3
I doubt this. W.D. comemored
very definite understandings
He
productive undertaking, and I find it difficult
to think of any further arguments we can bring
to hear on this point. I think we shall
ultimately have to abandon this contention although it may be useful not to do so for the moment so
long as there is any possibility of compromise.
As to the allowance for capital expenditure on
water works I do not feel much doubt that the
War Office are right as regards the intention
but equally there can be no doubt that Hong Kong
were right as to the actual meaning of the Ordinance,
and if we accept the War Office view I think we
must logically amend the Ordinance. I am not sure,
however, that we should accept their view. The
War Office are prepared to stand on technicalities
in other connections and as the technicalities are
on our side here I think we should insist on the
law being carried out. We are in a particularly strong position as the War Office concurred in the
draft of this particular section.
Our position is less strong in relation
to Ordinance 14 of 1927 and I feel very doubtful
whether we can continue this argument. On the
other hand we can make our consent to amending
the ordinance conditional on concessions in
other directions.
As regards the treatment of profits on
sales of securities, the 7.0. attempt to draw
istinction firstly between book profits and
actual profits and, secondly, between the
profits arising from sterling appreciation
of securities and profits arising from
depreciation of the Hong Kong dollar.
As
regards