COPY.
Local Currency Notes.
1276
316 SEP 19:
You are probably aware that a large percentage (about
60% lately) of the earnings of the Railway is received in notes. These notes today are at a discount of 23% compared with Canton silver currency. We have so far disposed of them at par paying contractors and others whose accounts were in Canton Currency and paying half the salaries and wages of the Staff. We also disposed
of $55,000 notes at par by arrangement with the Local Government
paying a portion of the Service of the Loan. To the end of June
1912 we had received 0.8141,000 in notes and had disposed of 0.8133.000 leaving a balance of 0.88.000.
The rate of discount, notes to silver, has been steadily increasing as shown below. When the notes were first issued the Government ordered that they were to be received and issued at par and threatened severe penalties should anyone not obey the order. The native Banks and money changers however boldly set the order
at defiance, refused to do business at par. The Government
Treasury changed at par but so arranged its place of business and
its methods that not more than a few hundred dollars could be
changed at a time and that only after waiting perhaps a whole day and sometimes even several days. The traders and shopkeepers evaded the order by having two prices a higher one when notes
were tendered. The Government now realises its inability to en-
-force its order and one reads and hears much of its deliberations
on the subject. The order now is that payments and receipts are to be made half in notes half in coin (the former at par, of
course,) but nevertheless contracts entered into and other trans-
-actions are always made at rates to allow for the discount on the
notes, and so to all intents and purposes there are two distinct
currencies, notes and silver.
-
As stated above, until quite recently we were able to
dispose of the notes received and we suffered but little in-
-convenience and no loss in doing so. There was some dissatis-
-faction of course but nothing very serious. Now, however, con-