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could only approach materialisation if such was the case or, possibly, if the note issue was a Government one. The question of the Hong Kong Government issuing notes was, I know, considered
in 1909 when A.M. Thomson was Treasurer, & was abandoned as
impracticable, to a great extent owing to the fact that there are no suitable silver securities in which the Note Reserve could be
invested.
Mr.Mackay, however, wants to force the three note-issuing Banks to issue notes on demand against delivery of silver dollars, which could only lie useless in their Treasuries or be sold at a large loss; we have far too many of these "white elephants" as it is. The note issues also would know no limit on this dollar-for-
doller scheme, which is utterly impracticable. The P.&0.Bank would seem to be under the impression that the note-issuing Banks could, when occasion arose, force exchange down to protect
themselves from such an influx of silver dollars, but how is a
mystery. The Banks don't make exchange but their quotations are in the nature of a barometer which registers the exchange which is the natural outcome of supply & demand.
I would mention that the Memorandum states that when a
demand for Hong Kong currency arises it "is left to the free "discretion of the Hong Kong & Shanghai Bank as to whether it will" "increase its Note Issue against the security of additional silver" "dollars". I fail to see why this Bank should be the only "bogey"
when both the Chartered Bank & the Mercantile Bank have note
issues.
Mr.