preview of it (and the Governor may grouse to you a little about having to take it unseen when our talks started yesterday.
The upshot is satisfactory. The Governor and his Financial Secretary think that they can sell our proposals to Hong Kong public opinion, provided that we can meet them on a number of points of detail. One concerns the amount of the bond. We suggested £100 m. The Governor wants 200 m. but would settle for either £100 m. or 50 per cent of official reserves, whichever is higher. A possible formula to meet this point is now being drafted and will be submitted to the Chancellor and Lord Shepherd overnight. The Governor then wants his Financial Secretary to go back to Hong Kong at the weekend and try our scheme out on his Executive Council who we are assured, will not leak. Then Mr. Cowperthwaite would return here and we would settle all the details with a view to a public announcement in say a fortnight's time.
(1)
I suggest you say to the Governor:
We hope he understands why we could not accept the Hong Kong proposals mainly because of the repercussions elsewhere in the sterling area. (2) We are sorry we were not able to give him prior
notice before he came of our proposals, but they required very careful consideration here, because of their novelty, right up to the last moment.
(3) We are glad he thinks our scheme would be acceptable
in Hong Kong subject to certain important questions of detail which have still to be settled, especially
the maximum limit for the bond issue.
(4) In view of the intense public interest in this matter here as well as in Hong Kong we know he appreciates as much as we do the importance of no premature leakage until we have got the details tidied up.
(5) We hope it will be possible to settle tomorrow
the terms in which the Financial Secretary shoulä
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