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manship. But on the other hand it appears to Sir MICHAEL HICKS BEACH that the Japanese Government are not less worthy of confidence than that of Mexico, and that looking to their evident anxiety to push their coin into circulation, arising probably from the fact that their expensive minting machinery will otherwise be idle, there would be a strong incentive to the maintenance of the purity and weight of the dollar in the knowledge that the legalization of the coin in the British Colonies would be rescinded in case of the failure of its quality.
Their Lordships may, therefore, perhaps feel disposed to think it desirable to invite the opinion of the mercantile community of Hongkong as to whether in view of the altered circumstances of the American Trade Dollar and the impractica- bility of supplying a British Dollar, it would now be proper to legalize the Japanese Yen as a partial means of keeping up the supply of coin; and Sir MICHAEL HICKS BEACH would be glad to learn whether their Lordships, judging from the information now before them, are of opinion that this step should be taken.
5. Secondly, with regard to the currency of coin mutilated by the Chinese practice of chopping, Sir MICHAEL HICKS BEACH is disposed to agree with the Lords Commissioners that it will probably be for the convenience of the Hongkong Mercantile world to accept with all its defects the currency of the Chinese ports, with which the Colony is in such intimate connection, and that it will be better not to interfere in this matter by further legislative action. Yet, with a view of taking every practicable measure to secure a clean currency within Hongkong itself, Sir MICHAEL HICKS BEACH is prepared to recommend to the local Government the suggestion of the Lords Commissioners as to an issue of One Dollar Notes by that Government. Before, however, communicating with the Colony, he would be glad to learn whether, in their Lordships' opinion, the retention in the Government vaults of the whole amount of silver received in exchange for notes should be insisted upon. 6. It seems to Sir MICHAEL HICKS BEACH that, when a considerable amount of coin has accumulated in this way, it would be legitimate to remit a certain proportion to this country for investment in consols, leaving a sufficient quantity to meet all probable demands. Should there at any time be an extraordinary and unexpected run upon the Treasury for redemption of the notes, the Government would sell Bills on the Crown Agents against the investment, which would at the same time be realised.
7. Thirdly, with regard to the application of the Hongkong and Shanghai Bank for permission to establish a branch at Singapore, Sir MICHAEL HICKS BEACH directs me to enclose a draft of a despatch which he proposes, with their Lordships' concurrence, to address to the Governor of the Straits Settlements. Their Lordships will of course decide what answer, if any, should in the meantime be returned to the Hongkong and Shanghai Bank.
The Secretary to the Treasury.
I am, &c.,
R. G. W. HERBERT.