CO129-463 - Governor Sir Stubbs - 1920 [10-12] — Page 36

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to December 15th it would seem best to adopt that rate in this case also.

3.

Your Lordship suggests that an "Investments Depreciation Account" should be established so that in the event of the sale of the securities the amount realised would by transfer from that account, be made to balance with the original cost price. Owing to the exchange conditions to which I have already alluded I think that such an arrange -ment would be unsuited to the circumstances of this Colony, involving, as it would, constant readjustments. A concrete illustration may be of interest. The Colony holds stock of the British 5% War Loan 1929/47 to the nominal value of £4,569. 188. 7d. This stock was bought in July, 1919, at a cost of £4,301. 8s. lld. which at the ruling rate of exchange (38.6td.) was equivalent to 824,290.56. On March 31st, 1920, the market value of the stock was £4,044. 7s. 9d equivalent at 58.6d., the rate of the day, to $14,706.86. On the 31st July, 1920, the market value was £3,656. 4s. 7d. but, exchange having fallen to 38.8d., the dollar equivalent was $22,060.29. On the 8th October, the last date which I have figures available the sterling value was still £3,656. 4s. 7d. but exchange was at 48.04d. so that the dollar equivalent had fallen to £18,185.42. If during the next year the dollar were to fall to 38. the result, even allowing for some further depreciation of the stock, would

be an appreciation in the dollar value above the original

purchase price and this, on the system proposed by Your Lordship, would necessitate a transfer to revenue from the

Investments Depreciation Account, which would need to be

readjusted later if the dollar rose again by a further pay-

ment to the Depreciation Account and so on indefinitely. It may be noted that apart from the inconvenience of these adjustments the Colony would be involved in considerable

expense since the payments to revenue for the Depreciation