OP Y.
Love
41096
Enclosure/
4391
62
Pro 6 FEB 13 Memorandum on the Subsidiary Silver Coinage Redemption Scheme
suggested by the Secretary of State in letter to Home Treasury of 13th. January, 1912. (C. 0. D. Confidential 20th. Sep.1912).
1. The first suggestion to be noted is that the notes would be declared unlimited legal tender.
The objection to this is that in the event of the issue of a very large quantity of notes the whole of the subsidiary coin extant with the exception of the very small part required for Government payments and receipt would be replaced by notes while the necessary subsidiary coin for mercantile retail transactions, &c. would without prohibition still be found in the Cantonese so-called subsidiary coin.
It might mean that Government would have about ten millions of dollars notes out against a total asset (excluding general assets) of say & millions.
2. The com.unity would hail the addition of a considerable number of
81 notes as there is now a great scarcity of such in spite of the small increase recently authorised, but it is doubtful whether such a large number of that denomination could be put on the erket. It might be well, if the scheme were adopted, to modify it by permitting the issue
of $5 and $10 notes as well.
3. The Government need not, I think, fear any opposition by the Banks
to the issue of a limited number of notes as they do not wish or should
not wish to issue themselves notes for which a deposit of dollar for
dollar is required.
These notes, it is obvious, do not pay the Banks, as they cost something to maintain and are liable to a tax of 1% per annum under the
Stamp Revenue Ordinance.
Such excess issue by all the Banks is about $10,000,000 at the present time, most of which is in circulation in or near the Colony. 4. The security against the proposed note issue suggested by the Secretary of State is (a) deposit of the price obtained for the sale of the coins as bullion less something for expenses and (b) the
general Assets and Revenue of the Colony. It would therefore appear to