10. It must not be forgotten that we have the wants of the Army and Navy to provide for. Every ship, before going North, obtains a supply of coin, because these coins pass anywhere in China or Japan, and, except broken silver or Ja- panese money, nothing else is to be had.
11. The total amount of subsidiary coin supplied to Hongkong to date has been $2,133,881, including some copper, which has not been exported. Of the silver, probably not ten per cent. is in the Colony.
12. I trust I have shown the necessity for keeping this Colony supplied with small coin, and the impossibility of the Government's exercising any check on its exportation except by declining to issue it at all. I now pass on to consider the risk of these coins being hereafter thrown upon the Colony for redemption in a worn or mutilated condition. I venture to think that this risk is very small, and that, even if it exists, which is doubtful, it would be easily averted. It should be borne in mind that these coins are not a legal tender for sums of more than $2.
13. The subsidiary coinage of Hongkong has been in circulation nearly a quarter of a century. During all that time no worn or mutilated coin has ever been seen in the Treasury. I am inclined to think silver coin would never become worn in China as it does in England, for the people do not carry it loose in their pockets, but always most carefully in a pouch or purse, or wrapped in paper; nor is it passed about to anything like the extent that silver coin is in Europe. Be this as it may, the fact remains that our silver coins are as yet practically unworn.
14. Chinese are great hoarders of coin. The popularity of our five cent pieces very greatly arises from their common use as little presents to children and servants. Thousands of them are made into buttons. It would probably be difficult for a speculator on the mainland to buy any quantity of these coins at profitable rates.
15. Let it be supposed, however, that in the course of another 25 years there will be, on the mainland of China, thousands of five and ten cent pieces in the same condition as old sixpences and shillings in England, namely, mere discs of silver, with perhaps slight vestiges of the original design of the coins. Let it be further supposed that a speculator has brought up $10,000 worth of these, and proposes to flood this Colony with them, forcing them on the Treasury as coin at a discount is always forced upon it.
16. It appears to me that the only course open to the Government would be to decline to recognise any coin which could not be shewn to have been issued from the Treasury here. This would practically amount to refusing to redeem all worn coins except in very rare cases.
17. If it once were known that the Hongkong Government was receiving at par
value coins which purported to be tokens worn out on the mainland, we should be at once inundated with coins by the thousand which had never been in or near Hongkong at all. There has already been some trouble with spurious ten cent pieces, so well made as almost to defy detection by ordinary observation. What then might be expected if forgers could imitate pieces worn out beyond recognition?
18. How easily the remedy would be applied may be seen from what happened some years ago in the case of Japanese 20, 10, and 5 cent pieces. These coins had for years circulated side by side with our own, and were received here, as Singapore ten cent pieces now are, at their par value. The Japanese Government suddenly lowered the intrinsic value of its subsidiary coinage, and, at the same time, the coast of China was flooded with it. The Banks here then refused to receive Japa- nese small coin, the Treasury did the same. The Government departments of course followed, and within a few weeks tradesmen begin to print on their accounts, Japanese small coin not taken. The coin sank to something like 16 per cent. discount, at which it remains, and even a chair-coolie in the street will not take a Japanese ten cent piece as his fare if he can help it.
19. It only remains to enquire whether such a course as is suggested would give rise to any hardship. I venture to say that it would not.
20. It must be borne in mind that this Government never sanctioned the export of subsidiary coin, and never undertook to redeem it on its return from the mainland in a bad condition.
21. Quite apart from that, however, every person who, on the mainland of China, takes these coins, does so becanse they are worth to him the value for which he receives them. Nobody ever accepts a coin in China on any other conditions; and these conditions are, as I shall show, absolutely independent of any idea of a central authority which will eventually redeem the coin at its par value if nobody else will take it.
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