13
my
about four days the exchange rate had fallen
to about bullion point, where it has apparently
remained.
Enormous sums in silver dollars are
on the way to Hong Kong or have already arrived
and, while it may be anticipated that this
movement will cease, now that the exchange has
readjusted itself, immediate difficulty is
arising owing to (1) shortage of storage
facilities (2) the fact that the newly coined
silver dollars are squeezing more notes out of the
banks. The Banks of issue are not anxious to
see their vaults filled with silver dollar,
while they pay out increasing amounts of
paper, since (1) they can only increase their
issue if they deposit silver (dollar for dollar)
as security, with no obvious profit in return,
(2) when, as is anticipated, circulation again
contracts, the Banks will be compelled to take
back the notes, but will only be able to get
rid of the silver cover by exporting it and
paying the costs of shipment, melting down etc.
There is, moreover, the possibility
perhaps
the probability that silver has not reached
the lowest point of its depreciation.
This review of the situation would
be incomplete if it did not mention the fact conditions
that, apart from present abnormal nainen
there are various circumstances which suggest
that the note issue may be insufficient for
present needs. The fall in silver and
consequent