3. I have given this subject my best consideration. I would remark, in the first place, that the profit on the coins, which is little more than what this Colony would obtain, without any expenditure of labour or trouble, by simply placing money in the Banks here on fixed deposit, has not suggested the obtaining of a single coin more than would have been asked for under any circumstances short of a prohibitive loss. If the coins were obtainable only at par I should have recom- mended every requisition I have recommended. If they were obtainable at a slight loss, I should have asked for as many as we could afford. I cannot see that the Government is less bound to provide coin than it is bound to provide roads, water, or police; and I consider it as much my duty to see that the supply of coin does not run out as I do to take the same precaution with regard to the stock of Postage Stamps.
4. I would further say that this Government does not encourage the exporta- tion of coin to China, but it is powerless to prevent it. We used to issue subsi- · diary coins only on a written uudertaking that they would not. be exported. The promise was not worth the paper it was written on, and its exaction was such a transparent farce that I substituted for it a system of granting any reasonable ap- plication for coin according to the eircumstances of the applicant. A shopkeeper in a large way of business, for instance, is allowed more than a petty trader, an employer of labour more still, and so on. This system works smoothly, but of course the export of the coin goes on as it always has done.
5. It would in many ways be more convenient to this Colony to keep the coin here, but no means of doing so could be devised.
6. It must not be forgotten that Hongkong is very badly provided with cur- rency, and for this reason the Managers of the Banks have repeatedly begged me not to allow the Colony to be left, as it used to be, for months at a time, with small coin unobtainable except at 10 per cent. premium. A shipment of $50,000 worth would arrive perhaps once in two years, and, however charily distributed, it was absorbed in a fortnight. Change was given only as a favour, a request for it was often regarded as positively unreasonable.
7. When I took charge of the Post Office, twelve years ago, it was regarded as the normal and almost legitimate state of affairs for the Shroff's employed to sell stamps never to have any change. Of course the real reason was that, with small coin at a high premium, they put aside all they got from the public for sale to money changers and others, and no consideration of the inconvenience they were inflicting on the public or on their employers deterred them from doing this. It is only of late years that I have been able to insist upon change being kept both in the Post Office and in the Stamp Office. As the premium on small silver coin, under ordinary circumstances, is now only about 3 per mille, the temptation to make away with it surreptitiously does not exist to any great extent.
8. The trying time is of course Chinese New Year, at which period it is the custom amongst Chinese to pay all debts and close all accounts. Only two years ago, during the three or four days before the Chinese old year's eve, small coin was at 200 per cent. premium. The Treasury had none to issue, the Banks had none, and Bank Notes were not to be had for love or money. The inconvenience to those who had many small payments to make, to the Commissariat, the Dockyard, to employers of labour, and public companies, was so great that I resolved on no account to allow such a state of things to recur if any vigilance of this Department could prevent it.
9. On the approach of the last Chinese New Year (January 24th, 1887) there was $180,000 worth of small coin in the Treasury, and this supply, amounting to no less than two and a quarter millions of coins, I considered to be ample. Never- theless, two months before the new year, such a steady demand set in that, though the requisitions were cut down as much as they reasonably could be, in four weeks the whole was exhausted, and the issue had to be suspended, if only to keep a few coins for the use of the Police, &c. It was at this juncture that an urgent request was received from the Army Paymaster for $10,000 worth of coin. I was enabled to make the issue, because I knew that after the New Year I could, if necessary, purchase small coin for Government use at a merely nominal premium. It has not been necessary to do so, but until the next shipment arrived we were on famine allowance, and the issue to the public was suspended. I should say, however, that no inconvenience appeared to arise from the exhaustion of the supply of coin at that time, as the Chinese community, in exhausting the Treasury stock, had suffi- ciently supplied itself. The new shipment arrived on March 22nd, and $48,000 of it, or nearly one-third, was issued in a week, to the Banks, the Commissariat, and the public.
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