CO129-625-5 Hong Kong University- establishment fund 1-3-1950 - 31-1-1951 — Page 2

¡

2

note of mtg with the

3

you. Hong Kong

Repent by Dr Jones - Mr W. Adams

HK 20k So.

Sav 708 Conf.- 15.7.50.

June 1750

2

Governor

if

không Kang

tex 1135 Cout

$10.50.

5.10.50

J. F. Meall

5

Extract from

minutes on

54147/50

Cent

On the points in (4) and (5) that (a) £500,000 is in- sufficient and (b) the fund should be invested in local utilities:

(a) the Inter-University Council never expected that the deficit could be met by endowment income alone (see para.9 of 12A). It is clear that even if U.K. and Hong Kong governments together gave £2 million (£17,500 p.a.), private gifts raised $6 million (=£13,000 p.a.), increased fees raised £20,000 p.a. and Hong Kong government increased its annual grants by $1 million (£31,250 p.a.), this would still be insufficient to meet the estimated additional recurrent expenditure. Some of the deficit is notional (e.g. all the developments cannot be started simultaneously; some depend on prior capital works like buildings; staff cannot be recruited for all the vacancies). Expansion will have to take place as funds become available and the "coat cut" accordingly in the meantime. It was not intended that a £4 million contribution from the U.K.government on a £ for £ basis should do more than initiate an endowment fund, and certainly not that this should set £2 million as the final target. It was intended only as an initial stimulus to the University to make a sustained effort over a period of years to get further endowments of chairs, etc., from local gifts, Dominion governments, African foundations, etc.

(b) Sir Arthur Morse made this same suggestion to Dr.Mouat Jones and myself frequently during our visit. The investment even of this small amount would at the time apparently have helped the local stocks which were sagging badly. With the dismal experience the University had previously had of losing its endowment funds by buying Shanghai mortgages in order to get a high rate of interest, we felt bound to advise against speculating with all the funds. In para.9(c) (i) of, we were careful to limit the suggestion (of investment in securities outside Hong Kong) merely to H.M.G's contribution, as we did not feel that we could suggest the same limitation on funds contributed by private donors, etc. If the Hong Kong Government gave £4 million to the endowment fund, it need not attach the same restrictive condition about the way in which the University invested it.

Apart from financial prudence our main reason for suggesting that the investment of H.M.G's gift should be outside Hong Kong was that given in para.9(c). A situation might arise in which the University could not continue its teaching in Hong Kong and would have to migrate temporarily to, for example, the University of Malaya. Its present overseas investments are sufficient only to meet its superannuation obligations. If it had no outside assets or income it could not preserve its identity during a temporary exile. Similarly, if an "unsympathetic" government took over in Hong Kong and confiscated local assets, the University would be impotent; if it had resources and income from outside, the University would be in a far stronger position of independence.

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(Signed: W.A.W. Adams.)

18th October, 1950.