CO129-519-4 Adjustment of exchange account- payment of military contribution on profit on exchange 10-9-1929 - 10-6-1931 — Page 2

71. Gov.

400

on 46390/17 Mus

WEAKN

h

(58663/20)

*

4

10-9-29

on

2

Reviews the general position regaj Proper Exchange, the effect of the fan of the dostar, palisation securities & the liability for military contribution

q

I am sorry for the delay in dealing with this.

Meanwhile no further action has been taken on the

military contribution file.

The position appears to be as follows Lord

Milner's Circular despatch of 22nd November, 1919

stated that, in view of the great depreciation of the

value of investments which had occurred in recent years,

it was desirable that each Colony should place on

reserve such a sum as was calculated to provide for

which might be incurred when it

the

losses

became necessary to realise the securities held.

amount thus provided should be charged to expenditure

The

and carried to the credit of an independent "Investments

Depreciation Account." The position should be

reexamined annually and in the event of its being

acertained that, owing to rises in the value of

securities, the balance to the credit of the

Investments Depreciation Account was more than

sufficient to meet the estimated requirements,

provision should be made for an adjustment, which

@

should be affected by the retransfer therefrom of the

excess amount to current revenues.

Sir R. Stubbs, in his despatch of 20th

October, 1920, suggested that the scheme was not

applicable to Hong Kong, for the following reasons

(1)

the violent fluctuations in the exchange, (2) the

liability to deduction of 20% Military Contribution

of any payments to revenue from the Depreciation

Fund, (3)

the Hong Kong investments were not intended

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