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THE NATIONAL ARCHIVES

CO 537/1369

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Mr. Hasting8.

Taking your draft B as the basis, I have the following comments:-

(1)

Clause 2.

the

(a) We must validate not merely $50 and $100 notes, which were excluded from the scope of the military administration proclamation, but also the $10 and $5 Hong Kong banknotes which were not

mentioned in that proclamation and therefore admitted to legal tender by implication. It is also desirable to validate the notes issued in similar circumstances by or in the name of the Chartered and Mercantile Banks, the precise numbers of which are not known with any certainty. I am not sure, therefore, that some more general description than reference to the numbers may not be desirable.

(b) I think the status of these notes as legal tender ought to be established not as from the date of commencement of the new Ordinance but as from the time of issue. Otherwise we shall be in some difficulty about the validation of past payments of debts and especially repayment of bank depositors in notes of this category.

(0)

I should prefer also to avoid any implication that the notes were not legal tender until the passing of the Ordinance, and to put it rather in the form of a removal of doubt than a change in the true position. I do not even at this stage want to concede the Bank's argument that the notes were definitely illegally issued.

If it were practicable, therefore, I should prefer Clause 2 to run something in the form:-

"Notes of the Hong Kong and Shanghai Banking

Corporation, the Chartered Bank of India, Australia and China, and the Mercantile Bank of India, which were put into circulation during the period of Japanese occupation by or at the instance of the Japanese authorities, shall, notwithstanding any irregularity in the manner of their issue, be deemed to have been at all times banknotes lawfully issued within the meaning of Section 3 of the Currency Ordinance 1935."

(2)

Clause 3.

(a) In consideration of the issue of the certificate of initial indebtedness for $103,800,000, the Hong Kong and Shanghai Bank have to pay not only the lump sum of £1,000,000 but the sterling equivalent at 19/3d. of the face value of any of the notes in question which are found on investigation to have been issued in settlement of any other liabilities of the Bank, including, of course, repayment of depositors. I think this condition must also be included as one of the obligations of the Bank in the terms of the initial issue of the certificate of indebtedness.

(b)