are now holding some 15 million dollars of theirs.
I need not go into further details of this issue at
present nor say anything about the issues of the
Chartered Bank and of the Mercantile Bank of India which are much less important.
I am inclined to think that the Bank issues need not be, and will not be, interfered with very greatly by a Coverment note issue. I believe that the capacity of China for absorbing sound notes is huge, and the Banks have always been discouraged from testing that capacity by having to deposit with the Government dollar for dollar against their excess issues. Indeed they actually lose money on their excess issues except in so far as their notes com- mand a premium, as they almost invariably do.
As to our present holding of 15 million dollars against the excess issue of the Hong Kong and Shanghai Bank, it seeme almost sinful that the Thole of this huge supply of silver (they are the big British dollars) should be looked up when the demand of India is so urgent. I would propose to ask the Bank to agree to our taking 5 millions from this reserve and replacing them with our first 5 millions
of
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