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Hongkong & Shanghai Why Curpn. London:
depositing securities instead of dollar for dollar at times. It
is doubtful if we should have to avail ourselves of the privilege
but it is conceivable that an occasion might arise when trade was
active and money in demand where our note circulation became
inflated and we could not obtain the necessary Silver to deposit
against the increase. Under such circumstances permission to
deposit securities would enable us to meet the demand without
curtailing facilities and bringing trade to a stop temporarily.
I would recommend that a limit be placed on the amount of the
excess issue to be covered by securities, say $ 3 or 4 millions
and such facility should be subject to the special sanction of
the Hongkong Government on each occasion.
What I wired about the Treasury Chest Officer's require-
ments is clear enough and I should think it would suit the Govern-
ment to supply the silver and save themselves some 10% on their
present monthly finance. * 8 lace is what they require monthly
in Shanghai and in the absence of Silver shipments we may not
be able to handle it all for them and without our assistance there
is no saying what rates they may have to pay.
The local requirements are not so great but, if they
provided them thro' Shanghai by shipping silver, they would save
considerably and the troops would benefit correspondingly by get-
ting a lower sterling rate for their pay.
Sir Charles Addis,
London.
Yours very truly,
(Sgd)
N.J.Stabb.