The evening times. [volume] (Washington, D.C.) 1895-1902, 1900-02-19
BANK METHODS IN China
The Operations Of the Hongkong
and Shanghai Company.
The Issuance of Notes in Excess Of
the Legal Amount ON the Deposit
Bills Not Legal Tendcrs-SIIvcr
Dollars Bought Like MerchandiSe

In reply TO the enquiries by a member
OF Congress respecting banking and cur
rency in China. Consul General Goodnow
writes from Shanghai. December H. 1899.
as follows:
The Honglsong and Shanghai Banking
Company was incorporated July %. 1867.
under an ordinance of the colony Of Hong
kong The first incorporation was for
twenty-one years. on May Z. 1857. The in
. corporation was continued for a second
term OF twenty-one years
The paid-up capital on June 80. 1859.
was SO 900 coo Mexican. The reserve fund.
at the same time. was $1,000 .0C0 Next
can. The current accounts were sS5. 2l7.-
4iA94 Mexican and Fixed deposits SIS .s4l.-
/ 7iel6 Mexican.
The issue OF notes was as follows. Au-
thorized issue against securities deposited
with the Crown lgeut for the colonies. $I0.-
600 600. additional issue. authorized by a
Hongkong ordinance OF 1899. against coin
lodged with the HOngkong government.
s. So, 69f total note circulation. SIS 622. Cg5
Mexican The amount OF coin lodged with
the Hongkong government against note
circulation in excess Of $40 eco. eco is equal
20 3. OC0. 600.
The ordinance OF 1899 allowed the issue
of certain notes in excess OF the legal
amount. as stated above but only on the
deposit Of coin with the HonEkong govern
ment TO cover the amount OF such notes
and any probable or pOssih- depreciation
in the price OF silver This extra issue Of
bills was made necessary by the increasing
Z business along the coast requiring currency
and the eXiEenCy OF supplying some Circu-
lating medium less bulky than the coined
silver
While there is nc statement on the
subject, 1 cannot see Chat these hank notes
have any leSal-tender quality. Under
extraordinarily, each defeC liant. in case
OF a lawsuit. is entitled to the law OF his
own nationality. Notes given a legal
tender quality by one natiopo would not
/ have that quality with any her nation
ity, except by positive enactment.
The branches Of this bank are so wide
spread (thus making IL easy to transfer
I its notes into silver, and its notes are so
generally accepted. and the banks ropu-
tatiOn is 81 thoroughly good. that in prac-
tice these notes are received by everybody
| m payment for debt. Branches and agel-
cies on the bank are at the follow *
places; Hongkoug. Shanghai, New York
London, Calcutta, Bombay, Fuchau. Hi
Ogo. Saigon, Haukau, Annoy Manila. San
Francisco. Singapore Lyons. Tientsin, Pc
kim IloilO Penang Batavia Bangkok,
Hamburg. NagasaH RaugCon. Colombo.
and Soerabaya.
AT the present time. the bank pays
per cent per anuum to depostors on daily
| balance, per cent per annum on fXei
deposits for three months. 4 per cent per
snnum on fixed deposits for six months,
and Pc cent per annum on fixed de
pcsits for twelve months.
Each branch issued its notes payable
| to bearer on demand at the place OF issue.
| and in coin lawfully current at such
place. Notes issued in Hongkcng are pay
| able in the currency of HouEkoug con
sisting of British dollars (which do not
| circulate throughout China and chop
/ ped MeXicans. The limited area Of cir
| culation OF the first and the damaged con-
dition of the second reduce their value
as compared with the clean Mexican dol
| lar, in which the notes of the Scang al
| branch are payable. The HOngkong dol
lar today is worth 7l-2S tael cents. while
the clean Mexican dollar is worth 75.5SS
! tael cents.
The theoretical money of this country
| is the tael. which is a Chinese ounce OF
silver The value OF this tael Gin other
words the weight Of the ounce differs in
I almost every port, and the value OF any
of these taels varies with the value of
/ silver bullion.
! The real standard money of the peo-
| pie in China is copper cash. which are
worth about onetwentieth Of a gold cent
| each.
THE actual money of circulation for the
I trade a foreigners in central and north
/ ern China is the clean Mexican dollar.
/ In southern China. il is the chopped
] Mexican dollar, worth from to per cent
| less than the clean dollar. In Hong
| kong. II Is TIE British dollar and the
! chopped dollar
Coined dollars are bought and sold pre-
! cisely as any other article of merchandise
! Their price varies not only according TO
! the true value-that is. the amount of
| bulk siiTer ins them-but according to the
| demand for them in any particular place
| for the purposes of trade.
The Hongkong and Shanghai Bank. I
\ have stated, has a reserve fund of ten
millions. The net profit Of that bank for
the half year ended June 80. 1899, amount
ed to 50, 447, 579.6S, after making provision
for bad and doubtful debts and deducting
all expenses and interest paid and due.
''At the aforementioned date 81 900 900
was transferred from the proft-and-loss
( account to the credit Of the reserve fund.
I which today stands at $1,000. 600. A di-