CO129-582-7 Taxation 6-6-1939 - 5-2-1940 — Page 37

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That west of Comes prevent a wintroduction of pachups confound

A

1. T. Bill Thereafter.

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he

should contain an automatic repeal clause as the

N.P. Governor suggests in his first alternative. Th

next important proposal in the telegram is that

certain substantial defence expenditure should be

preceded with without delay on the assumption that

by hook or crook the necessary additional revenue

will be forthcoming, and in the meantime, if necessary,

expenditure should be met from surplus balances.

The additional expenditure which the Governor desires

to incur are

(1) The local construction of two mine

sweepers at a cost of 13 million dollars each

each

(£110,000) which are considered to be urgently

necessary, with the approval of the Naval C. in C.,

For

the defence of Hong Kong.

Provision of funds for the

(2) The/purchase of ten aeroplanes con-

sidered to be essentially necessary for defence

reconnaissance purposes together with sufficiency

of training type aeroplanes, and to begin to train pilots locally. The Governor explains that if owing to H.M.G.'s immediate needs aeroplanes the mokosed purchase by the HK Gut was not macticable, then Ike Colonial authorities would substitute the construction

of additional ships. The surplus balances of Hong

Kong, as Mr. Andrews mentions, have been used almost

of

to the hilt as advance for loan works, and were they

was to be recouped in due course by the flotation

of the balance of the local loan, as to which a

telegram in the near future is promised by the

Governor. He recognises that there may be some

risk in so depleting the surplus in present con-

ditions by the proposed expenditure, but contemplates

the Exchange Fund surplus being regarded as a

supplementary reserve for the Colony's financial

stability.