CO129-449 - Governor Sir May & Acting Governor Claud Severn - 1918 [7-9] — Page 375

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against low metallic reserves.

btinute A Ct., from Six h Ramsay 2

uttacked

es. [Ve

371

We do not think

that His Majesty's Government would be justified

in pressing the United States of America to

provide silver for the relief of China in the

present limitation of supply and urgent demand elsewhere until all relief possible and safe has been given from your existing stock of silver.

Mr. Stabb in his last message to you says that it would be most inadvisable to ship away any silver from the Colony as present holdings are not more than sufficient from a point of view of prudence and soundness, that your notes circulate extensively in South China and that any reduction in the present reserve would create a very bad effect. It seems to us that the silver reserve is so high that the re- placement of an amount up to 7 million dollars by the deposit of securities with the Crown Agents could scarcely have a serious effect on confidence in the ability of your Bank to cash your notes on presentation in Hong Kong. You have pointed out to me that the Government's control over the movements of specie during war time and the present prohibition on the export of silver from Hong Kong to China except under license are important safeguards in this respect. There will still remain 10 million dollars in the custody of the Hong Kong Government for the encashment of your notes in the Colony, and

we