TNAG-0374-FCO40-420-Discussions-with-Sir-Murray-MacLehose--Governor-of-Hong-Kong-1973 — Page 182

Private Secretary

SECRET

Scarchary

HONG KONG STERLING BALANCES

1.

2.

I was present on 9 August at a meeting between Sir Murray

MacLehose and Mr Nott in the Treasury. Mr Haddon-Cove was with

Sir Murray, and Mr Mitchell and Mrs Hodley-Miller with My Nott.

After Sir Hurray had outlined his problems along the lines

of his recent telegrams, Mr Nott and the Treasury officials

explained that the Chancellor would be sending a further

message to those governments with whom we had sterling agreements

early in September, possibly in the first week of that month

and certainly not later than the early part of the second week.

This message would explain what the British Government had in

mind for the future. It was not possible for any indication to

be given of its likely contents because the Chancellor had not

yet taken any decisions, about which he would in any case have

to consult some of his colleagues and the Prime Minister. But

they asked why, given that this message was known to be coming,

the position could not be held. Could not the Banks in Hong Jony:

be persuaded not to embark on major diversification pending the

receipt of the Chancellor's message? (At one time in the

discussion Mr Nott said "The Banks must at all costs be stopped

from major forward selling".)

3.

Sir Murray said that the position could perhaps be held,

but he did not think it right to send Mr Haddon-Cave back to

Hong Kong with instructions to reassure the Banks unless he

could be given some indication of what was in the Chancellor's

mind. It would be disastrous for the Goverment to cajole the

/Banks

SBORET