FO371-46259 — Page 29

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1,

GENERAL REPORT ON HONG KONG

I arrived in Hong Kong on September 7th with nine Civil Affairs officers.

2. I found an administration in being established, so far as could be seen, precisely on the 1941 basis, except that the Governor was now by Proclamation known as Lieutenant Governor. There were Executive and Legislative Councils and a staff of between 700 and 800 Europeans engaged on their 1941 duties. Many of these officers had been gazetted to official ranks and possessed executive powers.

3. The first few days were taken up with the attempt to transform governmental authority into something more in line with H.M.G. directives. I met the Lieutenant Governor and Executive Council and explained the principles adopted by H.M.G. for governing Hong Kong (and other reoccupied British territories).

4. Details of the action subsequently taken to regularise the situation will be found in the attached Legal Report.

5. I considered immediate action necessary in regard to the financial situation of the colony which appeared to be running quite happily entirely on a yen basis. Mr. Butters, Financial Secretary to the Colonial Government, had evolved plans during internment which in many respects were identical with those decided upon in London. Stop-gap currency was in the course of printing locally.

6. Since official payments were being made in yen, I felt obliged to insist upon the immediate implementation of H.M.G's plans as regards demonetisation of the yen and the re-establishment of the Hong Kong dollar at the first possible moment, even although supplies of Hong Kong currency (including stop-gap notes in the course of printing), were dangerously inadequate. The necessary modifications in Mr. Butters's plans having been made, the currency proclamation was issued on September 13th.

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7. Details of the situation as it developed thereafter have been fully reported by telegram. Briefly, the situation with which I was faced upon the demonitisation of the yen was that ninety per cent of the

To meet population had no money and little prospect of obtaining any. this I recommended the following measures in the hope of holding the situation:-

(1) A large scale public relief work programme whereby between 30 and

40 thousand unskilled labourers were employed daily to clean up the city streets.

(2) An advance of two weeks pay to every subordinate government

employee.

(3) A rehabilitation allowance of HK$1 per day to every non-

European essential worker.

(4) Authorisation to the banks to issue one instalment of

HK$200 in their discretion to each customer and to make

funds available to employers of essential labour to meet wage bills.

(5) Allocation of $150,000 for relief purposes to feed the

destitute.

(6) Advance of $100,000 to fishermen in the shape of $4 to each junk master to enable him to obtain supplies to put to sea, together with an advance of $50,000 to finance wholesale marketing of the fish when caught.

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