CO129-555-2 Estimates 1936 30-8-1935 - 29-1-1937 — Page 24

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I sympathize with Mr. Gent in attempting to

deal with these estimates, but I do not think we need

be too pessimistic.

charges due to the increased dollar equivalent of the

sterling expenditure are amply covered by the avail-

able surplus, and it is reasonable to assume that the

dollar revenue will show some increase. All our

recent currency policy has been based on the assump-

tion that a reduction of the value of the Hong Kong dollar would have a stimulating effect on trade, and

we must hope that that effect will soon be felt and

will be reflected in the Government revenue.

As he points out, the additional

The other main bearing of the currency

situation on the estimates is the prospect of a

profit on the taking over of silver and on the

operations of the Exchange Fund. As a result of the

events of the last few days it is not safe to count

bust

on any quick and certain profit; I think it is still

reasonable to assume that there will ultimately be

some profit which can be transferred to general

revenue. At the worst, if the price of silver falls below the parity represented by the current Hong Kong exchange rate before the Hong Kong Government has got

rid of its silver liabilities, the rate can always be allowed to fall to a level corresponding to the

new price of silver. Finally, as regards the more distant future. if the Government is in possession

of an Exchange Fund a large part of which can be

invested in interest bearing securities. there should

be, when the system has settled down, a steady income

from that source. It is therefore not taking too

big a risk to allow some depletion of the reserves

in the present exceptional circumstances.

ame

13. 12. 1935.