CO129-619-4 Department of Supplies- Trade and Industry- organization and finance 19-3-1949 - 31-3-1949 — Page 24

Secretariat file No. 2/2161/47."

No. 48.

GOVERNMENT HOUSE,

th

HONG KONG.

19. March, 1949.

Now Dept of Supplies and

Distributions

Sir,

I have the honour to address you on the subject of the organization and financing of the Department of Supplies, Trade and Industry.

2.

The precarious existence of this essential, though temporary, department gave cause for some anxiety in the difficult period which followed the resumption of civil government, and Mr. W. M. Thomson, the then Director, gave the facts with his recommendations in the form of a Memorandum dated the 21st June, 1946. A copy of the

Enclosure 1 Memorandum is enclosed herewith.

3.

The fundamental principle in Mr. Thomson's recommendations was that the Department should continue to be operated on a commercial basis. This involved two major departures from normal practice

4.

(a)

(b)

that staffing arrangements, including salaries, should so far as possible be left to the discretion of the Director of the Department,

and

that the trading activities of the Department should not be subject to the normal principles of Government finance laid down in Colonial Regulations.

As you are aware from correspondence relating to the setting up and the Report of the Salaries Commission, Government was then unable to offer salaries in any way comparable with those ruling in commercial firms. Permanent civil servants were not available and it was necessary to staff the Department almost entirely with temporary officers, and at the time that Mr. Thomson's Memorandum was written such officers were resigning to take up more remunerative commercial posts within a few weeks of appointment, leaving only the least competent to carry on. The situation was approaching the point where a complete breakdown in administration was imminent, and Sir Mark Young accordingly approved generally the proposals in the Memorandum.

5.

In consequence of various queries raised by the former Director of Audit, an effort was made to assemble together all the points inṛconnection with the working of the Department of Supplies, Trade and Industry which appeared to contravene Colonial Regulations, with a view to seeking your covering approval. But before the task could be completed the Director of Audit found himself able to complete an exhaustive report which he has forwarded to the Director-General of Colonial Audit.

AC

THE RIGHT HONOURABLE

ARTHUR CREECH-JONES, M.P.

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