CO129-495 - Governor Sir Clementi - 1926 [11-12] — Page 152

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I am doubtful about the argument in §6 of the despatch, which suggests that the increase in prices brought about by a fall in exchange is confined to imports from sterling countries. Hong Kong currency is on a silver basis, and I think that past experience shows that a decrease in the market value of silver means an increase in the cost of ell commodities, and a general rise in the cost of living as expressed in terms of dollare.

The sliding scale, which was adopted in 1930,

has been remarkably successful, and I venture to suggest that it should not be adopted to meet the fall of the dollar below the original limit of 2/64. This is the logical course, and it has the merit that it benefits all equally without discrimination. t is true that officers, who at the present time have their families in England, will not for the time being receive as much as they would get under the scheme proposed by the Hong Kong Government, but the average officer, whose wife lives sometimes in England and sometimes in Hong Kong will prefer the permanent benefit of the sliding scale to the temporary remittance privilege.

Yours sincerely,

(Sd) A.G.M. Fletcher.

I return the copies of the despatch and telegram which you lent me.