CO537-(1262-1649) — Page 118

(C.A.A. 1).

·

CONFIDENTIAL.

No.

00083

42

CIVIL AFFAIRS ADMINISTRATION,

Hong Kong & Shanghai Bank Building,

Hong Kong.

15th April, 1946.

82

2

cms

Ref.:

THE NATIONAL ARCHIVES

CO 537/1369

restrictions. Further information is given in the enclosed Terms and Conditions of supply of National Archives' leaflet. Please note that this copy is supplied subject to the National Archives' terms and conditions and that your use of it may be subject to copyright

My dear Caine,

You will have seen that the duress note decision has now been communicated to a waiting world. On the whole, the business went off at our end well enough.

2.

There was not, you understand, a terrific uproar or upheaval when the decision was announced. The immediate effect, for some reason which I do not yet clearly understand, was to give a slight boost to Chinese National dollars as against our own currency: I am not sure whether this was a direct result of the decision or whether it was accidental. In any case rates have resumed their forward trend so it is not important.

3.

The decision has given a very solid satis- faction all round. The evidence thus far available shows that we have raised our stock in this region in what I take to be a quiet and lasting way.

It was very obvious that large numbers of these duress notes were held by speculators, and we have not been able to escape doing them a good turn. That, however, is a side issue, if an expensive one.

4.

When I arrived back from London there was a strong local move to do down these speculators by ourselves secretly buying in as many of these duress notes as we could lay our hands on. I vetoed this at once on the grounds that physically it could not be done on any worthwhile scale, and that the secret could not in any case be kept. I also had some dim moral sense for turning down the superficially attractive proposals: I do not think we go in much for buying in articles whose price we are officially going to double within a matter of hours. Various kinds of South American governments would jump at the chance, but I do not think we can.

5.

The main credit for the decision has gone inevitably to the Hongkong Bank. They are the chief gainers. I do not myself think this is at all a bad thing.

6.

The enclosure to this letter gives the latest figures in Hong Kong dollars of the developing remittance business from abroad handled by the Hongkong Bank. These figures are thought to represent about half of the total business that is coming into Hong Kong. They cannot be regarded as unsatisfactory, and like some of our recent statistics, I find them in truth a little staggering. You will remember the figures of total goods handled by the port (apart from all official supplies and UNRRA) for December, January and February;

S. Caine, Esq., C.M.G.,

Colonial Office,

Dover House,

Whitehall,

LONDON, S.W.1.

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Ins