the Government to the members of both classes was exactly the same on the 31st May 1938, and; we submit, is still morally the same. The new rule arbitrarily penalises those contributors
who have by their continued life prevented liabilities from
arising under the scheme, and, after all, the widows' pensions
which began to be payable before the 1st June 1938 are being
paid in part out of funds provided by those very contributors.
12. There is another argument which seems to us quite con-
clusive for the period which it covers. It covers the whole
period of dollar salaries from 1908 onwards. It is entirely
independent of considerations of representation, undertaking,
or hardship. It depends on a knowledge of the working of the
system of pay known as "double exchange compensation", and as
the advisers of the Government have quite evidently but not
unnaturally failed to appreciate the implications of that
system,which is now ancient history, a long and somewhat tedious
explanation will be necessary.
,
13. Before 1901 every European member of the permanent
Government service of Hong Kong was appointed on a dollar salary,
but, from a date which we do not know, he was in addition to
his salary, given an exchange compensation allowance calculated
"to bring one-half of his salary up to the value of 3s. the
dollar" (C.0. paper, Eastern No.73). This is the allowance
which was later known as "single exchange compensation". In
1902 the exchange compensation allowance was extended to the
whole of the nominal dollar salary, and it then became known as
"double exchange compensation". This system of pay worked in
the following manner. We shall assume that the current rate of
exchange was 2/- throughout, and we shall at first disregard for
the moment any question of contribution to a widows and orphans'
pension fund. With these assumptions, an officer on a nominal
dollar salary of $4000 would receive an exchange compensation
allowance of $2000, making his actual pay in current 2/- dollars
$6000. $6000 at 2/- is equivalent to £600, and $4000 at 3/- is
also equivalent to £600. Each dollar of the nominal salary was
thus brought up to the sterling value of 3/-. "Dollar officers"
from 1902 onwards were thus in fact, though not nominally,
on
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