CODE 18-77
26/1
Mr Hoare HKD
?
CONFIDENTIAL
Subusson
Th
HKK
Reference
.PA
#
100/3
RECEIVED IN REGISTRY
20 JAN 1984
DESK OFFIONE, INDEX
PA
REGISTRY
Action Takeni
S
HONG KONG: CURRENCY STABILISATION
1. Article XII of the Letters Patent reads:
"In the making of any laws the Governor and the
Legislative Council shall conform to and observe all rules, regulations, and directions in that behalf contained in any Instructions under Our Sign Manual and Signet."
Article XXIV of the Royal Instructions enables any member of the Legislative Council to make proposals. However, it adds the following proviso:
2.
"Provided always that every ordinance, vote,
resolution, or question, the object or effect of which may be to dispose of or to charge any part of Our revenue arising within the Colony, shall be proposed by the Governor, unless the proposal of the same shall have been expressly allowed or directed by him."
The Exchange Fund Ordinance (CAP 66, 1979 edition as amended by the Exchange Fund Ordinance 1983) fell within the proviso to Article XXIV of the Royal Instructions. Section 3(3) of the Ordinance allows the Financial Secretary to borrow for the account of the Exchange Fund. Section 3(4) imposes a ceiling on such borrowing, and Section 3(5) enables the Legislative Council to increase or decrease that ceiling. It is required to do so "by resolution proposed by the Governor with the approval of the Secretary of State."
3.
The words "by the Governor" were required to be inserted as a result of legal advice given by Mr Cruchley in minutes dated 4 and 19 November 1968 (FP9/240/2). These minutes contain a good deal of what I may perhaps be forgiven as calling "colonial theology". I will not attempt to summarise them. If it should be thought desi rable, I would see no objection to copies being sent to Hong Kong. In a short minute of 9 December 1970 (MF6/393/1) Sir A Grattan-Bellew disagreed with the earlier advice, and I am inclined to agree with him.
4. The position as I see it is that when the words "by the Governor were inserted into the Exchange Fund Ordinance the effect was to prevent the Governor from using the option given to him by Article XXIV of the Royal Instructions to allow or direct that another person should propose resolutions in the Legislative Council for the purpose of increasing the ceilings in accordance with Section 3(5) of the Ordinance. The effect of removing those words will be that the proviso to Article XXIV of the Royal Instructions will once more apply in full.
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