CO129-598-2 Tai Lam Chung Reservoir Project 24-6-1948 - 3-3-1949 — Page 28

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It appears therefore that, in the circumstances of llong Kong, bearer bonds are the only practical means of raising a local loan, and the Governor in paragraph 3 of his savingram enclosed again states this quite categorically. In these cirmæntances, if Hong Kong is to raise any further amount locally it seems that it ramt be in the form of bearer bonis. The next instalment of $20,000,000 referred to in the savingram is part of the loan required to meet the expenditure arising out of the war. In addition, there is the question of financing any ex- penditure on the Tai Lam Chung Reservoir referred to in our telegram No, 1119 (copied to Bancroft), The Governor has replied to that telegram in a despatch which is now being considered within the Department, and we shall be writing to the Treasury in due course on this question,

we are, however, naturally anxious that any expenditure on the project should be financed as far as possible from local funds, possibly in the form of a premium bond inaus. If this should prove to be impossible owing to our insistence on any further loan being in the form of registered stook or registered bearer bonds, it would man that we should have to press for Hong long to be allowed to raise a loan on the London market and, in fact, this may be necessary in any svent. Obviously, however, all efforts should be zade to raise as much money locally as possible before the question of a London loan is considered, particularly in view of the paramount importance on general grounds of sopping up as mach as possible of the surplus purchasing power in the Colony.

5. For the reasons given above, we see no alternative in this case to allowing the Colony to mise further loans in the form of bearer bonds, and we are convinced that the