CO129-468 - Governor Sir Stubbs - 1921 [6-8] — Page 535

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of management. Allowing 10% for a depreciation fund, the

net addition to revenue ought at least to approximate to

$20,000 a year.

46.

Even if the Shanghai Bonde are not regarded

as a suitable security and if there should happen to be none

of the smell Hongkong loan on the market, a fair revenue

could be obtained by placing the investment portion of the

reserve on deposit in one or more of the Banks in Shanghai or Hongkong. Probably 5% interest would be allowed and

as there would be no risk involved a depreciation fund

would not be required so that the Government would receive

a revenue of £17,500 a year, less expenses.

47.

The advantage to trade of having an orthodox currency to replace the shop-notes would alone make the establishment of a Government note issue a desirable

measure, quite apart from the question of revenue and I hope, therefore, that careful consideration will be given to

the suggestion.

48.

I would add that in the figures which I have

given above I have taken the most conservative estimates. It will probably be found that a larger quantity of notes is required even for the local needs of Weihaiwei and it must not be overlooked that the notes of the Weihaiwei Government would certainly circulate freely in Shantung. The Chinese, even of the lower classes, are familiar with the use of notes and would undoubtedly prefer those guaranteed by the Government of Weiheiwei to local shop-

notes.

49.

I have suggested only the issue of notes for one dollar and one tiao. There are bank-notes of higher denominations in circulation, amounting perhaps to £200,000.

# These might be replaced by a Goverment issue but there is no real necessity to do so, as the local agents of the Hongkong and Shanghai Bank cash its Shanghai notes at par,

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