CO129-482 - Public Offices - 1923 — Page 761

allowed in excess of the normal limit, and the

requirement of coin deposits for such an issue is a convenient method of imposing a deterrent

upon its undue inflation and tends to restrict it to the real requirements of the trade of the

Colony. But My Lorda look rather to the

ultimate security of the notes than to their convertibility, and when the demands of the Colony are such as to justify a permanent

increase in the note issue and the position of the issuing Bank is such as to render an in- crease in its ordinary issue justifiable, They

have in the past been ready to assent to

reasonable increases against the deposit of.

securities in London.

In the circumstances explained above My

Lords do not propose to take any action upon the lines suggested in the final paragraph of the letter under reply, and They trust that after further consideration of the position the Secretary of State will find himself in

agreement/

agreement with Their view.

I ac,

gir,

759

Your obedient Servant,

Nemag.