18
credit; she has no effective administrative
machinery; she has very little experience in
such matters to fall back on; and she is
in a political condition which renders dependence on foreign aid--which is essential-- peculiarly difficult. A wild unreasing national-
ism dominates the situation, reinforcing the trad-
itional dislike (and to a large extent,
·
contempt of the foreigner.
(b)
So long as China is on a silver basis,
Things
it would seem,prima facie, that Hong Kong will
have to remain on a silver basis also.
could be managed if Hong Kong were on a gold
basis;but there would be many difficulties,
particularly as regards the trade conducted
by Hong Kong between points in China. I gather
that the Treasury view is that, so long as China
is on silver, the best interests of Hong Kong
require that the Colony should be on a silver
basis also.
(c) The present situation is obscure in many
respects; but one point emerges clearly--the
existing system is most unsatisfactory, and should
be remedied at the earliest possible moment.
Hong Kong has at present neither the advantages
of a gold basis,or of a silver basis. The
currency is in fact arbitrary; and it fluctuates
materially,and in an unpredictable manner.
Apart from their convenience premium,notes
have a scarcity premium also. The basis of the
issue is illogical--depending as it does,
apparently,on the capital of the issuing Banks.
(a) It seems unlikely that the local committee
will effect anything of value. Its composition
does not command confidence. But,as it is now