CONFIDENTIAL
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to the exclusion of any other material and comment felt to be sensitive, I would think that it would be helpful to the authorities in the dependencies to see the report.
5.
Our description in Annex 5 of details of the promotional companies involved with the dependencies is factual, the information being drawn for the most part from standard reference works.
We have, however, been involved in the past in correspondence about the McGraths of World Coin Corporation, in particular as a result of their approaches in 1974 to the Bermuda Monetary Authority. At that time, although there was no indication that the McGraths were other than financially respectable, it was understood that the "trade" tended to question their sense of responsibility. This stemmed from their dealings with less sophisticated governments: it was felt they tended to act as high pressure salesmen, intent on their turn and concentrating solely on selling the idea of a new issue rather than attending to the marketing of past and future issues. How much of this attitude is due to the McGraths' evident success is hard to judge, but I have no doubt that your colleagues in the WIAD at any rate will have formed their own opinion from their involvement from time to time in discussions about the Cayman Islands' and Turks and Caicos' programmes.
6.
As regards the general tone of the report we have tended to emphasise the negative aspects of numismatic coin issues. I make no apologies for this either. It serves to redress the balance: we normally hear, whether from the dependencies themselves or from the promotional companies, only too much about their positive aspects.
7.
But
You and your colleagues will now need to reach your own conclusions, and further discussion between us may well be required. my own general view is that an element of discipline needs to be applied to the numismatic issue business so far as several of the dependencies are concerned, in their own longer-term interests as well as those of HMG: and there are probably some recommendations which could be applied with advantage in almost every case. Admittedly, such discipline would probably imply a reduction in revenues. But this should be compensated by a reduction in risk.
8
A conclusive judgment on the degree of risk involved for each territory and for HMG is not in the nature of things obtainable, but the fact that the contingent liability for HMG appears to be already around $55 mn. and is still increasing would justify considerable concern on our side.
9.
The simplest and safest approach would be a policy of confining issues to those that conform to a Royal Mint-type contract, assuring a high level of royalty in terms of face value and thus the ability to maintain a correspondingly high level of backing (but with a lower level of direct revenues). This policy should involve a reduction both in the numbers of coins in each issue and in the frequency of issues measures which, by promoting scarcity and enhancing demand, would also tend to reduce risk. Such an approach would improve matters for the future, but the existence of contracts binding for a number of