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subsequently re-opened. There were no notable difficulties among the smaller native banks. The credit and repute of the Colony's financial institutions are still as high as ever and it is satisfactory to be assured that ample encouragement and support are available to finance any possible demand that a revival of trade would need.
2. The Currency of the Colony which had been hitherto based on silver and governed by the Order in Council of 2nd February, 1895, underwent some very important changes during the period under review. The unit of currency is the Hong Kong dollar, divided into 100 cents. The standard coin was the silver British dollar, the silver content of which is almost identical with that of the Mexican dollar, and the exchange value of the Hong Kong dollar should theoretically have been identical with the bullion value of this coin. The reasons for the wide discrepancies from this theoretical value which have existed at various times are discussed in the Report of the Hong Kong Currency Commissioners 1981. Apart from these, the Hong Kong dollar was, like that of China, on a silver standard after the 15th October, 1934, when the Chinese Government in effect left that standard by imposing variable duties on the export of silver from China. On the 9th November, 1935, however, the Hong Kong Government prohibited the export of silver, and on the 5th December, 1935, a Currency Ordinance was passed calling in silver coin from circulation, and setting up the machinery which now controls the exchange value of the Hong Kong dollar. Briefly, this consists of an Exchange Fund, with power to buy and sell foreign exchange, which has taken over the silver formerly held against their issues by the note-issuing banks, in return for certificates of indebtedness against which the Fund may hold silver or foreign exchange.
The legal tender currency of the Colony is now as follows:-
(a) Bank notes, the excess of which over the fiduciary issue of each bank is now backed by certificates, not by silver as formerly:-
At 31.12.35.
(i) Chartered Bank of India, Australia & China $21,763,985 (ii) Hong Kong & Shanghai Banking Corporation $112,822,143 (iii) Mercantile Bank of India $2,131,162(b) Government $1 notes, of which $1,280,000 were issued to prevent a shortage of currency at the beginning of the new system. These may ultimately be replaced by $1 bank notes.
(c) 10 cent and 5 cent cupro-nickel coins.