Sessional_Paper_1884 — Page 589

5. The proposal of the Directors of the Hongkong and Shanghai Bank is that

the Bank should issue as many one Dollar notes as may be required, keeping the

issue so made entirely separate from the issues of notes of larger denominations, and making it upon an entirely metallic basis. That is to say, the Bank would ear- mark and deposit in a separate vault, the keys of which would be kept by the Colonial Treasurer, a special reserve of Mexican Dollars equal to the full extent of its One Dollar Notes in circulation. By the local Ordinance constituting the

Bank (as will be more fully shewn below) this reserve would be, in case of a suspension of payment, inalienable to any other purpose than that of paying the Notes. It is evident that this part of the Bank's proposal saves the Government the expense of building a suitable vault and also of guarding it.

6. The Committee understand that the Hongkong and Shanghai Bank has a large stock of One Dollar notes in hand, and that the Staff necessary to conduct

the issue is already in existence.

7. The Committee invited the attendance of the Managers of the other Hong-

kong Banks of Issue and ascertained their views on this matter.

It appears, however, that the Charters of their Banks do not allow of the issue of One Dollar Notes, nor is there any reasonable probability that they will be so modified as to allow of it. Moreover the Shareholders of these Banks have no special liability

with regard to their Note Issue.

8. As to the security offered by the Hongkong and Shanghai Bank over and

above the Reserve alluded to, it is only necessary to say that the paid-up Capital is

$7,500,000, the Shareholders being liable to an equal amount. The reserve funds

are $4,800,000, and with regard to Note circulation the Shareholders are unlimitedly liable, the claims of note-holders being made, by Ordinance, a first charge upon

them. The Section is as follows;-

"The Shareholders of the Company shall be subject to unlimited liability in respect of all or any such issues or issue of Bills or Notes, and in case the general assets of the Company are, in the event of the Company being wound up, insufficient to satisfy the claims of both the Note-holders and the general Creditors, then the Shareholders of the Company, after satisfying. the remaining demands of the Note-holders, shall be liable to contribute towards payment of the debts of the general Creditors a sum equal to the amount received by the Note-holders out of the general assets

of the Company."

The Hongkong and Shanghai Bank Ordinance, Amendment Ordinance, No. 21 of 1882. Sect. 12.

9. The objection commonly raised against the issue of notes of small value— that they fall into the hands of large classes of ignorant persons, peculiarly liable to panic-is not of much force here, as experience shews that One Dollar Notes are held by shrewd and calculating Chinese, particularly well able to take care of them- selves, and moreover there is no likelihood of the circulation attaining any dangerous

extent (see par. 2).