CO129-452 - Others & Individuals - 1918 — Page 284

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280

Hongkong & Shanghai Why Ewropon. London.

C

O

40661

August 15th 0919 AUG 18

Dear Niemeyer,

I shall be glad to know as soon as you are in a position to tell me when we may expect a reply to the request made at the

suggestion of the Federal Reserve Banks that H. M. Government

might see their way to obtain the consent of the U. 3. Government

to come to the relief of the threatened currency impasse in China by making available a moderate amount of silver for that purpose.

The silver situation in China appears to be going steadily from bad to worse, and recent events have only served to accentuate and to present in stronger relief the urgency of the case,

as presented in my memorandum of the 11th July.

The exchange in Hongkong has advanced from 3/34 to 3/54d per dollar, and in Shanghai from 4/7ƒd to 4/10d per tael. These are the

nominal quotations, but we hear of actual transactions having taken place at 5/- per tael. This represents a premium of about 8% on

the cost, after payment of shipping charges, of importing a tael

of silver from America at a dollar an ounce. In ordinary timea

the rise in exchanges would have worked its own remedy. Exporte would have been checked, and the flow of imports, either of com- modities or of bullion, would have been stimulated, until an

equilibrium in the balance of international indebtedness had been

established. As things are at present, none of these forces is

in operation. Silver has been made a Government monopoly and is practically unobtainable by the Banks; the number of steamers

available for the China trade during the next few months is so

"LA9170==="I")" "WL. 3126-16. 50m, 1977 D & G 122 41.