47 Hong
Kong 45. D. R. Serpell (Jay)
49. A. H. Hicks (1A) w/c #8
A
Mr.Boss.
shild be
یه
tel.780
6-5-47
9-5-47
9-5-47
20
Mr.Mayle.
I am afraid telegram No.622 has only just come to the Department owing to the fact that the file has disappeared. (It would be advisable, if in future,
telegrams were circulated to the Department in temporary files if the original file cannot be found within say one week). I have now sent advance copies to Mr.Serpell (Treasury) and Crown Agents.
in
In our telegram of 16th Octóber 1946, we agreed to the raising of a loan of $100,000,000 (£6,250,000) locally and/or in London, that being the estimated expenditure on special residual war expenditure and rehabilitation expenditure in 1946/47 and 1947/48. The Governor points out that, in addition, there will be further rehabilitation expenditure which will come in course of payment after 31st March 1948 in respect of railway equipment and other rehabilitation works! The Governor now puts the total at $206,500,000. In addition heavy expenditure on water conservation scheme will be necessary in the next eleven years, addition to any other development schemes which may be recommended. The Governor states that the Colony cannot afford to borrow on such a large scale. At the same time if rehabilitation expenditure is not suddenly to stop at 31st March next, it will be necessary to raise more than $100,000,000 so far authorised. I doubt whether in fact this would be the case. Owing to shortage of supplies, it would probably be that special expenditure to 31st March 1948 was considerably below $100,000,000. The Governor proposes that the loan Ordinance shall authorise the raising of $150,000,000 as giving a truer indication of Hong Kong's probable requirements, but only an initial issue of $50,000,000 will be made, and not more than 100,000,000 will be issued by 31st March next. The Governor assumes that increasing the amount of loan authorised is preferable to relying on the J.C. F. even though the latter provides funds at a lower rate of interest.
I should have thought that it would have sufficed at this stage, when there were so many unknown factors, for the loan Crdinance to be restricted to $100,000,000 especially as Inshoridorerthought it doubtful whether in fact that amount could be spent by 31st March next. On the other hand as more than $100,000,000 will eventually be required there seems no objection to the increase to $150,000,000.
In view of the unfortunate delay in dealing with this matter perhaps agreement with Treasury and if necessary Crown Agents could be reached at a discussion instead of by correspondence.
The annual charge on Hong Kong for a loan of
$150,000,000 would be(say) :
Interest at 32% p.a.
Sinking Fund 1% p.a.
$5,250,000
$1,500,000
$6,750,000
Hong Kong's revenue for 1947/48 is estimated at $90,000,000 and will probably be greater with the introduction of Income Tax which may well be expected
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