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Copy.
SHANGHAI 5/6.
Sir,
Enclosure.
119
H. B. M. OFFICE OF WORKS,
Shanghai, January 25th, 1924.
I have the honour to refer to your despatch
No.2870 dated 28th December, 1922, and to inform you that my Board has intimated that the Lords Commissioners of H.M. Treasury have expressed Their approval of the purchas8,
in astar as the purchase price is involved, by the Imperial Government, of the British Post Office building at Shanghai under the scheme (b) as outlined in your despatch
quoted above.
My Board does not agree, however, that the
rate of interest asked for, namely five per cent per annum,
is fair and equitable, on the ground that the land on which the building stands was leased to your Government, as an inter-Government arrangement, at a nominal or peppercorn rental. I am instructed, therefore, to re-open negotiations with you with a view to arriving at an agreement on the question of the rate of interest. In my report to my Board I put forward, as a suggestion, that the interest should be calculated on the following basis; from 1911 to 1914 (four years) at 3 per cent, from 1915 to 1918 (four years) at four per cent, and from 1919 to date of payment at five per cent, my reasons being that, bearing in mind the nominal rental paid by your Government for the land, the highest rate of interest which could reasonably be expected would be the approximate rate which could be obtained on an investment in British Government securities
during
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The Colonial Secretary,
HONGKONG.
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