Youbtful
This is bad, at when silver stord very high, by pro- -hibiting the export of the tollar, the water of Exchange value of the Hong Kong dollar was below the value of the silor the metal dollar. At that time probably
Content
walan
smugs Lead were prepared to pay notes for a smallin
mmon of silor Sollars to be smuggled out of the Colony
42
By a convention as binding as law they have a purchasing
power in Hong Kong of X and their value is reckoned
accordingly.
This value cannot sink below that of the
X
2sh' hann said that
silver dollar but theoretically can
can remain above/it
the orphically it can't, but in practice it has and does 1119.
without limit.
Hong Kong therefore is and has been for a
generation on a paper currency which is hardly to be
described as inconvertible but whate value internationally is governed by the same as that of an inconvertible
i.e. amount of issue in relation to the
paper currency,
Go
o direction
demand for it, which is governed by the amount/of trade,
habits of the people, etc.
Λ
Various explanations have been offered of the
origin of this unique but typically Chinese arrangement. The obvious and perfectly adequate one is the impractica-
bility of using silver as a medium of circulation.
Thanks
to the fall in the price the debased pound sterling is now
once more able to look silver in the face, i.e. it is really approximately equal to 1 lb (avoidupois) of silver. That means that a man who wants to keep only a reasonable amount of cash in his pocket must be burdened with 5 or 10 lbs in weight and anyone who wanted to pay in Hong Kong legal tender for a motor car, say, would have to hire another car to transport the necessary cwts of metal. To these weighty considerations are added the difficulties
of shroffing, i.e., examining individually and counting large quantities of coin - involving the upkeep of a large staff of shroffs and limiting the amount of coin even the biggest banks can cope with. Only the adoption of the note has ena bled Hong Kong to become the great trade
mart it is.
2.