CO129-489 - Governor Sir Stubbs & Sir Clementi - 1925 [8-12] — Page 318

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The question of making the money avail- able in the Colony has been one of considerable difficulty. The Hongkong and Shanghai Banking Corporation and the Chartered Bank of India, Australia and China professed themselves unable to advance any money; the most they were prepared to do was to issue notes on behalf of this Government

against backing of coin or bullion for the whole

amount. Of such backing one-third must be silver dollars to be minted by this Government and to be laid down by it in Hongkong, and two-thirds must be gold coin or bullion to be deposited with the Crown Agents. It was a further condition that the silver reserve held in Hongkong must be demonetized when no longer required for purposes of securing the

note issue.

4.

I was unable to accept these proposals. In the first place it would be necessary to bring out the silver at a rate of exchange which is being forced up by the abnormal conditions prevailing,

and the subsequent repayment would probably be at a normal rate of exchange, involving the Colony in a heavy loss: And secondly, I was not prepared to

agree to the condition as to demonetization of the

only legal tender of the Colony, in order to suit

the convenience of the two Banks, who for their

own purposes are accustomed to maintain their notes at a considerable premium over the silver dollar.

5.

I accordingly caused enquiry to be made among the other banks doing business in the Colony, and I found that they were in a position.

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