COPY.
54126/4/48.
Code.
OUTWAR
SELE
EGR
83
IMMEDIATE
TO HONG KONG (Sir A. Grantham)
FROM SECRETARY OF STATE FOR THE COLONIES.
Sent 10th March, 1948.
No. 534 Confidential.
1.
16.45hrs.
Your despatch No. 1 Confidential of 6th Hanuary 1948.
Rehabilitation Loan Ordinance.
I understand first issue of $50,000,000 has now been made. Since issue of loan was approved the balance of payments and exchange position of sterling area has deteriorated especially in recent months and possibility of exchange centrel leakage is an increasingly serious concern. It is accordingly most desirable that all bonds issued in Colonial territories should be registered and not (repeat ot) in bearer fort. Grdinence however includes provision, under clause 7(7) fr transfer by delivery, thus covering both ordinary and presumably any premium bonds if issued subsequently under a subsequent rdinance. Bonds would therefore be in bearer form and provide possibility of Exchange Control Leakage.
2. Amendments to loan Ordinance to enable the bonds issued in Hong Kong to be de registerable nould be as followe.-
Section 7 (4) Omit all words after "the day called in that behalf of the bond".
vection 7(7) (mit entirely,
Section 8 (a) Add words "and the conditions under which the bonds shall be transferable".
Section 8 (f) Tedrart to red "to provide for the enner in which interest on the bonds shall be paid”.
Section 9 Omit words "together in either case with all outstanding coupons attached to cush bond", "revision for the registration of the bonds should then be included in regulation issued in accordance with -ection 8(d) as amended.
3. As içsue of $50,000,000 has already been made, graterul to learn what arrangements could be made for ensuring that stock should now be registered or deposited. Appreciate that such action might seem to be contrary to terms on which loan was subscribed and might militate : gainst future subscriptiods but matter is of great importance. Grateful for your early comments.
24 Suggestion has been made that registration of proposed
remium b nde might detract from their popularity. Grateful for your early co ments on this also. Premi'm element in such bonds might render them less liable to exchange control leakage, if in bearer form, than ordinary bonds. Matter is being further examined, but view now h 1d here is that registration would be necessary to obviate danger of leakage.
5. Section 5. If it were eventually agreed that any part of
the
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