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INDEXED
17
This is the telegram
3460
16 All
176 13 JUL 194ñ
22
10
F
referred to in Houyhony
1,93 ("E")
TELEGRAM from the Secretary of State for the Colonics to the Officer Administering the Government of Hong Kong.
Sent 6.45 Pemes 8th July, 1940.
No. 353.
Immediate
"D"
'
Your telegram No. 81. Following for Rogers from Treasury begins.
We shall not allow any
1. Your Paragraphs 1 and 2. transfer of sterling from whatever source to an account in the name of a residont in the U, 8. A.
S.A. Now York banke will not deal in free sterling. If a resident in the U.S.A. wishes to use. free sterling he would need to employ a third party in a country not covered by any arrangement with us.
2. Your paragraph 2. Wo esemed that the Chinese Govern- ment and Government banks and that Chinese residente here U.S. dollars: and aleo that exports to U.S. A. and Chinese remittances from the U.S.4. and Manila would provide ü. S. Á. dollars for the Shanghai market.
3. We expect sposdily to dry up existing free aterling balances of zesidents,da bhe U.5. A. and countries with which we have payments agreements. When all arrangements are concluded almost the only area left with free sterling shoʻld be the Far East oxeluding Japan, Residents of the areas subject to the Canadian, Dutch, Belgian and French Area Controls cannot of course deal in froe sterling,
In the result we should expect Ching's trade with tho U. 9.A. to be limited to nor dollar inoome. Over a period the number of other countries to which she might sell her sterling will become Cover and fewer: that is to say we expect the same practical effect on it we had a payments agreement with China. It may be as you suggest that the Chinese dollar will appreciate in terms of sterling and depreciate in terms of the U.S.A. dollar. We should expect therefore as a first result that the Stabilisation Fund will acquire aterling.
5.
As regards Hong Kong her trading and financial
relationg with China will nécessarily be affected by the in China's trading position. In so far as Hong Kong acta as m entrepôt between dollar countries and the sterling and Dutch areas, her business would anyhow be affected by the moanvres for import and export control nor in fores in those areas, We should like to put Hong Kong in the Storling Area, but so long as China is lefs free, it seems to be the lesser of two evils to leave Hong Kong free. Ende.
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