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licence, or some similar method, the import of
dollars, but he saw grave difficulty in carrying any
such arrangement into effect. We suggested to him
that the ultimate solution might be a suspension of
the "free-minting" of Hong Kong dollars; retention
of the Hong Kong dollar, or the substitution of some other coin, as a token currency, and the provision
of a sterling exchange arrangement on the lines of
those in force in the Straits Settlements, East and
West Africa and Palestine. He seemed inclined to
think that such an arrangement would be quite
practicable, but, of course, must not be taken to
have committed himself to approval of it. It would
mean a Government Note issue and would need a great
deal of consideration locally with special reference
to the peculiar characteristics of the China trade.
He promised to keep us informed of any developments
which might come to the notice of the Bank. He said
that he understood that the Mint was full up with
orders to coin Hong Kong dollars until about next
March. People who brought silver to be coined had, of course, made a profit so long as there was a difference between the banknote in Hong Kong and the
silver dollar, but now that the premium on notes had
virtually disappeared there was no money to be made
out of it. We mentioned the alleged change over to
a gold basis in Saigon. He was of course aware of
that proposal.
As for China itself, he did not think that China
was likely to change to a gold basis within any
measurable time.
(Intd.) R.V.V.
3/12/29.
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