CO129-519-7 Hong Kong currency- minting of silver dollars 1-11-1929 - 5-2-1930 — Page 9

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Mr. Vernon.

Mr. Ellis.

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In crow of the

of the metal value of the Brit. dellas

I have looked out the papers about the

embargo in the export of silver dollar from Hong Kong.

40926/20. The Governor stated that the

export of Bri ti sh dollar gwas prohibited in 1916 in

consequence of representations made by the Banks.

As far as I can trace this was the first

intimation to the Colonial office that such action

had been taken.

The Banks' request was made on the ground

that the sudden and unprecedented advance in the

price of silver might otherwise result in such

a drain on their silver reserves as to cause a

very serious dislocation of the Colony's trade.

issuing Banks had to maintain large silver coin

reserves in order to support their note issues.

The Governor explained that the pros and

The

cons for continuing this policy had in the interval

been put forward, but as the effect of the embargo

seemed to have been beneficial to the Colony's trade

the question of withdrawal had remained in abeyance.

The prohibition of export enabled the rate

ural

of exchange to be determined by the national process

of supply and demand of the export and import trade;

the violent exchange fluctuations resulting from the

abnormal silver market was in the main avoided.

The embargo led to smuggling of dollars t

the Colony since it had the effect of depressing

of th

the Hong Kong exchange to an average of 15% discount as compared with

of the exchange in neighbouring ports.

The

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