CO129-609-4 Future policy- draft proclamation for moratorium on unsettled debts 24-8-1945 - 22-2-1947 — Page 9

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HONG KONG MORATORIUM

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1. On the establishment of a British Military

Administration in Hong Kong in September 1945, by Proclamation

No. 6 a moratorium was proclaimed in respect of unsettled

debts incurred before the date of the Proclamation (13.9.45).

Under the Proclamation recovery of such a debt could not be

enforced by law, although voluntary settlement was not

prevented. The Proclamation did not apply to debts of

less than $100 (6/3a.) or debts in respect of salaries

and wages; or of less than a year's rent; or in respect of

debts due to Government. Certain dealings in land were

also prohibited.

2. In many cases, transactions in respect of pre-

occupation debts, took place in Japanese occupation currency

during the occupation period. This currency was not

recognised as legal tender by the British Military

Administration.

Accordingly it was necessary to decide what

should be the policy as regards the value to be placed on

transactions in Japanese currency which took place during

the period of the Japanese occupation, especially when such

transactions were in respect of payments relating to pre-

occupation debts. It was decided that legislation should be

enacted dealing inter alia with the value to be assigned

at different dates to the Japanese currency. If such

legislation were not enacted, the matter could only be

decided by reference to the courts, which might find it

impossible to give a ruling on the matter. The drafting of

model legislation on this subject in the Colonial Office

has proved to be an exceedingly complicated problem, due

to the diffic lty of holding the balance even as betwee