Legend of Xiangjiang Tycoon

Banknotes issued after 1895 still follow the previous practice, and the denomination must be 5 yuan or a multiple of 5 (except HSBC "one yuan" banknotes).

At the same time, the three note-issuing banks, Liyi, Standard Chartered, and HSBC, should not issue more than the actual amount of their issued share capital; Standard Chartered and HSBC must have at least 1/3 of the banknote issuance as reserves, while Liyi Bank must Reserve banknotes with 100% silver inventory.

Although these three banks are all private commercial banks, there is no doubt that the Hong Kong banknotes issued by them have become legal tender in Hong Kong and are commonly used in the market.

In addition, with the development of commerce and trade in Hong Kong, the supply of metal coins obviously cannot keep up with the expansion of currency demand, and the issuance of banknotes by banks has gradually increased.

Especially after the promulgation of the Regulations on Issuing Bank Notes in 1895, the issuance of banknotes increased sharply.

According to historical records, the banknotes in circulation in Hong Kong amounted to 10,000 Hong Kong dollars, in 1881 it was 3.7 million Hong Kong dollars, in 1895 it increased to 7 million Hong Kong dollars, and in 1934 it reached 154 million Hong Kong dollars.

The Great Depression of the global economy of 1929-1933 destroyed the international classical gold standard.

During the years, major countries in Europe and the United States have abandoned the gold standard one after another, and the reserve currencies of these countries have also changed from a single gold bullion reserve to a gold and silver composite reserve.

This has caused a huge increase in the demand for silver in the international market, and the price of silver has risen, especially after the promulgation of the US "Silver Act" in 1934 (provided that within four years, 24.42 million ounces of silver should be purchased each year, and the export of silver was prohibited and silver was nationalized. ), the United States began to buy silver from abroad in large quantities.

The silver purchased by the U.S. government mainly came from Huaxia, because Huaxia was one of the few countries that implemented the silver standard currency system at that time, and there were more silver stocks.

The large-scale purchase of banks in the United States means a large-scale outflow of silver from China.

The large-scale outflow of silver caused a sharp decrease in the amount of currency in circulation in Huaxia, which was based on the silver dollar at that time, and caused a drop in prices.

Although Huaxia has introduced a number of measures to try to prevent the outflow of silver, the results are not good.

In the end, Huaxia could only be forced to implement the legal currency reform policy on May 4, implement the paper currency standard system (that is, "fiat currency" banknotes), and abandon the silver dollar standard system.

On March 9, five days after the National Government started the legal currency reform, the Hong Kong Legislative Council quickly passed the Monetary Ordinance and started the currency reform.

It is also the implementation of the paper currency standard system, abandoning the silver dollar standard system.

The reason why Hong Kong quickly followed the reform of the mainland is because of the close economic and trade ties between Hong Kong and the mainland, the mainland has abolished the circulation of silver dollars, and it is impossible for Hong Kong to continue to circulate silver coins.

As a supplement to the Monetary Ordinance, on November 9, the British Hong Kong government also promulgated the "One-Yuan Banknotes Ordinance", which reverted the right to issue one-yuan banknotes previously granted to HSBC, and was authorized by the British Hong Kong government to it. The Treasury Department, an internal organization, is responsible for the issuance of 1-yuan banknotes (1 yuan is the basic currency unit and represents the standard currency), which is the beginning of the Hong Kong British government's own issuance of banknotes.

The Treasury Department has also established a "1-yuan Note Guarantee Fund" as a reserve for the issuance of Hong Kong banknotes.

The British Hong Kong government uses 1-yuan banknotes to redeem silver coins or silver in the hands of the public, and then transports the silver coins or silver to London for sale in exchange for sterling.

After that, if 1-yuan banknotes are issued again, the corresponding guarantee fund will be allocated by the financial revenue of the British Hong Kong government, and it will still be in pounds sterling.

The Monetary Regulations came into effect on May 6, and its main contents are:

First, the British Hong Kong government set up the "Exchange Fund", which is responsible for purchasing all private silver coins and silver, and transporting these silver coins and silver to the London Gold Exchange for sale and converting them into sterling banknotes. The sterling obtained is still held by the Exchange Fund, and This is used as a reserve for the issuance of Hong Kong banknotes.

Second, the Exchange Fund is managed by the Office of the Chief Accountant under the Treasury Department. The Treasury Department is the ultimate controller, and the Governor appoints the "Exchange Fund Advisory Committee" to provide advice.

3. There are two ways for the Exchange Fund to acquire silver: one is to ask the three note-issuing banks (HSBC, Standard Chartered, and Yili) to hand over their silver reserves, the Exchange Fund will issue a certificate of indebtedness, and the Exchange Fund will sell the silver into pounds Afterwards, the certificate of indebtedness held by the note-issuing bank represents a certain amount of British pounds (as a reserve for the issued Hong Kong banknotes), but these pounds are managed by the Exchange Fund; the second is to purchase private silver coins and silver ingots with Hong Kong banknotes , silver coins are purchased at face value equivalent, and silver ingots are purchased at HK$1.28 per ounce of pure silver.

