ALL COMMUNICATIONS
TO BE ADDRESSED TO THE
CROWN AGENTS FOR THE COLONIES,
THE FOLLOWING REFERENCE AND THE
DATE OF THIS LETTER BEING QUOTED.
1138.
TELEGRAMS
(INLAND: "CROWN SOWEST LONDON,"
OVERSEAS: "CROWN LONDON,"
TELEPHONE: ABBEY 7730,
IMPORTANT.
CONFIDENTIAL.
CROWN
AGENTS
FOR
COLONIES
THE
4, MILLBANK,
36
LONDON, S.W. 1.
1st December 1939.
Clyft.K.
113
Sir,
I have the honour to refer to your letter of the
28th November, No. 53593/39, requesting our observations on a
telegram from the Government of Hong Kong respecting a loan
issue under Ordinance No. 11 of 1934.
2. The Ordinance provides for issues of 3% bonds in
Hong Kong, redeemed by drawings to the extent of one-twentyfifth
each year.
Before an issue could be made in London fresh
legislation would be required and such an issue would normally
take the form of inscribed stock, with a sinking fund
contribution of not less than one per cent per annum. It seems
improbable that the Capital Issues Committee which controls
issues in the present state of war would consent to such an issue
at the present time for the purpose indicated in the Governor's
telegram. If such consent were given, however, we think it quite
possible that £750,000 could be raised on a lower effective
yield basis than 4.34%. Probably the period to redemption would
have to be considerably less than 25 years, but the period and
terms cannot be indicated in advance.
3. As regards the alternative mentioned by the Governor of
raising the money "through the Crown Agents for the Colonies
direct loan scheme", we fear that the Inter-Colonial Loan Scheme
is not suitable for raising so large a sum even by instalments.
It is not clear to us why, after postponing the issue for
some years, the Government now wish to make it before the end of
December. It is true that postponement involves the risk of
having to issue later on less favourable terms, but the risk does
4.
not/
The Under Secretary of State,
o pur
Colonial Office.
Jel
CA