14
consequent rise of prices and wages means a
corresponding increase in currency in circulation
(that is, in practice, notes). Added to this
are (1) hoarding of notes, whereby a certain number
is continually being withdrawn from circulation,
(2) increasing use of Hong Kong notes in South
China owing to disorganization of Chinese
currencies, (3) increase in population of the
Colony.
A Committee has been appointed to
examine the position, with terms of reference as
reported in paragraph 9 of Mr. Southorn's despatch.
Meanwhile the Secretary of State is asked
to review the problem, with such expert advice as
may be considered necessary, and furnish the
Officer Administering the Government in due course
with his observations.
It is clear that much evidence must be
collected before any very helpful advice can be
given. It might be desirable to appoint a small
Committee here for a preliminary examination of the
position. On the arrival of the Hong Kong
Committee's report it might be desirable to send out
a Commissioner to examine the position on the spot.
(If it be true, as reported, that Sir Basil
Blackett may go to China as an adviser to the
Nanking Government his services might be secured
for this purpose on the way).
In any case it will be desirable, before
reaching any final decision on the problem, to await
an announcement of the attitude of the Chinese
Government to the Kemmerer Report, regarding which I
attach a press telegram (See 13).
7.M. Martin 2.5.30