רי
59
£
51868
sum had been lent it became necessary to decide how to finance further loans, and I have now agreed to accept the proposals of the Hongkong and Shanghai Banking Corporation as set forth in their letter and memorandum of the 15th October, copies of which were enclosed in my Confidential despatch of the 16th October.
4.
The chief difficulties in financing such a
loan are to avoid losses in exchange on the conversion of gold into silver and vice versa and also any cost in minting or purchase and subsequent sale of dollar coins. Both the Hongkong and Shanghai Banking Corporation and the Chartered Bank have to keep in reserve actual dollar coins to the extent of of their note issue. The average note
circulation and actual coin in reserve of the three Banks
was on December 31st, 1925 as follows:-
Hongkong and
Shanghai
Banking
Corporation.
$42,326,964.
Coin in Reserve.
Limit of Issue
$33,500,000
$100,500,000
Note Issua
on condition of
1/3 in coin.
5.
Chartered Bank of India, Australia
and China.
$14,504,352.
Mercantile Bank of India.
$1,459,872.
$ 5,000,000. $ 550,000
$15,000,000
$1,650,000
The Hongkong and Shanghai Banking Corporation are also importing $2,000,000 in coins minted at the Royal Mint.
It is therefore obvious that the Hongkong and Shanghai Banking Corporation can expand their note issue to a very considerable extent without the necessity of further coinage and importation of silver dollars, while the other
two Banks have almost reached the limit of note issue; and
it is also apparent that in concluding the arrangement with
the Hongkong and Shanghai Banking Corporation for financing
the loan up to $15,000,000 there is no reasonable cause to
expect