HONGKONG.
GENERAL INSTRUCTIONS REGARDING GOVERNMENT BALANCES.
Laid before the Legislative Council by Command of
His Excellency the Governor,
529
No. 35
97
QUESTION.— Under what authority and for what purposes have the Crown Agents for the Colonies recently sold in London to the Exchange Banks of d bills on Hongkong for large amounts; if this has been done in virtue of any special instructions will the Government lay a copy thereof on the table together with a copy of the Secretary of State's general instructions in connection with the custody and the disposal of the Colonial Government's cash balances in Hongkong?
ANSWER.-
Extracts from Colonial Office Despatch No. 222 of 10th October, 1890.
"I will now give you definite instructions as to the limit to be placed upon Government balances in the Banks, which in the last paragraph of my despatch No. 69 of 18th April last, I proposed to give as soon as I received further information as to the possibility of reducing the balance of ordinary current accounts.
"In view of the fact that the Revenue of Hongkong is larger than when the limit of $200,000 was fixed as the maximum of Government balances including current account and deposits at interest and on the clear understanding that the total amount is not placed in one Bank, I am prepared to sanction the increase of the limit of such balances to $350,000 including the Praya Fund as well as ordinary balances and deposits. Out of this amount the current account at the Hongkong and Shanghai Bank for ordinary expenditure must never exceed $125,000 but should, as a rule, not exceed $100,000; and the amounts in each of the other Banks should not exceed $75,000.
"I am not prepared to sanction any excess upon the above limits so long as the balances or deposits in the Banks are unsecured, but if any of the Banks are willing to give security for sums in excess of such limits, I should not object to larger amounts being entrusted to them.
"In order to prevent the necessity in future of the current account at the Hongkong and Shanghai Bank being raised to an excessive amount for the purpose of meeting large drafts by the Crown Agents for expenditure on behalf of the Colony in this country, I have caused them to be directed, pending further instructions, to draw $50,000 every fortnight, beginning about the middle of this month, so that they will have money in hand in advance of their requirements, and not have to make very large drafts at any time. If, however, a further sum is still occasionally required by them they will tele- graph to you, stating that they propose to draw such larger amount."
Extracts from Colonial Office Despatch No. 57 of 30th March, 1893.
"I have the honour to inform you that as long as only two Banks in the Colony are employed for the custody of Government funds, I am willing that the instructions given in my predecessor's despatch No. 222 of 10th October, 1890, should be modified to the following extent. The maximum balances, $350,000, may be divided between the two Banks, provided that not more than $200,000 remains in the Hongkong and Shanghai Bank, and not more than $150,000 in the Chartered Bank of India, Australia and China. It will therefore be necessary for you to further reduce the balances in the former Bank.
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"As regards your remark that it is necessary to have large balances in order to meet occasional large drafts by the Crown Agents, I have to refer you to the fifth paragraph of Lord Knutsford's despatch No. 222 of the 10th October, 1890, which shows that there is no need to accumulate excessive balances for this purpose, if only arrangements are made with the Crown Agents to make small drafts periodically so that they may have money in hand in advance for all their requirements.”