CO129-609-4 Future policy- draft proclamation for moratorium on unsettled debts 24-8-1945 - 22-2-1947 — Page 24

COLONIAL

OFFICE

Mr. Paskin

24

2

"

1. I forward herewith two copies of a draft Proclamation to close financial institutions, to proclain a moratorium and to prohibit certain dealings in land.

2. Time did not permit discussion with

Col. Bacon but the draft is based on a draft for Malaya lent to me by Mr. Harris of F. 5 who stated that to the best of his knowledge it had been approved for Malaya.

4- B

3. The Hong Kong draft differs in two respects from the Malaya draft in that (a) while the latter by section 5(2) prevents interest from accruing during the Moratorium the former does not and (b) the phrase relating to "suspending" or "extending" debts appearing in Section 5 (1) the Malaya draft has been omitted.

4.

Both the points in question were discussed with Mr. Caine by Brigadier MacDougall and myself and the omissions were agreed.

5. As to interest it was felt that the provision preventing interest from accruing would tend to negative voluntary payment as a debtor would gain no advantage by paying.

6.

As to suspension and extension, the essence of a moratorium is to prevent legal enforcement of a debt while permitting voluntary payment. The phrase used in the Malaya draft is meaningless as it stands though the words "suspended" and "extended" could be applied to the time for payment of the debt as opposed to the debt

itself.