CO129-461 - Governor Sir Stubbs - 1920 [5-7] — Page 374

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RES

RE 18 AUG 201

GOVERNMENT HOUSE.

HONGKONG. 3rd July, 1920.

Sir,

With reference to Mr. Severn's despatch No.302

63985/19 heas 634/20 of the 7th January last, I have the honour to state that I

of the 18th September, 1919, and to Your Lordship's telegram

concur with Mr. Severn as to the desirability of a reduction

in the fineness of Hongkong subsidiary coin and the introduc-

tion of a nickel five cent piece, when opportunity offers;

but I agree that in view of the practical difficulties no

action should be taken at present.

2.

In 1916 the export of British dollars was prohibited, in consequence of representations made by the British Banks: copy of letter attached; and that prohibition

still remains in force. Arguments for and against the

adoption and the continuance of this policy have been advanced

but, as far as it is possible for me to judge, the effect

upon the Colony's trade appears to have been beneficial, and

in the absence of any demand for the withdrawal of the exist-

ing restrictions I am allowing the question of withdrawal to

remain for the present in abeyance.

3.

The prohibition of export enabled the rate of

exchange to be determined by the natural process of the supply and demand of the export and import trade and the violent exchange fluctuations resulting from an abnormal

silver market were, to a considerable extent, avoided. The

result has been that the Hongkong exchange ruled at a discount

THE RIGHT HONOURABLE

VISCOUNT MILNER, G.O.B.,

&C..

&c..

&c.