18
I agree with Mr. Gent that there is no
cause for alarm in these estimates.
There is no
point in having reserve funds unless we are prepared
to use them in hard times, and it is unreasonable
to hope that things will not improve in Hong Kong
in the next few years. Even if the surplus for
1937 is reduced to the figure shown in the estimates,
Hong Kong would still be in a fairly sound position
compared with many other Colonies. Actually, if
peace is preserved in China we can legitimately
hope that China herself, and therefore Hong Kong,
will benefit both by the increased currency stability
and by the general improvement in world trade, so
that the revenue may prove to exceed the estimate. happy On the other hand, the currency is in the má bake
position that no decline in its value can be
forced upon us (although we could engineer a
decline if the policy of deliberate inflation were
thought in Hong Kong's interests), and Government
need not therefore fear a forced increase
burden of its sterling commitments.
in the
The currency
is also in such a position that looking to the
more distant future the Government ought to secure
some revenue from the investments of the Exchange
Fund. A rise in the value of the Hong Kong dollar,
although it might render it inexpedient for the
Government to take revenue from the Exchange Fund,
would reduce the burden of sterling commitments;
while a fall in the value of the dollar, while it
would increase that burden, would also create a
surplus in the Exchange Fund which should in due
course become available for purposes of general
revenue.
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5. Caine
9. 12. 36.