CO129-504-10 Currency system- premium on bank notes as compared with British silver dollars 10-1-1927 - 30-8-1927 — Page 11

Copy.

HONG KONG AND SHANGHAI BANKING CORPORATION.

HONG KONG, 30th May, 1927.

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My dear Messer,

With reference to your letter of 27th May, I have read, through the file of correspondence you enclosed with interest and have the following comments to make upon same.

I notice that the Colonial Office are under the impression that the Memorandum was written by Mr. L. E. Hopkins, whereas it was composed by Mr. W. B. Mackay who, I believe, has had no experience of Hong Kong and I think is probably basing his comments on his Shanghai experience, where the currency is on entirely a different basis.

To turn to the Memorandum, I will commence by stating that I do not consider any Bank, which has had experience of running a Note Issue in a Silver currency, would dream of under- taking an issue on the terms suggested by Mr. Mackay. According to his proposal, note-issuing Banks would be compelled, as soon as exchange rose above the importing cost of silver dollars, to issue notes to an unlimited extent against delivery of silver dollars which they could not themselves pay out. If they did, I can well imagine the indignation of the public, & also of the other Banks, if they were forced to accept payment in silver dollars for unlimited quantities, but Mr. Mackay's utopian ideas

could