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Extract from TIMES-24412arch 1930 - Extract
from Refort of speech of MIWH. Bell (Chairman)
The increase of $16,500,000 in our Head Office note issue is related to Hong-kong's currency difficulties of the past year. During the first nine months the Hong-kong exchange failed to respond to the drop in the price of silver and in Shanghai exchange, and the notes of the three banks in Hong-kong (on the basis of which all business had for long been con- ducted following a mutual arrangement among the banks of many years ago) became in the end completely divorced from their nominal silver value and rose to a high premium over the silver currency which they actually re- present. The resulting disturbance to trade between the Colony and China decided the banks to revert to the circulation of the silver dollar. Many of the banks then sent orders for the minting of British dollars in London or Bombay, and 20,000,000 of these and Mexican dollars have been obtained, of which the greater part are already in the Colony.
As the largest issuer of notes, and as the Clearing Bank, we have seen the majority of these dollars force their way into our treasuries, a state of affairs which reveals itself in our in- creased note issue. It is obvious that a small colony like our own cannot absorb unlimited silver dollars, and further imports of these are much to be deprecated. The increase in our note circulation, I would add, has only been rendered possible by the Hong-kong Govern- ment having made a concession in regard to the taxation of our issue, without which an increase would have been prohibitively expensive.
The only expansion which I have to record in our field of operation is the opening of a new sub-agency at Muar in the Malay State of Johore.
Of the affairs of this Colony there is little to say except that, in addition to the currency difficulties already mentioned, we have suffered the inevitable reaction from the re- newal of civil war in the two Kwang provinces and other parts of China. The conditions for trade being very similar to those applying to China, I will refrain from treating them separately.
THE SILVER MARKET
With an excess of supply over demand the silver market has trended steadily downward throughout the year owing principally to a falling off in Indian demand, Continental sales of silver, presumably released when French Indo-China decided upon the transfer of their currency to a gold basis, an operation which they have now virtually accomplished, and, finally, a continuance of sales by the Indian Government. As regards this last it is reason- able to suppose that in future, with the refinery now working in Bombay, surplus coin in the silver currency reserve will generally be re- fined and sold locally as opportunity offers, thus narrowing the outlet for the world's pro- duction. The increase in the reserve is a weight on the silver market, and with condi- tions as they are in China one looks in vain for any probable source of a consumptive demand of sufficient strength and endurance to effect an appreciable re- covery in prices. As I have said, our local requirements in Hong-kong are bound to prove limited.
The extreme quotations of the year for the price of silver were as follows highest 26.7-16d., lowest 21.5-16d. per standard ounce, which constituted a low record for the metal (since then there has been a further decline). The quotations for Shanghai exchange were--- highest 28. 74d., lowest 2s. Id. per tael for telegraphic transfers to London. By a curious coincidence the Shanghai exchange touched the top and bottom limits on the first and last days of the year respectively.
The mine production of silver for 1929 is computed at 275,000,000 of standard ounces, which, added to 60,000,000 from outside sources, gives a total of 335,000,000-an in- crease of 12,000,000 over the previous year. China's estimated consumption was 143,000,000
and India's 70,000,000, corresponding respec- tively to 141,000,000 and 110,000,000 in 1928. China thus again achieved a record.
at Annual General Meeti
of IK. a Shanghai Bankij Corporation at Hong Kong
Home
on 22 Feb.
1930. 104
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