HONG KONG LEGISLATIVE COUNCIL.
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Government to fix Exchange forward for all the sterling commitments of the Government for 1936. Those sterling commitments the Acting Colonial Secretary, in his Budget speech, stated to amount to £750,000 sterling. (See Hansard 1935 at page 157). In a further letter to the Government of the 25th September I, on behalf of all the Unofficial Members, urged that at least sterling Exchange should be fixed forward for all the Government's sterling commitments in 1936, other than for sterling salaries, "as being in accordance with the best commercial practice."
As sterling exchange could have then, or shortly afterwards, been fixed at the rate of about 2s. to the dollar, the Colony has become involved, quite unnecessarily, in a large extra expenditure to meet its sterling commitments for 1936, with the result that our Budget for this year has become badly unbalanced, instead of our being in a comparatively satisfactory financial position.
This is most regrettable, and, up to the present moment no reason has been given to us, which we regard as adequate, for that deplorable omission on the part of the Government to adopt the obviously businesslike course of fixing sufficient sterling exchange forward to cover its sterling commitments which would have materially helped the Government to balance its 1936 Budget. Such omission on the part of the Government is all the more inexplicable, inasmuch as the Acting Colonial Secretary, in his Budget speech of the 12th September, 1935, clearly foresaw the possibility of an unbalanced Budget. (See Hansard 1935, at page 158).
We hope that the Government is not going to shelter itself behind the plea that it could not fix sterling exchange forward because it had some foreknowledge of the possibility of measures being taken by it to establish a managed currency. In considering such a plea, it is necessary to remember that the Government are trustees for the taxpayers of this Colony, whose interests it is the Government's duty to protect by every means in its power.
It is also necessary to remember that the other party to any such exchange transaction by the Government would be a Bank, which would at once protect itself against loss by entering into a covering contract. When the Unofficials ask for protection for the tax-payers' money, their wishes should be met and the onus for the action laid on them. In the present instance the Government were in the extraordinarily fortunate position of the Unofficial Members. of this Council unanimously volunteering to take upon their own shoulders the responsibility for the Government fixing sterling exchange forward.
We regret being obliged to emphasise this point of fixing exchange forward. Our reason for doing so is that it has been suggested by persons outside of this Council (in ignorance of the true facts) that the Unofficial Members were to blame for omitting to advise the Government to adopt the business-like precaution of fixing sterling exchange forward.
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