· 3.
13
Mr. Mackay assumes that the note and the silver
dollar are at par when Hong Kong exchange is at the bullion
value of the dollar, which no doubt is theoretically correct,
but I submit that the true working parity is the laying down cost of the British dollar; we can, I think, ignore the
Mexican dollar as it is no longer minted and can only be
picked up in small quantities.
In the appendix to the Memorandum the cost of
bringing British dollars to Hong Kong is put at 3%. including
2% Seigniorage and 1% interest. If you will refer to your
letter 39/1925 dated 26th August 1925, you will notice that
the London Royal Mint's Seigniorage was £2.5/- per $1000 or
247 on a 2/- dollar, but this was only if they supplied the
silver themselves which I should imagine was more or less a
temporary phase.
If the Banks supplied the silver the Seigniorage is
£3.16/- per $1000, and in such an event 1% for interest
is quite insufficient as the minting would probably take
at least a month for any considerable quantity, to which must
be added 5 weeks en route. I am mentioning this to emphasize
that the premium of the note over the laying down cost of
the dollar is a very different matter to a premium based
on the bullion value of the dollar; you will note that in
the formula for the latter, the Peninsular and Oriental
Bank have allowed no shipping charges &c. to get the
bullion to the point where it can be sold - usually India.
With reference to the questions raised at Downing
Street, the answers are as follows:-
(1)