CO129-433 - Governor Sir May - 1916 [5-6] — Page 395

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referred to in (1). The immediate result of the transaction was to actually reduce the discount to 24 - 11%, at which latter rate it now stands. may

add that practically no coin can be obtained at this figure.

(5) It is also highly probable that a further result of

this transaction will be a reduction in the amounts of subsidiary coin (10-cent pieces) collected as revenue by Government departments, thereby reducing the amount of coin to be demonetized and consequently

also the loss on demonetization.

3.

In view of the extraordinarily small loss (less than 3%) which the transaction involved which can be met out of the vote "Loss on Subsidiary Coin" now that it is anticipated that less coin will be collected, the excellent effect the re- -duction of the sub-coin on the market by a further £1,000,000 was bound to produce, and further in view of the large reduction in the losses of the Companies who chiefly receive subsidiary coin, I assented to the Chief Manager's proposals. These pro- -posals involved a departure from recent procedure under which, in accordance with your instructions, no purchases of subsidiary coin are made, and had it been possible to obtain your sanction by telegraph, I should have adopted this course. Under the circumstances, however, as owing to the fluctuations in the price of silver and in the rate of exchange, it was impossible to keep the offer open sufficiently long to obtain telegraphic instruc- -tions from you, I decided to accept the proposals, and shall be glad if you will confirm the arrangements made. It is not proposed to make further purchases with a view to demonetization, as it may be necessary to keep a certain stock in hand in case the coin goes to par, which may well happen within the next six months.

4.