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The only comfort which the Governor offers is
that he is bold enough to hope that the new
regime in South China (where the central
government of China appears now to have come
to terms with the two recalcitrant provinces
of Kwangtung and Kwangsi) may lead to an
expansion in trade and consequently to better
times in Hongkong, in which event the withdrawal
of the levy will of course receive consideration.
The Governor says that at the first
reading of the Supply Bill on the 16th of
September the Colonial Secretary will be
instructed to refer to the proposed reimposition
of the salary levy in 1937 and the accompanying
decision to pay sterling salaries at not more
than $16 to the £ (18.3d. = $1) unless the
Secretary of State telegraphs contrary
instructions in the course of the next few days.
It is clear that the Governor has given
a great deal of thought and anxious attention to
the financial problem in Hongkong, and I do not
think it would either be fair to him or, indeed,
that it is necessary, to intervene at this stage.
If there is any room for a more optimistic view
before 1937 opens we can, I think, rely on the
Governor advising the Secretary of State
accordingly, and in any case there would be no
harm in asking him to make a special report in
December before final decisions are reached as
to the continuance of the levy and the rates,
if any, which must be imposed. I don't think
we need comment on the decision to pay sterling
salaries at a rate not exceeding an exchange
value of 1s.3d.
$1..
H