N: 325.
58663
30.0420
GOVERNMENT HOUSE.
HONGKONG. 20th October, 1920.
My Lord,
I have the honour to acknowledge the receipt of Your Lordship's circular despatch of the 22nd November, 1919, the reply to which has, I fear, been unduly delayed owing to great pressure of work in the Treasurer's office in connection with salary revisions, the winding up of
enemy property accounts and other matters.
2.
In the case of this Colony the difficulty of shewing in the balance sheet the actual value of the investments is exceptionally great, since we have to reckon not only with the depreciation of the investments but with the fluctuations of exchange, which have in recent times been so violent that a statement of the dollar equivalent
for the value of a sterling investment which would be correct when the balance sheet was drawn up might easily be
wrong by as much as 25% either way by the time it was in
Your Lordship's hands. For this reason I fear that even an
approximation to accuracy is more than can be hoped for in
present circumstances and that all that we can do is to get as near as possible by taking for the purpose of the balance sheet the latest known sterling value of the invest-
ment and converting it into dollars at a rate of exchange
which must be fixed in some arbitrary manner. As the other
items in the annual balance sheet are converted at the average rate of exchange for the month from November 16th
LE RIGHT HONOURABLE
VISCOUNT MILNER, G.C.B., &c.,
&c.,
&c.
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