CO129-381 - Governor Sir Lugard - 1911 [11-12] — Page 29

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instead of two thirds. We shall then have more to invest in

London, and as the proceede of investment will be paid to

the reserve fund we shall hasten the time within which the

note issue will be completely covered.

This will be the more desirable because the discount on

the subsidiary coin will successively diminish as the scheme @

operates and we shall have to pay more to the Bank for each

lot of subsidiary coin we take off their hands.

All notes are at a premium at present. Our Govt. notes will

will no doubt go into China. Under currency schemes in the

future they may be excluded. But I think that before that time

can arrive we shall be in a safe position & as regards the

encashment of our notes in standard dollars.

As soon as our subsidiary coin stands at par we can cease

our operations. If a further fall occurs, We can resume them.

We shall therefore reduce our subsidiary currency to the pro-i

per limits by an

poe

eration that works automatically.

No restrictions on the introduction or Circulation of

coins will be necessary. Chinese subsidiary coins will

almost at once fall to a value markedly less than our sub- sidiary coins, and the Chinese are quick to detect the