aganist the Bank's Note issue,
lee on 20P.
2839/881
ariv
draft to Treasur
on 14480/89, 18420/89, 13224/91
16157/91
By Ord. 21 of 1882 there is unlimited liability
in respect
of the Bank's note issues, and also the Bank is compelled to keep Cash at each of its Establishments equal to one-third of the Notes issued from such Establishment.
The proposal in present letter is that they should keep one-half of the cash to the extent of instead of one-third, & that we should then release the Securities we hold.
This arrangement would have some advantages for the Noteholder (as compared with the present arrangement) and in combination with the unlimited liability might I think be accepted, as sufficient safeguard.
I Recommend the proposal to the favorable consideration of the Treasury observing that if it is adopted Ord. 21 of 1882 had better be amended by substituting one-half for one-third in s. XIII.
If we do not accept this proposal, W. Jackson who called the other day intimated that the Bank might probably have to withdraw their note circulation, in which case this Government & perhaps the Straits Govt might consider the question of a State issue; an undesirable solution of the question?
14.9.25/h
Im Farfield.
29 July
The present arrangement is undoubtedly onerous for the Bank and in time of pressure could not serve any useful purpose. I cannot see what justification there was for requiring the Bank to deposit Securities against its Authorized circulation and not against its actual note issue and it is in this view...