CONFIDENTIAL
Reas 41576727
for 43495
20
Sir,
9610 :
29
[REG 1. MAR 22
GOVERNMENT HOUSE.
HONGKONG. 9th January, 1922,
3e this
I have the honour to acknowledge the receipt
of your Confidential despatch of the 17th of August with regard to the cost of living in Hongkong.
2.
Estimates of changes in the cost of living in
the Colony over any long period are greatly complicated by variations in the sterling exchange value of the dollar and this fact would render it very difficult, if not impossible, to arrive at any index figures even approximately accurate.
3. In my Confidential despatch of the 19th July, 1920, I estimated that, at the date of writing, the cost of living had increased by at least 40% since 1914, and I pointed out that any considerable fall in the value of the dollar must result in a further increase in local prices.
The exchange value of the dollar, which in the middle of
8.d.
s.d. 1920 was approximately 4/-, is now 2/7, and there has been during the last year and a half a general advance in the cost of all the items specified in your despatch under reply. The immediate tendency is towards a fall in the price of
articles imported from Europe and a rise in the cost of
labour.
4.
To meet the exchange difficulty various
arbitrary rates of exchange, graded and otherwise, have been
adopted for the conversion of sterling salaries into local
currency.
THE RIGHT HONOURABLE
&c.,
WINSTON CHURCHILL, M.P.,
&c.,
&c.