TNAG-0448-FCO40-513-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 131

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GRPS 775

IMMEDIATE

YPHER/CAT A

CONFIDENTIAL

PA

L'ST

FM HONG KONG 020410Z

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荷し

CONFIDENTIAL

REF

Si

ORWELL

TO IMMEDIATE F C O TELNO 396 OF 2ND APRIL, 1974.

FOR BARRATT (TREASURY) FROM HADDON-CAVE.

MY TELNO 381 AND YOUR TELNO 319. NOF

RECEIVED IN REGISTRY No. 51

3- APR 1974

HKK 510

心

DOCUMENTS RELATING TO THE NEW GUARANTEE HAVE NOW BEEN RECEIVED

AND WE ARE STUDYING THEM URGENTLY.

2. MEANWHILE, I WOULD LIKE TO ELABORATE ON OUR REASONS FOR MAIN- TAINING THAT WE HAVE NOT BEEN IN BREACH OF OUR OBLIGATIONS UNDER THE

GUARANTEE WHICH HAS JUST EXPIRED. PARAGRAPH 2 OF YOUR TELEGRAM 1209 OF 26TH NOVEMBER 1973.

(B)

(A) CLEARLY PROVIDED FOR MORE THAN ONE ACCIDENTAL BREACH, AND

IN ACCEPTING THAT WE ARE UNABLE TO GUARD AGAINST OCCASIONAL

ACCIDENTAL BREACHES, SEEMS TO EXCLUDE THE INTERPRETATION THAT

THERE MUST BE NO ACCIDENTAL BREACH OF ANY PARTICULAR DATE.

3.

1

THE REASONS WHY WE ARE UNABLE TO GUARD AGAINST ACCIDENTAL

BREACHES, DUE TO FALLS IN GILT EDGED PRICES ARE WELL KNOWN TO YOU.

THE MAIN ONE WAS SET OUT IN PARAGRAPH 4 OF OUR TELEGRAM 1317 OF 17TH NOVEMBER 1973, WHICH WAS, INDEED, WHAT LED TO YOUR EXPANSION OF THE TERMS OF THE GUARANTEE IN PARAGRAPH 2 OF YOUR TELEGRAM

1209 OF 26TH NOVEMBER 1973, VIZ: WE SIMPLY DO NOT KNOW BEFORE OR AT

THE END OF ANY MONTH WHAT OUR INDIVIDUAL ASSETS ARE OR WHAT THEIR

VALUE IS. THIS IS BECAUSE OUR AGENTS HAVE AUTHORITY TO VARY OUR

INVESTMENTS UNDER STANDING INSTRUCTIONS AND TAKE UP TO A MONTH

TO SEND US STATEMENTS. THE OTHER REASON IS THAT THE WORKING

MONTH ENDS IN LONDON 8 9 HOURS LATER THAN HERE, SO THAT EVEN

IF WE HAD FULL DETAILS OF OUR ASSETS AT THE END OF EACH WORKING MONTH

WE WOULD BE UNABLE TO TAKE ACCOUNT OF LAST MINUTE FALLS IN THE

MARKET.

CONFIDENTIAL

14.