9.
84
Encl. 2
55778/
Alth
then the response from the public would almost certainly be negligible and the loan would only be taken up in limited quantities by the Banks and Insurance Companies. It seems improbable that more than 25 million would be subscribed which would in no way meet the requirements of this Government. This view is borne out by the small response which the recent Malayan loan is understood to have met with from the general public in that territory.
15.
If no expenditure is met from loan funds this year the deficit which it is hoped that His Majesty's Government will be prepared to meet temporarily is estimated to amount to approximately
114 million dollars. The details of this are set out in the
For a territory of this size such a deficit
attached schedule.
is an extremely serious commitment. The fact that it will be
repeated next year, though probably not on the same scale, makes the position even more serious, and the charges on the loan required to cover such a deficit will represent a very heavy drain on our financial resources in the future. Some $80 million of this repre- sents a first instalment of the sum which will be required to repair the ravages of war. The inflated costs both of labour and material which are indirect results of the war account for a large
proportion of the balance.
There is therefore not unnaturally
a feeling locally that not only was the Colony, because of its geographical position, fated to be over-run by the enemy but it is now to be condemned to carry a relatively heavier burden of debt thar other British Dependencies which were more fortunately placed. Indeed as has already been pointed out in paragraph 5 and 6 of my saving telegram No.1355/45 of the 27th May this Government cannot
contemplate further borrowings at the ruling rates of interest to meet non-official claims in respect of damage to property, and
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