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In the meantime it will be scarcely possible, in the face of the premiums at present commanded by the notes of the two Banks which enjoy the privilege of issue, to maintain a refusal of the request of the Mercantile Bank
of India Limited to be allowed to issue notes.
My Lords agree however to the concession with
very great reluctance, not only because it has been Their
consistent policy for the last twenty years to discourage
any additions to the list of Banks of Issue but also
because They feel great doubts whether the grant of the
privilege will have the desired effect of removing the
premium on notes.
They see no reason, however, for granting the privilege on terms more favourable than those laid down in
Section III of the Treasury letter of the 21st September 1894 already referred to viz: the deposit of securities to the full amount of the proposed issue plus 5 per cent.
Lord Crewe's proposal would in fact place the
Mercantile Bank in a more favourable position than either the Hong Kong and Shanghai Bank or the Chartered Bank of
India Australia and China since the former is under
Ordinance No. 6 of 1907, required to deposit coin or securities to the full amount of any issue in excess of their original capital of $10,000,000 up to the amount of their increased capital, while the ordinary issue of the latter is limited to $8,000,000, although their original capital is £2,000,000 and they have power under the last
Charter to increase it.
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