CO129-576-4 Loans for public works 3-7-1939 - 4-1-1940 — Page 46

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It appears unlikely, however, that either of these sources

can meet colonial requirements in full, and we have, therefore

looked up the arrangements made in 1914-1918 for meeting

urgent oversea requirements. In their letter No. 2402/14

of the 24th of November, 1914, the Treasury agreed in

principle to an advance being made from the Vote of Credit

to the Malay states upon the some conditions, as indicated

in Treasury Minute of the 17th of November, 1914, as the

Exchequer loans made to the Dominions. As, however, the

Vote of Credit had been provisionally allocated for other

services, the Treasury proposed that arrangements should be

made with the assistance of the Bank of ängland for temporary

advances to the Crown Agents, and they were prepared to me

their good offices with the Bank to obtain the necessary

aacomodation. It was decided also that these arrangements

should be extended to other debtor Colonies and Frotectorates,

on the condition that the assistance of the Bank of england

would only be invoked to meet net total advances by the

Crown Agents after they had used any funds at their disposal

for such borrowings.

what we should now like to suggest is that, if it

is decided that borrowing for a Colonial Government is just-

ifiable, arrangements should be made for funds to be

provided from the proceeds of loans raised by His Majesty's

Government, on the undertaking that payment of interest at

whatever rate may be appropriate should be made by the

Colony concerned. Cther detailed conditions would no doubt

have to be considered. For example, it might be desirable

to lay down that, at the end of the war or at some agreed

date thereafter, the colony should fund the debt by issuing

a loan in the usual way, the proceeds going to extinguish

the capital debt to His Majesty's Government. But points of

this kind can be takes up later if we can reach agreement on

the