CO129-606-2 Treasury control over Hong Kong finances 22-1-1948 - 9-12-1948 — Page 74

My dear Caine,

Treasury Chambers,

Great George Street,

S.W.1.

7th May, 1948.

10.

74

(9)

We are

Thank you for your letter of 3rd May. certainly ready to consider the possibility of modifying the exercise of Treasury control over

(1/8) Hong Kong, and paragraph 7 in telegram No. 456 of the

16th April was in fact inserted as a result of our suggestion. But we are very doubtful of the wisdom of making an immediate announcement that Treasury control was being terminated.

In the first place, though we undoubtedly make reference to Hong Kong's flourishing economic position, we certainly do not take the view that the offer we have made is other than one of substancial assistance in a sense H.M.G. are giving more assistance to Hong Kong than to Malaya, since we are not giving anything to Malaya for general governmental purposes.

Moreover, we must consider the question of relaxation of Treasury control over Hong Kong in the light of the general practice and the general proposals that are being made. In the past, such control has continued for a considerable period after a Colony has ceased requiring U.K. assistance, not only so that its reserves should be built up, but so that H.M.G. could be satisfied that it was conducting its own affairs wisely. In that context you know we have considerable doubts over Hong Kong's revenue policy and some of its expenditure proposals. is also the complication of the setting up of the Municipality.

Sir Sydney Caine, KCMG.,

Colonial Office.

As

There