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Mr. Vernon.
I have seen Mr. Young and shown him Mr.
Palmer's minute of the 31st January. He feels sure
that the bank is making a considerable profit on the se
transactions, but he does not see that we can advance
much further without ascertaining the facts. He quite
agrees with the action suggested at X of my minute of
the 1st February, and would be glad if we would write
to Hong Kong.
He pointed out that on one occasion someone
in the House got up and asked the Financial Secretary
whether it was a fact that the Shanghai consular fees,
etc. were being remitted home whilst the Army were
requiring dollars to pay their troops. The Financial
Secretary replied that he would make enquiries, and
found that such was the case, and arrangements were
then made with the Foreign Office for their funds to
be available locally for the use of the War Office.
He thinks it would be very awkward if a similar
question were asked in regard to Hong Kong, but, of
course, in the former case one pocket was involved;
in Hong Kong there are the two pockets of His Majesty's
Government and the Hong Kong Government. He said that
the Treasury would be prepared to consider something
more favourable for Hong Kong than in (iii) of No. 4,
but that was a matter which could be settled later.
I submit draft letter to Sir Pethur JAST
you South
accordingly.
festoward yo
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