541 26/4/49
DRAFT TELEGRAM FOR TREASURY CONCURRENCE.
TO GOVERNOR. HONG KONG.
CONFIDENTIAL
23
Your savingram No. 831 Confidential
Rehabilitation Loan Ordinance.
1. I am in greatest sympathy with your
2.
desire to encourage maximm of local
investment by offering issues in most
attractive form. I agree therefore that it
would not repeat not be wise to require
registration or deposit of further issues.
With reference to the alternative
suggested in paragraph 4 of my telegram
No. 1245, I note that only very small
proportion of first issue was taken up by
non-residents of Colony. I feel however
that further consideration should be given
to above-mentioned alternative in light of
following fuller explanation on this point
of reasons for its desirability given below.
3. The actual leak from issue of bearer
bonds might be small, but main anxiety is that
bonds would be purchased with free market
sterling and subsequently serviced or
redeemed for foreign holders, particularly
Americans, by sterling at official rates.
Loss of United States dollars in this way
might be very serious.
4. This danger could theoretically be met
by stipulating that payment must be in
Hong Kong dollare only, but this would
involve discrimination in sense prohibited
by American loan agreements,
5.
Exchange control authorities would
prefer
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