CO129-472 - Others - 1921 — Page 132

My Lords hold the requirement of full security to be even more important now than when (in 1907) a similar proposal was refused by Lord Elgin and the then Board

of Treasury.

As regards the proposal that local reserves should be taken into account in reckoning the security held y Lords see no objection in principle to a proportion of the security being held at places other than Hongkong where notes are issued. From the practical point of view it seems to Them that it should be possible to secure that changes in the holdings should be notified promptly to Hongkong. But the question of the safety of such deposits is more serious and They would suggest that in the first instance the Foreign Office might be consulted on this point. They are Themselves inclined to take the view that only reserves

held at certain accessible points such as Shanghai and Tientsin should be allowed to rank. Apart from the question of security it must not be forgotten that the

bulk

bulk of the Notes would be payable at Hongkong.

I am,

129

Sir,

Your obedient Servant,