1
2
15
such a policy was opposed to the understood rule of
non-speculation by Colonial Governments. If the
Secretary of State gave his approval to the policy,
the matter would be settled, and it would not be the
Auditor's duty to criticise the terms of any particular
contract, provided that any limitations or conditions
laid down by the Secretary of State had been duly
observed.
3.
As regards the second point B, dealt with
in paragraphs 6- 11 of your letter, I see no objection
the view set out in paragraph 8 of your letter, and
I see no reason to interfere with the normal accounting
procedure for remittances to the Crown Agents; but I
have to point out that the existence of the forward con-
tract introduces a new factor, the result of which is
that on the date when a remittance is made (under the
contract) the transaction probably takes place at a
rate of exchange other than the rate ruling at the date
of the transaction, and that, consequently, a profit
or loss on exchange is actually made and should at once
be carried to the Exchange Account.
This entry in the Exchange Account is not one of
the normal entries contemplated by the Secretary of
State's despatch No. 431 of the 26th November, 1925,
and consequently the Exchange Account cannot properly
be used in this way without the sanction of the Secretary
of State, As, however, the forward contract system
should be referred to the Secretary of State if it is bo
be admitted, as explained in paragraph 2 above, and as
the entries in the Exchange Account follow automatically
upon the adoption of the system, the approval of the
system