CO129-523-13 Currency situation 16-6-1930 - 16-6-1930 — Page 29

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landing at Hong Kong being somewhere between 3 51%. This being so, the theoretic maximum of the exchange premium, if there is no "note premium", that is to say the extra cost of a Hong Kong dollar at a foreign

centre, such as London, over the cost of the silver

content of a silver dollar at the same centre, ought

never to exceed the cost of minting and transporting

the silver to Hong Kong, that is 3 to 5% [ so long,

of course, as the "note premium" survived, the theoretic

maximum of the "exchange premium" was 3 to 5% above the "note premium"7

There are, however, certain circumstances

which have made it very much higher. In particular

the process of having dollars minted to order is not

absolutely straightforward.

Orders are not accepted

for less than a minimum number of dollars. In London

the minimum is said to be as much as 500,000 in India

it appears to be rather less. This diminishes the

effectiveness of minting as a corrective to excessive

exchange premiums in two ways. In the first place the

amount is so large that only a great concern like a bank

could put such an order through. In the second place

the storage and accommodation of so many dollars on their

arrival in Hong Kong is difficult for all, and

impossible for many, Banks or similar institutions.

Furthermore the transaction of minting itself is

a large scale speculation in silver "futures"; a

minimum period of two and half months must elapse

between