CO129-523-13 Currency situation 16-6-1930 - 16-6-1930 — Page 56

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(b)

(c)

(a)

(e)

ins

minting and bring to Hong Kong British

dollars from English bar silver;

Government to take over the note issue;

Government to control the note issue,

possibly with the advice of a Currency

Advisory Board;

to make the note-issuing powers of the note-

issuing banks more elastic, abrogating the provisions associating the limit of such note issue with the paid up capital of the banks, and allowing expansion against cover of gold securities and bar silver in London;

to adopt the use of bar silver for inter-

bank clearing purposes.

11. I do not agree with (a). It constitutes

an artificial method of dealing with a situation,

which may have some legitimate origin, and it is necessary to deal primarily with causes rather than

effects.

12. (b) While the idea of Government taking

over the whole note issue appears to me to have some attractions, I think that the reasons put forward

It may, against it by the Committee are cogent. however, be necessary to adopt this proposal as a step towards the adoption of a gold basis. that this was the case in the Straits Settlements,

where incidentally, although its success was in the balance for some years, the Government note issue has been fully justified and has moreover added

considerable sums to revenue.

I think

13.