Sessional_Paper_1897 — Page 536

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Extracts from Colonial Office Despatch No. 169 of 20th October, 1893.

"I have the honour to inform you that I see no reason for modifying the instructions relative to the Government Balances in the local Banks, laid down in my despatch No. 57 of the 30th of March last and in my predecessor's despatch No. 222 of 10th October, 1890.

"I have also received your despatch No. 178 of the 5th ultino, from which it appears that the total balances had by the end of August increased to nearly $670,000 or more than $100,000 beyond the amount specified in your despatch of the 28th of August, and over $300,000 in excess of the authorized limit. I have accordingly authorized the Crown Agents to draw upon the Hongkong Government for the sum of three hundred thousand dollars and to draw further from time to time on receipt of telegraphic instructions from you as suggested in the last paragraph of your despatch of the 28th of August. The sums thus remitted to England will be temporarily employed by the Agents for the benefit of the Hongkong Government, until the money, or part of it, is required to meet their expen- diture in this country on behalf of the Colony.

"It is impossible to foretell the course of exchange, or to foresee whether this process of remitting the surplus balances to this country will result in gain or in loss to the Colony; but the only alter- native course, which I should be prepared to approve, is that described in the last paragraph of my predecessor's despatch No. 222 of the 10th of October, 1890, namely, to place the surplus in a Government Safe where it will earn no interest, but will at any rate be free from the risk of loss owing to unforeseen changes in the rate of exchange..

"The restrictions placed on the amounts of the bank balances are imposed not for the sake of profit, but of greater security, and, as I have said above, I see no reason for modifying the instructions of my predecessor that the aggregate of unsecured balances must not exceed $350,000, whether that amount be divided between three or only two banks."