TNAG-0765-FCO40-969-Minting-of-coins-for-Hong-Kong-1978 — Page 187

CODE 18-77

SS 10/76

4

Mr Thompson (HKGD K245)

HONG KONG COINAGE

CONFIDENTIAL

Reference.

Punte to the Hult

VIAM 1978

DESK OFFICER

1. I appreciate that you feel strongly on this subject, but gut caution is warranted. a recommendation to amend the 1936 Order-in-Council would need Ministerial approval which may not be forthcoming because of the domestic issues involved, particularly in the run-up to a general election in 1978 or 1979.

See

2.

Blye's case is that in a free-trade economy it is hard to answer criticism of an enforced dependence on one supplier to the Government. This assumes

(i) that criticism is expected and

(ii) that the government must act like a textbook

firm in seeking strictly to minimize costs.

3. Assumption (i) : It is not clear from where this criticism will come: Hong Kong is not a democracy; publicly answering criticism of government policy is not one of the Hong Kong Government's daily functions. So far the Press has shown no interest and this is hardly the subject to inflame the average man in the streets of Hong Kong. However, the loss of substantial orders for a big employer in a Labour seat where unemployment is roughly 9% is precisely the sort of subject interesting to Ministers in London. Bearing in mind the bevy of Cabinet Ministers with constituencies bordering on, or containing, Royal Mint employees (eg the Prime Minister, the Lord President of the Council, our own Minister of State) I doubt that a recommendation to alter the 1936 Order-in-Council will be passed at Ministerial level.

4.

Assumption (ii) : However, a problem might exist if the Governor were asked about this in Exco by (presumably) an unofficial member. In this case the Governor could explain that governments are not always in the same position as commercial firms and in particular the Hong Kong Government's relation to the British Government is one of Colony and Sovereign. If Hong Kong wishes to retain Her Majesty's head on its coins it has to place the order at Her Majesty's Mint. This, so I believe, is the normal position, as it applies to our other colonies and dependent territories. The Royal Mint has an extremely high reputation among Governments as a competitive and efficient producer of coins. In 1976 it struck coins for 76 overseas customers, including not only former British colonies. who are under no obligation now to place orders there but even two Communist countries (Mongolia and Vietnam).

/5. Furthermore

CONFIDENTIAL