CO129-357 - Governor Sir Lugard - 1909 [7-9] — Page 625

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Extract from the Minutes of the Meeting of the Executive

Council, held on the 19th. July, 1909.

· 35645

RECS

(REG: 30 OCT 09

Council unanimously approved of the princi-

-ple of a Government Note Issue, but Mr. E. A. Hewett expressed

the opinion that the present time was inopportune because (1)

China ray reform her currency in the near future: (2) the rate

of exchange is now low: and (3) trade is bad and notes will be

at premium. Mr. Hewett added that in his opinion Mr. A. M.

Thomson had under-estimated the cost of instituting and main-

-taining a Government Note Issue.

Sir Paul Chater suggested that in the event

of 30 millions note issue being made with a dollar for dollar

deposit, 15 millions should be kept in reserve, but that the

remaining 15 millions should not be remitted to England, but

should be invested in the Colony in 1st. class mortgages ap- -proved by the Director of Public Works and the Land Officer. Sir Paul Chater argued that this would (1) obviate the danger of loss on exchange in enitting to England: (2) secure an interest of or at least 6 on the investment, instead of 31: (3) give confidence to local investors, Chinese and European, and thereby promote the sale of property in Kowloon and elsewhere. Sir Paul added that to his knowledge no Insurance Company had lost a penny on investments in property mortgages in the

Colony.

Mr. Thomson replied that the possibility of China reforming her currency was remote, but that in any case a Government note issue was required for the purpose of main- -taining a proper currency within this Colony: that when the note issue was in the hands of the Government, and not in the hands of local Banks, notes would no longer be at a preniwa: that there would be no danger of loss on exchange in ranitting to England as the Colony already possessed large sterling

liabilities