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appropriately be financed from a loan. On the main question of raising a loan, we are awaiting a reply from Hong Kong to a telegram which was sent as the result of a discussion which we had, during your absence on leave, with the Treasury, the Bank of England and the Crown Agents.
I heartily
yne
42. Tel. No. 996 from Mong Kong
(Original Registered on file 544126/4/44)
4.
3
9.9.46.
9/9/46
No.42. This telegram deals primarily with questions relating to the raising of a loan to finance special expenditure and is dealt with on sub file -/4/46. A copy is registered on this file, as it refers to the proposals for increasing
revenue.
Paragraph 1 is satisfactory as indicating that steps are being taken to explore possibilities of increasing revenue.
Paragraph 2 and 3. There is nothing more that we can do about these matters at present.
Paragraph 4. Perhaps Finance Department would comment on this in view of X of No. 35.
Paragraph 5 to 7. No comments.
Subject to Finance Department's observations I do not think any further action can be taken on this telegram. I have sent a copy to Mr. Serpell (Treasury) who has now taken over Mr. James's work.
No.43. The Hong Kong Government is to be congratulated on producing detailed printed estimates so promptly. The absence of summaries of the revenue and expenditure heads is however a drawback. I do not think it is possible to examine these estimates in detail. Apart from items of
personal emoluments, the estimates must be more in the nature of intelligent guesses than considered estimates of a pre-war accuracy. The items included ite "Special Expenditure all relate to rehabilitation and re-equipment (see paragraph 2 of No. 28) i.e.
abnormal and non-recurrent
que to the war.
Some of the items may be of small amount in themselves, but if the principle is accepted that that type of expenditure is rightly chargeable to a loan (or to advances from the .C.F. pending the raising of a loan) then I do not think it is possible for us in the Colonial Office to criticise individual items included under that head. Even if we propose to suggest a different basis for deciding what expenditure shall be charged to loan funds, then
/it
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