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Mr. Vernon.
Mr. Ellis.
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In crow of the
of the metal value of the Brit. dellas
I have looked out the papers about the
embargo in the export of silver dollar from Hong Kong.
40926/20. The Governor stated that the
export of Bri ti sh dollar gwas prohibited in 1916 in
consequence of representations made by the Banks.
As far as I can trace this was the first
intimation to the Colonial office that such action
had been taken.
The Banks' request was made on the ground
that the sudden and unprecedented advance in the
price of silver might otherwise result in such
a drain on their silver reserves as to cause a
very serious dislocation of the Colony's trade.
issuing Banks had to maintain large silver coin
reserves in order to support their note issues.
The Governor explained that the pros and
The
cons for continuing this policy had in the interval
been put forward, but as the effect of the embargo
seemed to have been beneficial to the Colony's trade
the question of withdrawal had remained in abeyance.
The prohibition of export enabled the rate
ural
of exchange to be determined by the national process
of supply and demand of the export and import trade;
the violent exchange fluctuations resulting from the
abnormal silver market was in the main avoided.
The embargo led to smuggling of dollars t
the Colony since it had the effect of depressing
of th
the Hong Kong exchange to an average of 15% discount as compared with
of the exchange in neighbouring ports.
The
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