Secretariat File No. 1/2062/46.
CONFIDENTIAL.
(18).
(4).
346-347 fil
Copies to o/€ (10). Tusy (11).
Vido (6)
SAVINGRAM
To The Secretary of State for the Colonies
From the Governor, Hong Kong.
Date 7 April, 1948...
No. 235
Ordinance.
Je
Your telegram No. 334.
605
Rehabilitation Loan
I do not consider that any action can now be taken for registration of Bonds of First Issue amounting to $50,000,000 which has already been made. The possibility of requiring the Bonds to be deposited with approved banks, as has been done in the United Kingdom, is a wider question as it would be necessary to apply such measures to all bearer securities and not merely to this last issue.
Practically all local issues are bearer and you will recollect that in paragraph 4 of my telegram No. 990 of the 9th September, 1946, it was stated, as the considered view both of this Government and of the then Financial Counsellor to His Majesty's Embassy, that to be successful it was absolutely necessary that an issue should be in the form of Bearer Bonds. This applies with even more force to a Premium Bond Issue and I have no doubt at all that insistence on registration would result in the complete failure of such an issue.
Portsmore is examining this question of control of securities and his views will no doubt be expressed in his report. But although he has reached no final conclusion he shares, I think, our view that the danger of exchange control leakage is much less than appears likely from the London end. Securities expressed in Hong Kong dollars would not find a ready market outside Hong Kong, and a person wishing to purchase U.S. against Hong Kong dollars can do so on any of the many free markets in the Far East much more simply than by the sale of bearer securities.
Copy of prospectus and details of sources of subscriptions to First Issue of Rehabilitation Loan are being forwarded separately.
RECEIVED
17 APR 148
C. O. REGY
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