-
2.
ance by allocating against it their 40% entitlement from
the exchange proceeds of a sale to S.C.A.P. of Chinese
ramie which they had concluded through the Hong Kong Open
Account a short time previously. This 40% entitlement
approximated to the US$600,000 of the debit balance. De-
livery of the ramie however had not begun and would not
be completed until fairly late in the year and it was
therefore necessary, in order to meet S.C.A.P.'s proviso,
that the Hong Kong Government should agree that the US
$600,000 debit balance should be met by the acceptance of
a debit to this extent on the Hong Kong Open Account be-
fore 30th June, 1949.
3.
Pending the shipment of ramie and the receipt
of a debit note from S.C.A.P., no firm arrangements were
made in Hong Kong for the implementation of this agreement,
although it was tentatively proposed that Scott and English
Limited should collect only 60% of the export proceeds of
their ramie shipments receiving no payment under Japanese
trade arrangements for the balance of 40%. The US$600,000
debit in S.C.A.P.'s special account with Scott and English
Limited had its counterpart (at the current exchange rate
of 4 to 1) in a Hong Kong dollar account maintained by
Scott and English Limited with the Hong Kong and Shanghai
Banking Corporation in Hong Kong, this account being to
some extent under the control of S.C.A.P. through the
agency of the Hong Kong and Shanghai Banking Corporation.
The proceeds of the cancelled sterling credit in favour
of Pakistan were not in fact returned to this account but
were held by the Hong Kong and Shanghai Banking Corporation
in London, subject to instructions from the Hong Kong Gov-
The balance remained in Hong Kong dollars in the
ernment.