Ref: 2F(RMSA) 120/91/01
Treasury Chambers Parliament Street London SW1P 3AG
Telephone 01-930 1234 ext
3 April 1974
460
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S W Payton Esq., CMG, Bank of England Threadneedle Street LONDON EC2R 8AH
Dear Payton,
HONG KONG
Discussed with M
Cambridge
PIA
Is
I
Following the meeting in my room yesterday, I have prepared the attached draft letter for Barratt to send to Haddon-Cave. think there is some merit in a letter partly because this will defuse the exchange of some of its heat, and partly also because by the time Haddon-Cave receives it, the final figures should be fairly firm.
I would be grateful for your comments, and those of Aust, Cambridge and Stuart, to whom I am copying this letter and the draft.
The letter is plainly in some ways a bit laborious in explaining why we must attach importance to the "correct" interpretation of the relevant provisions, but I do not think that the fact that we are now likely to compensate on end-March anyway (largely be cause of the sharp end-month fall in gilt prices) should allow Haddon-Cave to enjoy the impression that his record has been accepted as perfect. This plainly has implications for Hong Kong's
behaviour under the new declaration, and though we need not altogether rule out now the possibility of giving Hong Kong a small end-month margin of flexibility for observance of their minimum holding obligation, I see no reason why we should take an initiative in offering this now.
Yours sincerely
Dfwann
(D.A. WALKER)
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