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3. As regards possibility of bringing wealthy Chinese in Hong Kong to invest in local loan, such investmont has never been popular owing to low rate of interest. Leaders of the community can doubtless be persuaded to subscribe, but any attempt at widespread pressure would, I am convinced, be fruitless and might moreover have a political repercussion, possibly in the form of press campaign, that money should be devoted to rehabilitation of China, It would be a political blunder to put out the argument suggested in latter part of paragraph 2(ii) of Treasury message contained in your No. 813.
4. I note from paragraph of your telegram No. 81) that 5% for 20-25 years loan not considered unreasonable. I had in mind issue at par with repayment at par not earlier than 1965 and not later than 1970. To be succossful, it would be absolutely necessary that issue should be in form of bearer bonds, Since my despatch No. 48 of 24th July was forwarded, I have received verbal. assurance from Hong Kong Bank that, in order to assist in making any Local loan floated by the Government a success, they would tako up considerably more than they were originally prepared to do. In view of this and assuming that local wealthy Chinese can be persuaded to subscribe to expected extent, a total of 50-60 million might be obtained. Best results would probably be obtained if issue left on tap until date to be spoolflod or until certain specified limit had been reached, Even on moat optimistio estimate, amount obtained would be totally insufficient for our requiremcnto but, if it is considerad desirable to meet portion of our needs, by 5% local Ican instead of obtaining full amount at lower
rate of interest in London, every effort will be made to secure maximum amount locally,
Copy sent ¢0;-
Treasury
tos
Mise M.E. Ashe,
{D.R Serpell OBE.
Goldbung.
Grown Agents
J
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