CO129-624-14 Finances- relief stores- Hangover stores and Siamese free rice 1-7-1948 - 31-12-1951 — Page 35

MEMORANDUM

ACCOUNTING FOR STORES SUPPLIED BY

H.M. GOVERNMENT TO HONG KONG IN 1946.

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1.

The preparation of indents for stores to be supplied by H. M. Government was carried out by the War Office before the re-occupation of the Colony, and was intended to provide for the needs of the Colony during the first six months when the administration was to be a military responsibility. It was understood that the cost of these supplies would be borne by H. M. Government. In addition the Hong Kong Planning Unit prepared at the same time and placed with the Crown Agents, indents for stores covering somewhat the same range to meet antici- pated requirements after the first six months of military

administration.

2.

During the period of military administration, stores intended for civil "se were dealt with by the Sun- plies, Transport and Industry branch of the Civil Affairs Administration, whose instructions required the disposal of relief and rehabilitation supplies at prices determined by an attempt to maintain economic stability rather than to recover the cost of the stores. In fact it was rarely possible to ascertain details as to costs because priced vouchers were not and have not been- supplied in respect

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of War Office stores. so that although the general rule was to base selling prices on the estimated costs, profits and losses were made at random. The one exception to this general policy was rice purchased locally by the Military Administration, pending the arrival of War Office supplies, at prices ranging up to £90 per ton, which had to be sold at the same price as South East Asian rice, so that a net loss of £528,000 was incurred. The only other serious loss known probably $30,000 was on pipe tobacco which

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was supplied in place of leaf tobacco.

3.

Nevertheless all stores which were not in- tended for the use of Government Departments which were identified as being of War Office origin in some cases months after their arrival and disposal were accounted for as British Military Administration Stores. The inten- tion then was to account to H.M. Government for the net proceeds of sales as revenue accruing to the period of military administration. Before the final financial settlement, £3,017,000 had in fact been paid to H. M. Govern- ment, despite the loss of £528,000 on the sale of locally purchased rice, and it will be seen from Appendix II that credits arising from the handling of War Office stores exceeded the cost to H.M. Government.

4.

When the civil administration was restored, War Office stores were dealt with by the trading section of the Supplies, Trade and Industry Department, which con- tinued the activities of the Supplies, Transport and Indus- try branch of the Civil Affairs Administration; while stores intended for use by Government Departments were dealt with by the Government Stores Department.

5.

Very considerable difficulties were experi- enced in attempting to ascertain whether goods intended for

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