I am doubtful about the argument in §6 of the
33 END
despatch, which suggests that the increase in prices brought
about by a fall in exchange is confined to imports from
sterling countries. Hong Kong currency is on a silver basis,
and I think that past experience shows that a decrease in
the market value of silver means an increase in the cost of
all commodities, and a general rise in the cost of living as
expressed in terms of dollars.
The sliding scale, which was adopted in 1920,
has been remarkably successful, and I venture to suggest that
it should now be adopted to meet the fall of the dollar below
the original limit of 2/6d. This is the logical course, and
it has the merit that it benefits all equally without
discrimination. It is true that officers, who at the present
time have their families in England, will not for the time
being receive as much as they would get under the scheme
proposed by the Hong Kong Government, but the average officer,
whose wife lives sometimes in England and sometimes in Hong Kong
will prefer the permanent benefit of the sliding scale to the
temporary remittance privilege.
Yours sincerely,
(Sa) A.G.M.Fletcher.
I return the copies of the despatch and telegram
which you lent me.