CO129-381 - Governor Sir Lugard - 1911 [11-12] — Page 40

be 10oke? for.

I will be observed that

Sir F.Lugard wishes to be allowed to

1

proceed with the scheme described in

his despatch, of which a copy accom-

panied the letter from this Office

of the Cth of April 1910,

But Mr.

5116

Hexcourt does not see how the scheme

can be corried out with any prospect

DÍ (20049* except at a cost beyond the

present means of the Colony.

It ap-

ners to him that if there is to be no

"repudiction" of the subsidiary silver

coins now circulating in China es vell

as in the Colony, and if the question

of depreciction is to be dealt with, it

must be dealt with comprehensively, and

haring rey rd to the resources of the

Colony this can only be effected by the

issue of Government notes of unliited

legal tender in plecs of the redundant

subsidiery coins,

4. The difference in the intrinsic

value

37

value of the subsidiary as compared

with the standard coins, the former

being .000 fine as compared with the

latter which are .900 fine, is not so

great as to make a sound scheme of note

issue impossible, especially when it is

remembered that the subsidiary coin can

be bought up from time to time at a price

based approximately on the prevailing my

of discount. The notes then issued can

thus be backed at once by a reserve of

standard dollare amounting to two-thirds

of the issue, and, after paying expenses

of the note issue, there will still re in

a

balance

it to be invested, which will in

course of time, as interest is added to

the investment fund, fully cover the

issue of notes. Moreover the note i asue

will of course be secured by the Generel

Revenue and Assets of the Colony, so

that there will be no cause for lack of

confidence in the issue.

E

The demand for notes in Hong

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