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lenders. My Lords are bound to have regard to the congested state of the market for British Government securities in this country and also to the demand which it may be necessary to make on that market for other purposes, and They could only add to their commitments in
My Lords this direction in cases of unavoidable need. regret that in these circumstances They cannot agree to ask Parliament to pass legislation guaranteeing a
It does not seem to Them that the Hong Kong loan,
viz.. argument advanced in support of this proposal that the Colony could then obtain the loan on cheaper terms is of any great weight. The money borrowed is presumably to be used in making advances on adequate security to the native banks and traders and it is of
the utmost importance that such advances should only
be made on stringent terms in order that they may be
utilised solely for genuine trade purposes and not
taken advantage of by speculators as a means of
obtaining
obtaining credit for purely financial operations.
My Lords would remind the Secretary of State that whenever in this country the question has arisen
of allowing the Bank of England in a financial crisis to increase the circulation beyond the limits
prescribed by law, it has invariably been made a
condition that the Bank Rate should be raised to 8% or
10% forthwith. There should be a very wide margin between the 5% rate which is asked by the lenders and
the rate at which the funds are made available within
the Colony: My Lorda assume that whatever arrangements are made will secure that the benefit of that margin
inures to the Colonial Government and not to the
distributing agente.
I am,
Sir,
Your obedient Servant,
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