Enclosure 2.
29
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Copy.
Hon. Colonial Secretary,
1.
Increase of nominal capital from $20,000,000 to 250,000,000. This seems to be justified by the position held
by the Bank in the Far East. It occupies the position of the leading British Bank. Increase of trade requires increase of banking capital to finance it. The purchasing value of the sovereign and the dollar is now less than it was prior to the war and hence capital required for financing the same amount of trade is now greater than it used to be. Several of the Japanese banks have recently largely increased their nominal and/or paid up capital. The Yokohama Specie Bank to Yens 100,000,000, the Bank of Taiwan to Yens 60,000,000, and other Banks are establishing themselves in the China trade. In the interest of British trade and British institutions it is necessary for the leading British Bank to keep pace with ita competitors and maintain its position.
2. Privilege of issuing bills up to $20,000,000 on deposit of one-third of that amount. This seems reasonable. If when the paid up capital was $10,000,000, this deposit was considered sufficient for $10,000,000; present day circum- stances should warrant the figures being doubled. During the recent history of the Bank its prestige has increased, and the lessons of the war and recent experience shew that the above security together with the other securities laid down by the Ordinance including the unlimited liability of the share- holders are ample for all reasonable purposes. The Chief Manager also brings forward the fresh conditions namely, the necessity for more notes owing to decrease in number of silver dollars, and the present necessary use of notes of other banks, notes which rely on securities of a more unstable nature than is desirable.
As to allowing deposits beyond the one-third of notes issued at each establishment at such establishment to count for the one-third security cf. Section 13(2) and excess
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