CO129-519-4 Adjustment of exchange account- payment of military contribution on profit on exchange 10-9-1929 - 10-6-1931 — Page 14

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and that a Conference with the "ar Office and

Treasury is to be preceded by a little domestic party of our own. I hope that somebody will arrange it and that you will come to it. As we have promised the Governor a reply before the end of this month, this party ought to take place at an early date.

TP.V.V.

2/12

Mr.Vernon,

If the principle is adopted for the

Colonies generally, and also applied to Hong Kong,

that the value of investments should be shown in

the Balance Sheet of the Colony at their current

market value at the date of the Balance Sheet

instead of at cost price when purchased, I agree that it would be correct, from the accounting

point of view, to apply that principle to Hong

Kong sterling investments and to adjust the

differences between the market value in dollars

at the date of the last Balance Sheet and the

market value in dollars at the date of the new

one, whether those differences are due to variations

in the sterling values of the investments or to

variations in the dollar-sterling exchange or to

a combination of both.

So long as the old rule of showing invest-

ments in the Balance Sheet at their cost price

was adhered to, the "Adjustment of Exchange

Account" was, I think, justified and correct.

It certainly had the

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intended

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result of not

burdening the Colonial Government with a

military