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(b) when the amount has been ascertained the payment by the Hong Kong and Shanghai Banking Corporation to the said Fund of a sum equal to the sterling equivalent at ls. 3d. to the Hong Kong dollar of the face value of that portion of the notes referred to in Section 2 which were used when first issued in discharge of any legal liability of the Hong Kong and Shanghai Banking Corporation.
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Objects and Reasons.
1. The first object of the Bill is to remove doubts as to the legal status of Bank Notes issued during the Japanese Occupation and the second, to provide for the meeting of liabilities consequent upon the status given to these bank
notes.
2. The circumstances in which these bank notes were issued made it uncertain whether the bank whose name they bore was liable to redeem them, but for the sake of the prestige of the banks and of the Colony itself and also for the preserva- tion of the faith of the public in the currency of the Colony as a whole, the Government and the banks agreed that the notes should be honoured. It has further been agreed that in the case of bank notes bearing the name of the Hong Kong and Shanghai Banking Corporation Government should bear a proportion of the resultant loss.
3. The Bill makes provision for validating the bank notes in question and gives effect to the agreement which was arrived at between the Government and the Hong Kong and Shanghai Banking Corporation as to the manner in which the liability arising out of the validation of bank notes bearing the name of the Corporation should be borne.
The liability is shared by:
(1) Immediate payment by the Hong Kong and Shanghai Banking Corporation of £1,000,000 to the Hong Kong Exchange Fund.
(i) Payment by the Hong Kong and Shanghai Banking Corporation as and when the amount is known of sterling at the rate 1/3 to the dollar for such of the notes of this issue which were used on first issue to discharge a legal liability of the Hong Kong and Shanghai Banking Corporation.
(i) Immediate issue of certificates of indebtedness by
Government in the sum of $103,800,000.
(iv) The application of part of the nett income of the Exchange Fund to the discharge of the certificates of indebtedness in (i) until they reach the figure of $16,000,000. The part of Exchange Fund income so applied will be a part which bears the same proportion to the whole as $16,000,000 bears to the figure arrived at after deduction of the total sum of dollars referred to in (1) and (ii) from $119,800,000.
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Ref.:
CO 537/1369
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