Fourth, starting from December 6, if the three note-issuing banks issue new Hong Kong banknotes, they must first pay 100% equivalent GBP to the Exchange Fund at the fixed exchange rate of "6 Hong Kong dollars" in exchange for a certificate of liability issued by the Exchange Fund. The certificate of indebtedness is the banknote issuance certificate of the note-issuing bank, which can be used to issue Hong Kong banknotes of the same amount. In addition, the note-issuing bank can exchange GBP back to the Exchange Fund with the certificate of indebtedness.

On the date of the official implementation of the Monetary Ordinance, in order to further improve it and ensure its smooth implementation, the British Hong Kong government promulgated a revised version of the Ordinance on Issuance of Bank Notes, which stipulates: HSBC, Standard Chartered, and Lili are the legal issuance of banknotes. Banknote Bank, the banknotes it issues are all legal tender, with unlimited legal repayment qualifications, and all liabilities can be paid with this.

Previously, although the banknotes of these three banks were in circulation in the city, there was no legal provision to formally give them the status of "legal tender".

The currency reform in 1935 was the most important reform in the history of Hong Kong's local currency, and it was of epoch-making significance. It not only brought great changes to Hong Kong's local currency system, but also had a far-reaching impact, laying the cornerstone of the current Hong Kong currency issuance and management system. With this milestone, the monetary history of Hong Kong has entered a new historical period.

First, it marked the end of the silver dollar standard in Hong Kong and the beginning of the era of the paper currency standard; secondly, it was the beginning of the British Hong Kong government's own issuance of banknotes, and the beginning of the Hong Kong banknote's official acquisition of "legal tender" status; third, The issuance and management mechanism of Hong Kong banknotes has been established. The Exchange Fund acts as a "currency bureau" and indirectly manages the issuance of banknotes by authorizing private commercial banks. At the same time, it requires full foreign exchange (GBP) as the issuance preparation, and the Hong Kong dollar is linked to the British pound to form the British pound. The exchange standard system ensures that Hong Kong banknotes are not indiscriminately issued. This issuance mechanism is still in use today and is the source of the current linked exchange rate system in Hong Kong.

After the currency reform in 1935, the framework of Hong Kong's local currency system was basically finalized.

Unfortunately, after only six years of stable operation, Hong Kong was invaded by another colonizer, Japan. This brief invasion interrupted the evolution of Hong Kong's local currency system.

On January 25, the Japanese army occupied Hong Kong. The then governor of Hong Kong, Yang Muqi, surrendered to the Japanese army, and the rule of the British government in Hong Kong was interrupted.

Gu Zhen

Since then, Hong Kong's history has entered the "Japanese occupation period", which lasted three years and eight months until the end of Japan's defeat and surrender in August 1945.

After the Japanese army occupied Hong Kong, they tried to force the Japanese currency system into Hong Kong.

On January 29, the Japanese military authorities issued the "Outline of Official Measures for Exchange Banks", which stipulated that the peg between the Hong Kong dollar and the British pound would be abolished from January 1942, and the Japanese military authorities would directly determine the exchange rates of various countries' currencies against the Japanese yen.

At the same time, the Japanese military authorities also issued "military hand notes" banknotes in Hong Kong to replace the circulation of Hong Kong banknotes. The original three Hong Kong note-issuing banks were also prohibited from issuing banknotes and were forced to close their business for clean-up.

In the one and a half years after the issuance of Japan's "military hand notes", the originally issued Hong Kong banknotes can also be circulated in parallel with them.

From June 1, 1943, the circulation of Hong Kong banknotes was banned, and "military notes" became the only local currency in circulation in Hong Kong until Japan's defeat and surrender.

During the "Japanese Occupation Period", "military hand tickets" were completely reduced to a tool for the Japanese army to plunder the wealth of the Hong Kong people. The number soared from 25 million yuan at the end of 1942 to 100 million yuan on the eve of Japan's defeat. The Japanese army used these gold and silver reserves. Guaranteed banknotes are exchanged for a large number of materials from the people to support the war.

In addition to "military tickets", the Japanese army also forced HSBC to issue a batch of "forced signature banknotes".

At that time, during the process of taking over and cleaning up HSBC Bank in Hong Kong by the Japanese army, it was discovered that there were still a batch of unsigned banknotes in the warehouse of HSBC Bank. Therefore, it cannot be marketed.

However, the Japanese army has long been predatory and forced the senior staff of HSBC to issue these banknotes, hence the name "forced signed banknotes".

