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specialised knowledge is required the establishment of a small ad hoc official organisation for the purpose would be desirable. The essential condition would be the development and maintenance of the spirit of co-operation between Government departments and commercial enterprise which is already proving effective in the rehabilitation of public utilities. Full exchange of information as to availabilities; the establishment of an official agency for the dissemination of such information, and for the sponsoring of commercial procurement; and the maintenance of the present Hongkong "Rear Link" in London, and of the Hongkong agency in Australia, to assist in such action, are indicated. In the present difficult times, the best results, to the common good of all elements in the community, will be achieved only by co-operation along the above lines in securing for Hongkong, at reasonable prices, an adequate supply of building materials.
4. The development of import programmes, however, will not meet all the im- mediate dangers in the situation. If inflationary tendencies are to be countered, in connection with building costs as well as in other directions, some measures of control of the distribution and sale prices of building materials, after they have been imported, would appear to be essential. It is clear that, owing to shortages of supplies, the reconstruction of damaged properties is being retarded. As such materials are durable, and can be stored for fairly long periods, deliberate hoarding to maintain high prices must be prevented, and control over their allocation must be exercised in the interests of the community. Action on the following lines will be necessary:
(a)
Materials in short supply.
(i) It is recommended that the necessary powers be taken to secure periodical registration of stocks on hand, and as imported, together with particulars of the place of storage. The list of registrable materials may be in- creased or reduced as the supply situation develops.
(ii) Licences should be issued to importers of registrable materials for their sale to bona fide builders, stipulating the appropriate maximum prices, and prescribing a date by which they must be used in actual construction.
(iii) Maximum prices for sales of such materials should be prescribed and announced from time to time, usually on the basis of landed cost plus a reasonable percentage for distributor and retailer.
(iv) The use of the materials in construction should be subject to official
inspection.
(v) Government should take powers to requisition stocks of registrable
materials where hoarding thereof may be evident.
(b) Materials not in short supply, surpluses, salvage, etc.
It would appear that, except where Military surpluses, or stocks on hand with the Custodian of Property, may be disposed of as under (a) above, control would not be effective, and it would be impolitic to attempt to introduce it.
5. The above proposals to establish a system of registration in a Government pool do not imply any necessity for the physical custody of such materials to be assumed by Government. Their storage, in the interval between importation and use, could be the responsibility of the importer. The Stores Department would store materials imported by Government, and commercial and private importers would store in their own Godowns the materials imported by them. The controlling organisation would at all times have access thereto for inspection.
6. The necessary legal sanctions to secure compliance with the regulations regarding registration and licensing for use should include, in addition to a substantial maximum fine, provision for the confiscation by Government of any registrable materials in respect of which an offense might have been committed.
7. The active intervention of Government, in connection both with the procurement and with the disposal of building materials in short supply, would appear to be an unavoidable necessity at the present time. The additional costs to the taxpayer of main- taining, for a year or two, the ad hoc organisations required to further procurement programmes, on the one hand, and to control the disposal of materials in short supply, on the other hand, would be more than offset by the advantages of securing a reduction in landed costs and of the prevention of the profiteering which the present abnormal situation must inevitably encourage.
(Signed) W. G. WORMAL, Lt.-Col.
A.D.C.A., Supplies, Transport & Industry.
Hong Kong, 8th April, 1946.