CO129-605-5 Government loans 4-2-1948 - 8-1-1949 — Page 34

5365768)

48

possibly in the Form of

a

premium. Good

issue

34

The

form of bearer bonds. The next instalment of $20,000,

referred to in the savingram is part of the loan requi

to meet the expenditure arising out of the war. In

addition there is the question of financing any

expenditure on the Tai Lam Chung Reservoir referred to

in our telegram No. 1119 (copied to Bancroft).

Governor has replied to that telegram in a despatch

which is now being considered within the Department

and we shall be writing to the Treasury in due course

on this question. We are however, naturally anxious

that any expenditure on the project should be financed

as far as possible from local funds. If this should

prove to be impossible owing to our insistence on any

further loan being in the form of registered stock or

registered bearer bonds, it would mean that we should

have to press for Hong Kong to be allowed to raise a

loan on the London market and in fact this may be

necessary in any event. Obviously, however, all efforts

should be made to raise as much money locally as possible

before the question of a London loan is considered,

particularly in view of the paramount importance on

general grounds of mopping up as much as possible of

the surplus purchasing power in the Colony.

For the reasons given above, we see no alternative

in this case to allowing the Colony to raise further

loans in the form of bearer bonds, and we are

convinced that the risk of any exchange leakage is

very slight. I should be most grateful if you could

let us have your

views as soon

as possible.

Your Ever

Harry Bonne d'illon