Sne
(Gov.49831/22.)
The smuggling was however satis-
factorily suppressed and it did not become
necessary to interfere with the convertibility
of the note (which would cut off at the source
the supply of silver dollarstopotential
smugglers).
An important reason for adopting the
export embargo policy at the time was that
the Banks' metallic reserves could not be
replenished from the IndianMints since they
were closed to the coinage of British dollars,
nor could Mexican dollars be obtained in
nt
sufficient qualities; any continued drain
on their reserves could therefore only result
in the Banks having to curtail their note
issues which would have had serious results
on trade in Hong Kong and South China. Although
the currency in the neighbouring ports was
the Chinese minted dollar (not legal tender
in Hong Kong) the Banks' notes were the usual
medium for the conduct of the trade of South
China. British dollars when exported were
melted into sycee or chopped and therefore
rendered useless for Hong Kong currency
purposes.
The question of rescinding the
prohibition on the export of British dollars
under
was apparently consideration again locally in
1922 but we heard no more about it on that
occasion nor have we since until the present
crisis has again brought the question to the
fore.