CO129-601-1 Salaries Commission- currency basis of emolument 9-1-1948 - 5-6-1948 — Page 5

in para. 6 of the draft is in effect Mr. King's,

whereas that in para.) is th

para.) is th. Butters'.

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72

With the greatest respect, all this seems to me to be unnecessarily complicated. The present arrangement whereby the Exchange Fund makes sterling available against local currency and local currency available against sterling at fixed (de facto) rates has been criticised as allowing an excessive "spread" and the Exchange Fund has been asked to narrow that spread. The ideal is a par rate of 1/3d. and as the entire backing of the Exchange Fund is in sterling to contemplate a variation from that figure in future is not practical politics.

But there is no reason why officers either present or future should suffer from the spread between buying and selling rates even though that spread may be reduced and in my opinion the only fair, practical and convenient method is to have a fixed rate of 1/3d. for pension and leave. The officer then knows where he is and the Government has an easy and fixed rate for the purpose of estimates. Moreover this is a rate which the Sloss Committee used as the basis of converting sterling into dlar salaries. In view of the very conservative nature of the Sloss recommendations, I deprecate the suggestion that they would properly be subject to a rebate.

authorise" par value.

In my opinion, the only fair course is to the rate of 1/3d. which is the proper

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3.2.48.

Mr. Mayle

We spoke about this matter.

As I mentioned to you, I discussed with Mr. Serpell on the telephone and he appeared in complete agreement but wished to consult other Treasury Depart nents.

I append a revised draft. I have deliberately refrained from any reference to a guarantee because I regard this as a red herring. It has no relevance whatsoever to actual circumstances. The rate of exchange is as little likely to alter as the Malayan Unions, in fact in my opinion less so. What I suggest is administrative action to fix the rate and that should be enough (even in legislative

/matters