This batch of "forcibly signed banknotes" includes four denominations of yuan and 500 yuan, with a total of about 120 million Hong Kong dollars. The Japanese army directly took these "forcibly signed banknotes" as their own, and then went to the market to buy materials and pass them on to the hands of Hong Kong people.

In 1945, Japan announced its surrender. On August 30, Britain occupied Hong Kong and established a military government to take over Hong Kong again.

On September 13, the British military government of Hong Kong announced that Japan's "military hand ticket" was abolished, and the pre-war Hong Kong banknote was restored as legal tender, and the fixed exchange relationship between Hong Kong dollar and British pound "6 Hong Kong dollars" was restored. The history of Hong Kong's local currency continued .

However, a large number of military tickets have been left in the hands of the Hong Kong people, and they have been declared invalid, which means that these military tickets have become waste paper, and the Hong Kong people can only admit their losses.

Regarding the batch of "forced signature notes" issued by HSBC, the policy of the British military government in Hong Kong in the early stage was that those with a face value of more than 50 yuan were prohibited from being used, and those with a face value of less than 10 yuan were temporarily allowed to circulate, pending investigation and processing.

In January, HSBC resumed business, and the most urgent task facing it is how to solve the problem of "forced signing of banknotes".

From the standpoint of HSBC, if it refuses to recognize these "forced-signed banknotes", the people of Hong Kong will suffer losses again, which will lead to dissatisfaction among the people and damage to HSBC's reputation; loss of funds.

After half a year of negotiation and hesitation, the British Hong Kong government and HSBC jointly decided to recognize these "forced signature notes" and make them "legal currency". The plan is: HSBC agreed to deposit 1 million pounds into the Exchange Fund, As part of the security deposit for this batch of "forced banknotes", the British Hong Kong government agreed to use the interest earned from the investment of the Exchange Fund to make up the shortfall within a number of years.

This scheme has won the praise and trust of the HSBC banknotes.

After the "Japanese Occupation Period" ended, Hong Kong returned to a stable state, and within a few months, Hong Kong's banking industry and gold and silver trade quickly resumed operations, and the issuance and management of currency, as well as the order of currency circulation, also quickly resumed. Back to normal.

After the reform of the Hong Kong currency system in 1935, the currency issuance and management system of the Hong Kong dollar was basically finalized: the Exchange Fund acted as a "currency bureau", and indirectly managed the issuance of banknotes by authorizing private commercial banks. (6 Hong Kong dollars), forming the pound exchange standard system.

The sterling exchange standard system is not an original currency system in Hong Kong, but comes from its suzerain, the United Kingdom.

In the middle of the 19th century, the colonial territory of the British Empire spread all over the world. In order to manage the economy and trade of its colonies, the United Kingdom widely implemented a currency system called "currency board" in its colonies.

The characteristics of the "currency board system" are: First, a currency board was established in the colony, which was specially responsible for the local currency issuance, and the issuance power was concentrated in the currency board.

Second, the currency issuance of the colonies must be prepared with a full equivalent amount of British pounds as the issuance reserve, the issuance reserves are managed by the currency bureau, and the British pound and the colonial currency form a fixed exchange rate relationship.

This monetary system can strengthen the economic and trade control of the British government over its colonies, and is conducive to the formation of a closed economic and trade circle of the British Empire to exclude other countries from seizing the economic and trade interests of the British Empire.

The earliest currency board system was established in Mauritius, Africa in 1849, and was later widely implemented in other British colonies, including Hong Kong.

The Hong Kong currency system reform in 1935 was a reform to localize the British currency board system in Hong Kong, and the result was the formation of the "pound exchange standard system" with Hong Kong characteristics.

Hong Kong's "pound exchange standard system" inherits the essence of the currency board system (that is, the issuance of Hong Kong banknotes must be prepared in full British pounds, 6 Hong Kong dollars), but at the same time, it has local characteristics of Hong Kong, which is not completely copied.

First, the British Hong Kong government established the "Exchange Fund", which performed the function of a "currency board" to a certain extent, but it was not a currency board in the full sense, because it did not issue Hong Kong dollars directly, but authorized it to three private commercial banks. Indirect management (certificate of indebtedness) issuance of Hong Kong banknotes.

Second, this reform does not centralize the right to issue currency, and the right to issue Hong Kong dollars is relatively decentralized. The British Hong Kong government can directly issue metal coins and Hong Kong banknotes, and the three private commercial banks (HSBC, Standard Chartered, Liyi) can also be Issue Hong Kong banknotes.

From 1946 to the next twenty-six years, Hong Kong has been running the sterling exchange standard system stably, and the currency issuance and management framework has basically remained unchanged until July 1972, when the Hong Kong dollar was delinked from the pound and the sterling exchange standard system ended.

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