C
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COPY
Enclosure
: 27797
REC!
673
REG 12 JUN 16
5% British Exchequer Bonda.
In order to save expense of Insurance &c. on the bonda coming out and coupons going home and also to facilitate and encourage small investments, the following procedure is suggested :-
The Hongkong & Shanghai Bank purchase 5 % Exchequer Bonds and hold same in London on a/c of the Hongkong Government. The Govern-
ment in Hongkong would advertise that it is prepared to accept sums of 25 and upwards in multiples of £5 (Bonds to be retained in London) and issue receipts to Investors, Interest payable half yearly on 1st. June and 1st. December, less income tax, on presentatio of the Receipt.
A Register to be kept in Hongkong of Investors, who could sell their holdings at any time upon delivery of the Receipt.
Payment for Bonds would be made at the Bank's selling rate of the day and interest (i.e. coupons) paid at the buying rate on London
on 1st. June and 1st. December.
The difference between the amount of Bonds held in London a/c the Hongkong Government and the amount actually subscribed for by investors in the Colony would be for account of the Bank, which would act as an Investor for the unsubscribed amount. Probably £5,000 would be sufficient to start with as more could be purchased at any time to
keep pace with subscriptions.
The Bank would collect the Coupons in London as they fell due end undertake anything else that was necessary free of charge. If the Government wished the Bank could arrange to keep the Register and issue the Receipts.
The only difficulty appears to be that of income tax as pre- sumably the maximum tax of 5/- would be deducted in the first instance and it would, therefore, be necessary for the Government to arrange with the Home Authorities to refund excess income tax deducted so
that