18
Mr. Sidebotham.
1.
I think you must now see. We have reached an impasse. The situation is clearly set out in Mr. Radford's minute of 11/11.
2. To sum up, we recently told Hong Kong (on 53652/48) that we couldn't approve a State Lottery as a method of raising money and we are about to tell them (on 53687/48), reference the Tai Lam Chung Reservoir project, that there is practically no hope of raising a loan en London, that neither the C.D. & W. Vote nor the C.D.C. can offer any assistance and that therefore the money must be found locally. We had it in draft to add that they might like to consider à Premium Bond issue. But now we must say that, although we can accept the fact of the first $50 million of Hong Kong's Rehabilitation Loan (not in any case enthusiastically subscribed to by the public) having been issued in bearer bonds for which neither registration nor deposit is to be insisted on, we cannot agree to this for the remaining $100 million of the Rehabilitation Loan or for any further loan which may be required (e.g. for the Reservoir). And the Governor has told us in (5) that it is absolutely necessary for the success of any loan issue in Hong Kong for it to be in bearer bonds - particularly so if the issue is a premium bond issue.
3. We must, it seems to me, obtain a general dispensation for bearer bonds in Hong Kong Government loan issues a dispensation which would then permit us to signify non-disallowance of the Rehabilitation Loan Ordinance, 1947 - see (73) on the 1946/47 file - and also to suggest a premium bond issue as a thin ray of light in the general gloom of our Tai Lam Chung despatch. From what is said in paragraphs 1 to 4 of (12) would there really be much objection to this, and is it therefore really necessary for the Bank of England to "reserve their position", as they do in paragraph 5 of (12)?
Finance Department is fully aware of Hong Kong's financial position and their advice and assistance as well as that of the Economic Division would be valuable.
J.wren
Dr. Kelvin-Stank
Milolmen
17.11.48.
Естрой
Th. fistan would be grateful for Economic or Juara Jept. wing
1.wreen