CO129-370 - Governor Sir Lugard & Public Offices - 1910 [12] — Page 520

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As the interest on the securities accrues to the

depositing Bank the requirement which My Lords suggest will

impose no real hardship.

The other conditions of the issue should be as

laid down in the letter of 1894, and the maximum normal

amount might (as in the case of the Hong Kong and Shanghai

Bank) be fixed at the total paid up capital of the Bank.

Provision might also be made (as in the case of the other

two Banks) for an excess issue subject to the deposit of

legal tender dollars to the amount of the excess; but it

is not desirable that such issues should be allowed except

for the purpose of meeting a temporary emergency, since the existence of such an issue postulates a premium upon

the notes, otherwise (even apart from the 1 per cent tax)

it would involve a loss to the issuing Bank.

As the 1 per cent tax on the fiduciary issue

of the Mercantile Bank will mean a considerable addition

to the yield of the tax, My Lords are of opinion that the opportunity should be taken to exempt the excess issues generally (which are covered by the deposit of legal-

tender dollars) from this tax. This concession would probably be appreciated by the two existing Banks of Issue, the value of whose privileges will be impaired by the ad- mission of the Mercantile Bank to the category of Banks of Issue, and it would enable the Banks generally

to provide additional notes when required at lower rates

of premium.

My