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practically become the ordinary medium of exchange in Hongkong, and would remove the inconvenience which the presence of chopped coins must cause to all classes of that Colony in the transactions of daily life.
My Lords entirely approve the despatch which the Secretary of States proposes to address to the Governor of the Straits Settlements on the subject of the establish- ment there of a branch of the Hongkong and Shanghai Bank.
The Under Secretary,
Colonial Office.
I am, &c.,
WILLIAM LAW.
ROYAL MINT,
30th April, 1879.
SIR,
I have the honour to acknowledge the receipt of Mr. STRONGES' letter of the 25th ultimo, transmitting, for my observations, two letters from the Colonial Office, with enclosures, dated the 13th of January and 19th of February last respectively, relative to the currency of Hongkong and the Straits Settlements, and especially calling my attention to the proposals respecting the American Trade Dollar and the Japanese Yen.
Both these coins were issued with a view to compete with the Mexican Dollar, which had, for some years before their issue, practically been the only coin used in the commerce of China and the adjacent countries.
The American Trade Dollar was first authorised by the United States Coinage Act of 1873, section 15 of which provides that, in common with the other silver coins of the United States, it should be legal tender at its nominal value for any amount not exceeding five dollars. The Report of the Director of the Mint for the fiscal year ended 30th June 1873 however says-"The trade dollar of silver authorised by the Coinage Act is designed expressly for export, and has no fixed value as compared with gold. It is in no proper sense a monetary standard or unit of account. Having been made a legal tender in limited amounts, it may eventually, if the price of silver relative to gold falls sufficiently, to some extent enter into home circulation. But its export value will always be in excess of that of the subsidiary silver coin; its bullion value being about 8 per cent in excess." Again in his report for 1874-5 the Director says-"In the latter part of the year 1872 it became apparent that the change in the German monetary system, and other causes affecting the demand and supply, would produce a serious decline in the value of silver, and injuriously affect our silver mining interests. To provide a market for the silver mined in the western portion of our country, a coin of a