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5-4126/4/46
S.52892/04
Treasury Reference..........
Dear Palmer,
229
TREASURY CHAMBERS,
GREAT GEORGE STREET,
२०
LONDON, S.W.1.
8th August, 1946.
At the meeting at the Colonial Office about Hong Kong finances on 26th July it was agreed that you would consider the possibility of approving a loan ordinance to cover borrowing for reconstruction expenditure, if possible locally, but alternatively in London. It was suggested, however, that in the first place I should ascertain the Treasury reaction to a market loan here and as far as possible explore the prospects of its success.
I am able to assure you that from the capital issues standpoint the Treasury would raise no objection to the raising of a market loan. As regards market prospects I am afraid that the advice we have received
is not altogether encouraging. We are told that with the prevailing uncertainty about the political and economic future in the Far East it would be improbable that, for the present at any rate, the colony could raise money on its own credit on terms' likely to be consistent with the general basis of similar issues. This, of course, is essentially a short term view and the pros- pects may possibly look quite different by next year.
You will probably wish to obtain a corresponding view from the local administration as to the prospect of local borrowing and this indeed may be included in the detailed despatch foreshadowed in paragraph 7 of Hong Kong telegra No.570 of 12th July. When you have this further pasement you will doubtless be in a position to consider the possibility of approving a loan ordinance as a basis for advances from the Joint Colonial Fund.
H. Palmer, Esq., 0.B.E.,
Colonial Office.
/I think