CO129-529-2 Currency- note issue 31-1-1931 - 31-1-1931 — Page 21

- 2 -

21

outside the Colony is a concession to the Bank only

granted if approved by the Governor and subject to

such conditions as he may approve, he may properly

impose on the Bank the duty of paying storage charges

as a condition of his approval.

4. On the other hand the Bank has hitherto made

no charge to the Government in respect of storage of

the security held locally and has itself always provided

the vaults in which this is stored. It is possible

therefore that the Government might be placed in a

difficult position should the Bank decide to bring the

silver to Hong Kong and to call upon the Government to

accept custody of it, since the Government possesses no

facilities for the storage of a large quantity of

bullion. At the same time it is doubtful whether the

Bank, if only on account of the cost of freight, would

wish to bring the silver to the Colony, but if pressed

to pay the cost of storage in London the Bank might call

upon the Government to pay the cost of storage of the

large quantities of silver held in Hong Kong or, umless

compelled by law to do so, alternatively decline to

expand the note issue and resort to paying in silver

dollars.

5. In the circumstances I consider that the

Government should accept a portion of the liability

subject to such safeguards as may be secured by

reserving the right to give notice of termination or by

other means.

I am informed in this connection that the

Bank