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73
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VI-A.
VI-B.
VI-D.
No. 625.
V.
Regulation made by the Governor in Council under section 1 of the Stamp Ordinance, 1921, Ordinance No. 8 of 1921, on the 19th day of December, 1929.
Heading No. 9 in the Schedule to the Stamp Ordinance, 1921, is hereby amend- ed by the addition in the third column, after the words "on two million dollars", of the following words,--
Provided also that with effect from the 19th December, 1929, and pending the further order or regulation of the Governor in Council the duty on bank notes of the Hong Kong and Shanghai Banking Corporation shall not exceed one per cent. per annum on $45,000,000 of the aggre gate bank note issues of such corporation.
COUNCIL CHAMBER,
19th December, 1929.
D. W. TRATMAN,
Clerk of Councils,
(Extract from the Hong Kong Government Gazette No. 58 of the 20th Dec. 1929).
VI.
Report by the Colonial Treasurer, dated 4th March, 1930.
Honourable Colonial Secretary.
About the beginning of November certain banks in order to obtain cover for their overbought position arranged to buy silver and have it minted into British dollars, and it is known that by about December $15,750,000 of new dollars were contracted for. The evil effects of flooding the Colony with silver dollars, was realis- ed, a clearing house for silver dollars was opened with the Banque de l'Indo Chine, and as more Note Currency was desired, and the chief note issuing Bank did not desire to extend its note issue, the Government was approached to waive the 1% tax en note issue so that the note-issuing Banks would increase their note issue and so relieve the shortage. Government action on the 19th of December in waiving the 1% tax on any issue by the Hong Kong and Shanghai Banking Corporation beyond $15,000,000 enabled the Hong Kong Bank to increase its note issue, and it did so, and the situation was relieved to a certain extent. The note issue of the three note issuing banks which averaged $70,830,479 during November 1929 averaged during January 1930 $89,837,681 an increase of about $19,000,000.
I attach memoranda on the situation from four different gentlemen.
(A) Mr. Waddington, Manager of the P. & O. Banking Corporation dated the 1th January. This gentleman acted as spokesman for the non-note issuing Banks. (B) Mr. Ferguson, Manager of the Chartered Bank. Mr. Ferguson is Chairman of the Associated Banks.
(C) Mr. Hynes, Chief Manager of the Ilong Kong & Shanghai Banking Corpora- tion.
(1) Mr. C. Champkin, a local bullion broker who was previously Manager of the P. & O. Bank in Hong Kong.
The last named gentleman quoted a Scheme by Mr. Priestley. is Manager of Messrs. E. D. Sassoon and Company, in llong Kong. impracticable.
This gentleman Document
Ilis scheme is No. VI-D (1)
Another factor which has made itself felt to a very large degree is the recent very great fall in price of silver. This factor has increased the difficulties in the return of Hong Kong Currency to silver parity as such a drop is adverse to imports, favours exports and has caused a large increase of remittances from abroad to Hong Kong and to places in South China through IIong Kong. It has also raised a good deal of discussion, especially among the Europeans in the Colony, who
see the sterling value of their savings and salary decrease, and have raised the question of stabilizing exchange to a fixed gold value, which is really the same as the Colony adopting a gold currency. The Commercial and Banking authorities in Hong Kong have so far been of the opinion that so long as China has a Silver Currency so must Hong Kong, as for Trade purposes Hong Kong may be considered a portion of China. However it may be advisable at some time or other for Hong Kong to adopt a gold standard and so this fact should not be lost sight of in making any alterations in note issue etc., so as not to increase the difliculties when a change over becomes necessary or advisable.
There is no doubt that the demand for note currency has largely increased, both for Hong Kong and the districts of China adjacent to Hong Kong, and it is advisable to make provision for such and the question of allowing a greater proportion of note issue to be secured by gilt edged securities might receive consideration.
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It is peculiar that at present Iong Kong has no control over minting her legal tender coins. Indian speculators are at present having British dollars minted at Bombay. The Hong Kong Bank asks for consideration in stopping this and dis- allowing their import. This does not seem to be in accordance with the usual theory of the free flow of currency, and any such restriction can only tend to retain and enlarge the premium on notes. The better method seems to be to bring the xchange value of the dollar in sympathy with the price of silver and not out of relation to it.
Matters regarding the premium on notes seem to be slowly but steadily ad- justing themselves. It is most important that no action be taken which may cause any violent fluctuation, as such is always against the best interests of trade.
4th March, 1980.
Confidential.
Dear Messer,
VI-A.
(Sd.) C. McI. MESSER.
Treasurer.
P. & O. Banking Corporation Ltd..
Hong Kong. 14th January, 1930.
I am sending you a note on the Currency Situation since the 1st October with details of events leading up to the present time. It is perhaps too comprehensive for your needs but I thought it might be of interest to you seeing that you were not here during October and November.
As regards your query, both Mexican and British dollars are legal tender for any amount and the Banks are accepting them at par.