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Your Reference 54126/4/46
Treasury Reference S.52892/04
Dear Palmer,
TREASURY CHAMBERS,
142
6
GREAT GEORGE STREET
Please refer to your letter of
LONDON, S.W.T.
1st February, 1947.
17th December, 1946, in which you raised a number of points concerning the proposed Hong Kong loan.
I am sorry that (mainly because of illness) it has taken us some time to prepare a reply. Our views are as follows.
1 We note that the Crown Agent's confirm that it is unlikely that the need to repay advances by the Joint Colonial Fund will arise for some considerable time. I have already told Emanuel that we can concur in the view taken by the Crown Agents (paragraph 4 of their 24 letter of 7th November, 1946 refers) that it is
unnecessary to mention these advances in the Loan ordinance.
2
You suggest that a reference to the provisions concerning exchange rates in the Bretton Woods agreement might be made with a view to reassuring local investors. We have consulted the Bank of England on this proposal but cannot, I am afraid, agree to its adoption, as a fundamental disequilibrium, should that occur, might have to be corrected by a drastic alteration of exchange rates. An announcement on the lines you suggest would have the same drawbacks as the general statement to which we were unable to agree previously. Our views on this matter are set out more fully in my letter of
33 31st December, 1946.
We hold that any announcement
or inspired publicity is undesirable, and are reconciled to the hypothetical ill-effects of discouraging both.
H. Palmer, Esq.,
Colonial Office.
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