CO129-403 - Governor Sir May Acting Governor Claud Severn - 1913 [8-10] — Page 119

NO CONFIDENTIAL.

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GOVERNMENT HOUSE.

HONGKONG. 18th. August, 1913.

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In continuation of my Confidential Despatch of the 26278 28th. ultimo and with reference to the statement in my cypher tele-

-gram of the 26th. ultimo that since the declaration of Independence of Kwangtung business in Hongkong had been seriously dislocated and financial difficulties had been caused by the deterioration in

value of Canton Notes, I have the honour to inform you that the cancellation of the declaration of Independence by the Kwangtung

Government and the consequent rise in the value of the Canton Note

Issue had the effect of so far restoring confidence that a grave

financial situation in Chinese Commercial circles was averted.

Several Chinese Banks and Money Changers held large numbers of

these notes, deposited when the discount on them was 20%. Against these they had made advances up to 70% of the face value of the notes. Fortunately the short period of tension between the huge

rise in the discount after the declaration of Independence and the

fall again after ita cancellation was tided over by mutual co- -operation in Chinese financial circles with the result that there was only 1 large failure. As soon as the notes reached the normal discount of about 25% the holders realised by sending their hold- -ings to Canton and I am informed that at the present time, thanks to this action and to the effect of the Foreign llotes (Prohibition of Circulation) Ordinance, Canton Notes to the face value of

THE RIGHT HONOURABLE

LEWIS HARCOURT, M.P..

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