35.
Make A
Commissioners, 1931, fluctuated with the price of silver. On the 15th October, 1934, the Chinese Government departed from the strict silver standard by imposing a variable export duty on silver, but Hong Kong remained on the silver standard until November, 1935, when the Chinese Government definitely abandoned the silver standard, nationalising all silver and prohibiting export. Following that, the Hong Kong Government, on the 9th November, 1935, 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 bullion, foreign exchange or approved securities.
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 31.12.36.
(i) Chartered Bank of India, Australia & China ... $22,756,888 (ii) Hong Kong & Shanghai Banking Corporation ... $124,863,771 (iii) Mercantile Bank of India $4,091,508(b) Government $1 notes, of which $2,300,000 have been issued.
(c) 10 cent and 5 cent cupro-nickel coins.
(d) 1 cent copper coins.
(e) The silver dollars and .800 fine silver sub-coin (10 cent and 5 cent pieces, and a few 50 and 20 cent pieces) which have either remained in circulation in the Colony or filter back into it from the mainland of China, are still legal tender in the Colony (sub-coin only up to an amount of $2.00).
The exchange value of the Hong Kong dollar, which had gradually risen during 1934 in conformity with the rise in the price of silver, reached a maximum of between 28./6d. and 2s./7d. in April/May 1935, and thereafter continued to follow silver until the prohibition of export in November, 1935. From then until the Currency Ordinance was passed in December, the rate moved between 1s./4d. and 1s./6d. Since the Exchange Fund began operating in December, 1935, the rate has remained fairly steady; the highest during 1936 being 1/33 on 4th April and the lowest 1/2 on 9th September. During the last 3 months of the year exchange was very steady at 1/21⁄8 to 1/23⁄8.