CO129-576-4 Loans for public works 3-7-1939 - 4-1-1940 — Page 52

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A

would not be continued as a peace measure without the express

approval of the Legislative Council.

Alte rnative proposals of the Committee of the European Chamber of Commerce some of which have also been suggested by

? ?

the Chinese are not commend able for the most part.

As indicated.

decision may be delayed for some time

would

and outcome may be that additional revenue raised here not suffice for adequate gift by this Colony to H. M. Government towards general way expenses, for I assume that you would be reluctant to approve the foregoing income tax measure though

ing against strong unofficial opposition. Assume however that substantiaX additionel revenue will be obtained from some source I should like to proceed as soon as possible with certain local

defence

exce expenditure detailed below. If additional revenue is not available immediately expenditure could be met from surplus

balances.

There are expected to be at least

13,000,000

(Hong Kong) at the 31st.December, 1939, and will be made fully

them to the Loan liquid by the refund of advances made from Account, if the balance of the 1934 local loan can be issued,

as to which I shall be telegraphing shortly. Depletion of sur- plus resultant on the proposed expenditure might appear dangerous but I suggest that we may justifiably take the Exchange Fund surplus into account as supplementary reserve.

Details the first proposed expenditure are:

(1) To begin at once the construction of 2 minesweepers which are urgently necessary for the defence of Hong Kong. Both the larger

Cost is estim- dockyards here could undertake the work at once.

ated as being of the order of $1,750,000 (Hong Kong)each. (2) Provided that such purchases is feasible (a) to provide funds

or the purchase of, say, 10 aeroplanes which are

essentially

necessary for defensive reconnaissance purposes together with sufficiency of training type aeroplanes. (b) to begin to train

pilots