CO129-514-4 Repayment of excess military contributions advanced by Hong Kong 9-1-1929 - 10-1-1930 — Page 3

1. W.0. w.o.

9.1.29

Propreals for adjustment of overadvances. Requests desp. of initus. (by cable) to bol. Gant.

action in 52502/28abili

a bit of both Ished Thirth. On the other Land Hill loses 10 year interest.

OB

N

This is very clever on the part of the War Office. They agree in principle to the return of the overpayment but insist that it shall be in

dollars. The amount as they calculate it is

$592,000, say £59,000 instead of £114,000 expected.

I am afraid we cannot very well contest the argument that the repayment should be made in dollars. We might maintain that Hong Kong should

not suffer because the War Office have had this

money in their hands for 10 years, during which

the sterling value of the dollar has depreciated.

and that they have a moral, if not a legal, right

to repayment in. sterling. The answer, am afraid, would be that what has happened is not that the

Hong Kong dollar has depreciated since 1918, but

that sterling has appreciated and I think, sa a

matter of fact, this is a truer statement of the

position and that Hong Kong is really getting back. something of approximately the same real value as it paid..

T

Although therefore I do not think we can

contest the principle, I am very doubtful about

the detailed calculations of the War Office. As

originally calculateu (see 48649/21 and 11250/20) the sterling value of the overpayment was £114,000.

The average value of the dollar in the years 1917-18 and 1918-19, as shown by the rates given in

the enclosure to the War Office letter (No.1), was

a trifle less than 3'-.

and one would therefore expect the sterling value

It is now worth about 2/-

of