CO129-576-1 Proposed schemes for improvements in housing conditions 13-10-1938 - 13-4-1939 — Page 3

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"excess" surplus of $4,000,000.

The current net

income from the Fund is between $4,000,000 and

$5,000,000 annually.

The proposal outlined by the Governor is

that an initial sum of, say, $5,000,000 should be transferred from the Exchange Fund to a new

Improvement Fund, which would receive annually a half

of the net addition to the surplus of the Exchange

Fund. If necessary, the Improvement Fund could

borrow further sums (though probably this would not

be necessary), the charges being met by the annual

payment from the Exchange Fund. As it would also

receive the proceeds of land sales from schemes

undertaken from it, these additional payments might

in time prove unnecessary.

The Fund thus constituted would be used for

rehousing schemes and germane matters, i.e.

ordinary governmental construction schemes.

not for mabeg

The possibility of utilising part of this

surplus of the Exchange Fund had already been raised

in a letter from Mr. Caine to Mr. Clauson at 21 on

15117/18/38 Economică. It was then stated that it

was not contemplated that any of the surplus should

be used in relief of ordinary revenue; and this is

restated by the Governor in paragraph 6 of his

despatch. At 22 on that file, it was agreed that the

currency is already over-secured; and it was diterofore

suggested that one way of using the surplus would be to

convert it into a capital fund, the interest of which,

together with the interest on the main fund itself,

should be used in relief of the public revenues.

The present scheme seems to me to provide

an