CO129-582-7 Taxation 6-6-1939 - 5-2-1940 — Page 138

ORIGINAL

ON

16102/39 ECON

Cypher telegram from the Governor of Hong Kong to the

Secretary of State for the Colonies.

13

139

Dated 2.10.39.

Received 10.50 a.m. 2nd October 1989,

No. 325 Secret.

76102/39

Econ

12

*

Your circular telegram No. 52 Secret and my

telegram No. 324 confidential.

7061/15/39

Control of imports and exports,

Paragraph 1.

Principle was agreed in your telegram No. 195 Secret that entrepot trade benefits sterling and should therefore not

be hampered, It follows that absolute prohibition of

imports falling within classes (1) and (2) of paragraph 4

of your circular telegram or restrictions to sterling

countries of imports under classes (3) and (4) are

undesirable, Following conclusions and proposals are

submitted on those assumptions,

(1) Fundamental object is to prevent utilization of

money resources for non-sterling purchases, except wi`k

Government approval. This can be achieved most simply

by diverting actual resources into Government hands.

Income tax proposals therefore represent probably the

greatest step this Government can take.

?

(2) Direct control over imports from non-sterling

countries can. it is thought, be effected by licensing

system in the case of certain selected commodities.

Licences for non-sterling imports would normally only be

issued on importer's guarantee that he would sell only

for re-export and the scheme would be confined to goods

whose nature renders enforcement of such guarantee easy.

I propose if you approve to enact legislation providing

for