerce to trump morals, which was Lord Patten’s essential point. It would never have been countenanced by, say, William Wilberforce, who in 1807 won the parliamentary campaign to end the slave trade in the face of caviling over commerce.

As for the gripe that Britain would be interfering in China’s internal affairs, this is as much a British matter as a Chinese one. They are both bound by the Joint Declaration, and Hong Kong Island and Kowloon — now representing 48% of Hong Kong’s 7 million people — were ceded by treaty to the UK in perpetuity, not leased like the New Territories.

In any case, this measure could defuse a potential catastrophe for China, whose campaign for legitimacy is being set back by these extraordinary protests. Creating a safety valve for Hong Kong citizens could give both sides breathing room as they maneuver for a practical accommodation. It would provide ample opportunity for all sides to save face and avert tragedy.

If Mr. Cameron turns out to be a weak, Neville Chamberlain type, perhaps the American Republican Party can seize the baton. Just now it could use an immigration policy that would set an example. I’d recommend moving fast, before Canada strikes again.

Mr. Wambold, who lives in New York, is managing principal of Corporate Partners LLC and a former managing director of Lazard Brothers & Co., Limited.