CO129-605-4 Government loans 12-7-1946 - 6-1-1948 — Page 26

at para 4 y (53) is

sugg.cation at para a

the suggcation

much

to h

bufond.

му обно

2/6.

26

Mr.Williams

I attacn draft reply to (54) opposite after our brief discussion.

(54) is a variation on the theme of a loan of $100,000,000 or of $150,000, 000 begun at (46), to which we replied at (53) preferring the lower figure especially as there is some doubt whetner, in fact, a loan of $150,000,000 would be fully

subscribed

-

see (28) paragraph 5, but suggesting at (53) paragraph 5, an escape clause which would reasonably allow powers to be taken for raising additional money if the conditions warranted it.

Unfortunately 0.A.G's. (54) crossed with our (53), and much of the draft opposite is a recapitulation of (53) which at first sight ought to meet 0.A.G. difficulty. His suggestion of borrowing from the Exchange Fund cannot finally be dismissed, I feel, but in any case I do not think approval should be given until the local response to a loan has been tested. The immediate argument against it, however, is that it would aggravate the inflationary trend in the Colony.

The suggestion in paragraph 5 of (54) tnat borrowing from the Exchange Fund should begin after the initial loan issue or $50,000,000 and before issuing the further $50,000,000 is disquieting; it rather

/suggests