CO129-364 - Public Offices & Others - 1909 — Page 43

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'currency and the note issue upon equal terms, and the

"discount on the British Dollars and other silver currency

"would disappear. The expenses of such an arrangement

"would be considerable, involving:

*(a) the initial cost and maintenance of the notes:-

(b) Treasury accommodation for the silver currency to be

retained against the note issue:

(c) Office premises for the conduct of the business:- and

"(d) ▲ staff of clerks, cashiers and Shroffs to deal with

the moneys and notes to be received and paid out.

*These would amount to a considerable sum annually, and

"would be a charge upon the already contracted if not

*strained revenue of the Colony, unless it is the intention

"of the Goverment to make the new department self supporting.

"In the latter case we anticipate the Government would be

"confronted by various difficulties, more or less insur-

"mountable. If suitable investment could be found for a

*portion of their cash reserves, in Silver Loans involving

"no exchange risks, they might be successful, but we do not

*think this would be found possible.

"There would therefore be left two courses to follow:-

#1.

*2.

To find local investment for the money, which could

not but involve competition with the business of the

existing Banks.

To invest in Sterling securities. These investments

# would involve possible loss by depreciation should

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the Government be forced to realise at unfavourable

times by reason of financial requirements to meet

their note issue. They would further render necessary

transactions in exchange in remitting funds to London,

and again in connection with the return from London,

India or elsewhere of proceeds of securities realised.

Losses in Exchange might be unavoidable in connection

with these transactions and cannot be insured against.

*If