• 26/4/47
Coda
COLONIAL OFFICE TELEGRAM
TO HONG KONG (Sir A. Grantham)
FROM S, OF S. COLONIES.
Sent 17th September, 1947. 15,30 hrs.
65 し
59
No. 1492
1.
Your telegram No. 1152.
Loan.
I am prepared to agree that Government should borrok up to $150 million in all, but for reason given below provision will have to be made in loan legislation for full $150 million and not (repeat not) for $100 million as proposed in paragraph 4 of your telegram No. 889.
2a Suggest that prospects of auccess would be increased
if loan wore floated in three parts, viz:-
(a) Tep issue up to a maximum of (say) $50 millions in first case at 3% per annum with Sinking Fund of 11⁄2 per
annum.
(b) A premium bond issue of say $50 millions bearing interest at 1% per annum. A small number of the bonds to be redeemed each year at pricee above the issue price, the premium being met from the saving of 24% interest. A copy of Palestine Ordinance, No. 27 of 1944, authorising the issue of premium bonds is being forwarded by savingran for your information.
(c) The balance to be held in reserve for further issue as either (a) or (b) became fully subscribed.
3. You would doubtless be able to decide in the light of local conditione how the $150 million could beat be divided amongst (a), (b) and (c) above.
L
Suggestion in your telegram No. 1152 for borrowing from Exchange Fund has been very carefully considered in light of paragraphs 2 and 3 at your telegram, In present
9
Gircumstances, however, any recourse to the Exchange Fund which could only mean a reduction in the sterling securities which the Fund would otherwise hold, would have precisely the same effect on general sterling position as direct borrowing in the London market. I am setisfied therefore that it would be undesirable to pursue this proposal at grerent.
5. As regards paragraph 5 of your telegrem No. 1152, enclosure (b) of my savingrem No. 115 provided for the annual sinking fund contribution to be remitted to the Crown Agents for investments to be approved by me! and (o) of my telegram No. 220 envisaged use of the Fund to purchese loan if price of loan fell below par. Group Agents point out that in fact sonditions may be auch that even above par the loan may be the best investment of the sinking fund; but it would be inadvisable to include provision for making the purchase
/obligatory