C.I.N.
1. Gov.
2
x
tel.34
9-1-48
2
(Ory, on 58723/148).
I discussed Hong Kong telegram No. 34(1)
with Mr. Butters/over the 'phone and have also th.King
discussed it with Mr. Mayle and Mr. Palmer.
I understand that the rate of 1/3d to
SH. K. 1 is not a legally established conversion rate and that it is not practicable to guarantee such a rate as a general rate of exchange. This is however a different matter from adopting such
a rate for the limited purpose of guaranteeing a relationship between salaries paid on a Hong Kong dollar basis and leave salaries and pensions paid in sterling.
Mr. Butters suggested that the solution might be to state a sterling equivalent to all Hong Kong dollar salaries likely to be applicable to expatriate officers (i.e. as is done for information in the Salaries Commission Report). This would in effect guarantee a rate of 1/3d. to 1 Hong Kong dollar, but would not involve a specific statement that this was the adopted rate. If I understood Mr. Butters correctly, an objection to such a specific statement was that in the past there has been some discontent among officers in Hong Kong at receiving their salary converted from sterling at the rate of 1/3d when in fact the dollar has been worth rather more than this on the open market.
It is thought in Eastern Department that Mr. Butters' suggestion would be somewhat cumbersome in practice and further that it is hardly in accordance with the spirit of the proposal to change the currency basis of Hong Kong salaries (see extract of paragraphs 15 and 16 of Salaries Commission Report at (2)).
It is suggested therefore that, if it can be made, a statement on the following lines would be simplest and would meet the case:-
"For purposes of payment of leave salaries and pensions in sterling, Hong Kong dollars will be converted at the rate of 1/3d to the dollar. "
In the last sentence of (1) the Governor suggests that the procedure in Malaya may provide the solution. In the "paper of particulars" used for recruiting to the Malayan services para. 3(vi) reads as follows:-
For
"(vi) Currency. The currency of the Malayan Union, Singapore and Brunei is based on the Malayan dollar. All salaries are fixed in dollars and are so paid while officers are on service. purposes of paying salaries when on leave or on pension after retirement dollars are converted into sterling at the Government rate of exchange which is at present 2/4d. to the dollar. This rate liable to alteration, but no change has taken place since 1906. "
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