CO129-394 - Governor Sir May & Public Offices - 1912 [12] — Page 152

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in this Colony. There is little doubt that the circulation is maintained here, in spite of its general unpopularity not only by official pressure from Canton but also by means of intimidation practised by so-called patriotic associations and by influential persons who are financially interested. Further the regulation already reported, which prohibits the export of more than $50 in silver at any one time from Canton, renders it almost necessary in the present state of the currency that these notes should, to some extent at least, be used as a medium of exchange between that City and Hongkong.

4.

The extent of the circulation in the Colony of Canton notes is difficult to estimate. In my Despatch of the 31st.

37-73 October I suggested the sum of $1,000,000, part of which was held

2

for speculative purposes. The Chief Menager of the Hongkong and Shanghai Banking Corporation in July last expressed the opinion that the circulation was practically nil but that notes to the extent of some $1,600,000 were held by Chinese banks and specula- -tors, while the Manager of the Mercantile Bank of India reported at the same date that he had received information to the effect that notes of the approximate value of $1,000,000 were circulating in Chinese brothels and Eating-houses. The Registrar-General reports that they are to be found in most of the Chinese shops in the Colony.

5.

I may inform you, with reference to the estimate of £30,000,000 given in my last mentioned Despatch as the total amount of the issue, that on the 21st. instant forged Canton Notes of the face value of over $500,000 were seized by the Police in Hongkong, and on the confession of the Canton Authorities a large number of these forgeries are in circulation. It is also alleged that the Treasury Officials at Canton have, for their private purposes, issued a quantity of duplicate notes in all respects identical with the originals.

6.

The circulation in this Colony of a totally unsecured paper currency of this nature, already depreciated between twenty and thirty per centum below its face value, must