2
De-
ance by allocating against it their 40% entitlement from the exchange proceeds of a sale to S.C.A.P. of Chinese ramie which they had concluded through the Hong Kong Open Account a short time previously. This 40% entitlement approximated to the US$600,000 of the debit balance. livery of the ramie however had not begun and would not be completed until fairly late in the year and it was therefore necessary, in order to meet S.C.A.P.'s proviso, that the Hong Kong Government should agree that the US $600,000 debit balance should be met by the acceptance of a debit to this extent on the Hong Kong Open Account be- fore 30th June, 1949.
3.
Pending the shipment of ramie and the receipt of a debit note from S.C.A.P no firm arrangements were made in Hong Kong for the implementation of this agreement, although it was tentatively proposed that Scott and English Limited should collect only 60% of the export proceeds of their ramie shipments receiving no payment under Japanese trade arrangements for the balance of 40%. The US$600,000 debit in S.C.A.P.'s special account with Scott and English Limited had its counterpart (at the current exchange rate of 4 to 1) in a Hong Kong dollar account maintained by Scott and English Limited with the Hong Kong and Shanghai Banking Corporation in Hong Kong, this account being to some extent under the control of S.C.A.P. through the agency of the Hong Kong and Shanghai Banking Corporation. The proceeds of the cancelled sterling credit in favour
of Pakistan were not in fact returned to this account but were held by the Hong Kong and Shanghai Banking Corporation in London, subject to instructions from the Hong Kong Gov- The balance remained in Hong Kong dollars in the
ernment.
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