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4
It is clear from 6 in 52745/28 that the Government must accept silver dollars in payment of taxes.
(Intd.)R.V.V.
I do not profess to understand the Hong Kong
currency question, and there does not appear to be
any clear memorandum describing it. But the odd
thing about it appears to be that while the notes
issued by the three Banks are expressed as promises
to pay silver dollars, in practice there has been
what is described as a "Commercial Convention" under
which debts have to be discharged in notes and not
in silver dollars. For some reason which is not
clear to me, the Banks, which have power to increase
their note issues if they deposit an equivalent
amount of silver, have kept their issues contracted
somewhat below the requirements of trade, and,
consequently the notes have risen to a premium.
They have apparently now decided, and have been able,
to get rid of the "Commercial Convention" described
above, and to secure the acceptance of silver dollars in payment of debts. Following this they have taken
silver to the Mint to be coined into Hong Kong dollars
and shipped it out to Hong Kong, with the natural
result that the premium on notes has disappeared. That
premium, if notes and dollars are equally current in
Hong Kong, ought never theoretically to exceed the
cost of minting Hong Kong dollars and laying them
down in HongKong. I do not see that any particular
action is called for from here, but the situation
ought to be watched, as I should imagine that with
the present low price of silver everybody will pay
their taxes and other debts to Government in Hong Kong
dollars in preference to notes, and the Government
may, before long, find itself landed with an
unmanageable quantity of silver. I gather that this
subject