4
The reason for the special rate adopted by the
Treasury is, of course, the precise opposite to the
reason for the Colonial Government's action, since
the Treasury system if strictly followed in December
would have deprived their local officers to an
unreasonable extent of the benefits of the recent
fall in the exchange value of the dollar. Their
special rate of 1/5 was accordingly devised in
order to give the local payees a rather more
favourable rate from the payees' point of view
than they would have been entitled to under the
customary system.
It seemed to me that
(1) the Colonial Government's proposal of a
fictitious rate as high as 1/8 was rather severe
seeing that
(a) it was to be a cut in effect only
on a section of the Government officers;
(16) tht that particular section had
already suffered over the last year or more
by the high exchange rate attained by the
Hong Kong dollar;
(2) the local officers of the civil Govern-
ment affected would be particularly incensed if
two fictitious rates of dollar exchange were fixed
by the British and Colonial Governments and they
themselves were condemned to the worse of the two.
It was therefore very desirable for the Colonial
Government not to go further than to adopt the same
rates as the Treasury in respect of December
which would mean some relief to Government finances
but by no means all that would be derived, of course,
from