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In their letter of 80th February 1923 to the Under Secretary of State, the Lords Commissioners of His Majesty's Treasury state that "they look rather to the ultimate security of the notes than to "their convertibility", and, with this in their minds, they saw no reason to dissent from the proposal to increase the ordinary issue of the Chartered Bank to the extent of their capital, £3.000.000 or $30.000.000, without requiring that Bank to keep any reserves of coin er bullion whatever.
It is true that the capital of the Hongkong & Shanghai Bank is only $20.000.000, but we would point out that, while the Chartered Bank Reserve Fund amounts to 13,800,000, our reserve funds are £4,500,000 and $24,500,000, say £6,950,000, which would seen to be sufficient to meet their Lordshipa' requirements for the ltimate security for our notes.
The crux of the matter appears to be that, as it is H.& 3.B.C. notes which the public, particularly the Chinese, require, we must issue in excess of our authorised issue, at additional expense to ourselves without the compensation of having greater earning power, while the Chartered Bank notes are not so widely sought though they have the advantage of earning to the full with any probable increase in their issue.
I trust the foregoing will be found sufficient to show the need for an increase in sur authorised issue against securities deposited,
I have the honour to be,
sir.
Your obedient servant,
sa/- A. Stephen
CHIEF MANAGER.
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