CO129-529-2 Currency- note issue 31-1-1931 - 31-1-1931 — Page 11

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the

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fairly

be much dat hu fosition is due to the inaction of the Bank self.

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say what the emergency really was, and what it

really comes down to is that the Chartered

Bank are left rather at the mercy of the Hong

Kong and Shanghai Bank. They cannot increase

their own note issue, and they can only get notes from the Hong Kong and Shanghai Bank on such terms as the latter may choose to dictate. This is no doubt a regrettable state of affairs, but I do not think it would justify such illegal action as authorising the Bank to exceed the

limits of its note issue.

The Chartered Bank note issue is at

present secured by coin and securities of which

one-third at least must be actual silver (this

last condition exists in virtue of an undertaking

given by the Bank, and is not at present included

in their Charter though it is proposed to include

it in the new consolidating Charter). There is the Hong Kong Government tax of 1% on the value

of their note issue. The Bank contemplated that

the increased issue would continue to be subject

to the same conditions - i.e. deposit of one-

third in silver and payment of the 1% tax. The

Hong Kong and Shanghai Bank have been let off

the 1% tax for any part of their issue in excess

of $45,000,000. On the other hand, they have

to deposit silver coin or bullion to the full

amount of any extra notes that they issue.

Supposing that we allow the Chartered Bank to

exceed its present issue limit, either now or

hereafter, there is a possibility that it may

be represented that the Banks are not treated

on