CO129-449 - Governor Sir May & Acting Governor Claud Severn - 1918 [7-9] — Page 376

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we would suggest to you that this is sufficient

for maintaining confidences on the part of the holders of your notes in China.

Under the provisions of the present Hong Kong Ordinance you are entitled to withdraw

7 million dollars and replace them with securities We would suggest that you should proceed under this authority and send to China such amounts within that limit as will satisfy your necessary requirements

requested by us to permit exports from time to time up to that limit.

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the Governor of Hong Kong being

As regardsprovision for further expansion of currency in China, the Treasury and we will agree that so long as 10 million dollars are deposited with the Hong Kong Government you may make excess note issues against the deposit of British Government securities with the Crown Agents up to such amounts as may from time to time be authorised by the Secretary of State and the Treasury. In the first place we would agree to an additional 5 millions. This of course would require an amending Ordinance in Hong Kong.

I note that Mr. Stabb in his message

to you says that the present monetary situation in Hong Kong is quite satisfactory. I agree with you in being unable to see how this view can be accepted without reserve having regard to the intimate connection of Hong Kong with China

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anyhow it can scarcely be expected to remain satisfactory.

(Sal as c.