Dear Marshall,
COPY
BANK OF ENGLAND, LONDON, E.C.2.
54126/4/48
16
37
14th December, 1948.
(13)
(12)
Hong Kong
With reference to your letter of 18th November
(ECA 7/202/01) we have had a further look at the question of the issue of bearer securities in Hong Kong in relation to the position in other Colonial territories. We feel that conditions vary so much from one place to another that generalisation is impossible, and that what is right for Trinidad is not necessarily right for Hong Kong.
First of all, I did not in my letter of, 3rd November go beyond suggesting approval of the issue already made although I agree that the arguments put forward in justification of this might equally well serve to justify a further bearer issue.
You say that you could not ask Hong Kong to refuse to provide official exchange for interest payments, but it is my strong impression that Hong Kong are at present prepared to do so in certain cases, and I should hesitate to tell them to revise their practice. This is really their substitute for any form of securities control.
As to whether or not a registered issue would be a flop (which is really the governing factor) we have only the opinion of the officials on the spot and we would not ourselves be prepared to express a view one way or the other. Certainly anyone who had been in the habit of issuing only bearer would naturally be most unwilling to embark on an experiment with registered unless pushed very hard and you may feel that you should do this for the future to test Hồng Kong's reaction.
I see that Hong Kong have already been asked in Telegram
(14). No.1245 of the 2nd December:-
(a) Whether events in China will render the comparative security
of a Hong Kong Government Loan more attractive than it has been, other opportunities for investments being fewer, and whether in these circumstances it would be possible to issue registered bonds;
P.T.0.