CO129-450 - Acting Governor Claud Severn - 1918 [10-12] — Page 57

r-

20

„JESIJE galawoli

Julei, Tadodun qul

tovfid unr:G

.\AGESŃ TOBÜ

to di le recund 100g að samrte Su of Juna meryelo♪ odi to amutagens

İn

Loy suen Won. I „radodoŭ wek beviecez yiyer adi lo a boy groll to vonte Voð ==

yam ddim tray of youdliwos de ou vra vodi Jedi esa In enakisida of Desolans end to kaigoo pribaut me i

MECCA (9.5

„VÍSTOONİK STELY

مي

ziullo 20.100

65

py.of letter to six Charles Addis Hongkong & Shanghai Okg. Cserpine London.

Sir

fom Hongkong Bank, Hongkong.

igust 30th, 1918.

Hongkong. 30th August, 1918.

My dear Addis,

-

Our

I enclose copy of your telegram of the 28th inst. (aent thro' the Govt.) re note issue together with copy of my reply. The suggestion to ship away 10 million really took my breath

away and such a transaction would lead to a real disaster.

note circulation is not confined to the Colony but supplies the

currency for the whole of South China and if the reserve was re- duced by shipping away silver coin, leaving only $5 million in

our Treasury, the result would be a lack of confidence in our

notes, the effect of which would be far reaching and disastrous.

In fact our notes would descend to the level of those of the

Bank of China. It is due to the strong cash reserves we always maintain that our notes rank so high and I personally would not

countenance any reduction whatever in the Silver Reserve held

against notes it could not be justified even in such an emer-

gency as war finance. As a matter of fact I should very much

like to have another $30 or $ 40 lace of silver coin in my

Treasuries. For a Bank like ours a cash balance of 40% of o/a

Liabilities is none too high. As pointed out in the telegram

a shipment of $ 10 million would only have a temporary effect

and when that wore off we might be in a very unpleasant position

with a large note issue and very little silver against it. At

any rate it is a position I have no intention of getting into.

The monetary situation here is quite satisfactory but so long as

Shanghai keeps in an excited position it is not possible to get

to an effective tael level of par with the Mexican dollar nor is

it even desirable to do so, especially with Shanghai exchange

some 12% above the parity of the fixed price of silver. Par with

Shanghai dollars cannot be reached until Shanghai is fully or

over supplied with cash.

As mentioned in my telegram, it would be an ad

vantage to have the option of covering the excess issue by

-