45680/1918.
488 PARAPHRASE TELEGRAM from the Secretary of State for the us Colonial to the officer Administering the Government off Hong Kong.
.isdgua: ni noidswie Sent 1.0 p.m., 5th October, 1918.
. CHOI
With reference to your telegram of the 19th September representatives of the Colonial Office in close consultation with Sir C.Addis have made every endeavour reach an
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arrangement fax to secure the supply of silver for Shanghai requested by the Bank unsuccessfully. It is considered by the Treasury that there is no prospect of Their being able to obtain for China any substantial quantity of silver if the irreducible necessities of the United Kingdom and India are to be supplied. Notwithstanding the objections urged in your telegram to proposals indicated in my telegram 14th September they consider that risks involved in adoption of those proposals are less serious than would be the conse- quences to India and United Kingdom if silver were diverted from the limited amount of new silver now available in America to China. They therefore press for adoption of those proposals. India Office point out that reduction of exports from China through shortage of exchange would only impose a restriction which has long since been enforced on India and that very high metallic reserve against the note issue of the Bank as compared with that of Government of India calle for provision for additional currency require- ments by means of an additional note issue against securities.
Sir C.Addis has explained importance of stock of silver in Colony to support trade of Hong Kong and South China and meet demand liabilities of Bank, but could not confidence be maintained by retaining 10 million dollars? The necessity
for export licences will prevent depletion below this figure Can you suggest any additional safeguards or any form of assistance which would render Bank more easy in facing the risk of diminished confidence? If Stabb refused
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