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Downing Street,
20 September, 1917.
Dear Lucas,
Thank you for your letter of the 17th instant. I have now put the question of a Government note issue at Hong Kong before Fiddes, and he agrees to my going ahead with formulating a scheme. This must I think be done here because the difficulty consists of the present bank issues.
By far the largest issue is that of the Hong Kong and Shanghai Bank, now about 30 million dollars. Against the first 10 millions they are required to deposit with us coin and/or securities up to of the 10 millions. On the next 5 millions of their issue they have to deposit coin and/or securities with us to the full extent of 5 millions. The remainder of their issue is called their excesa note issue and against this they have to deposit with the Government of Hong Kong coin or bullion (not securities) to the full extent of the excess issue.
In this way
[F. LUCAS ESQ., C.B.,
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