7
CONFIDENTIAL.
h10435
103
Coul an
Ridirance should. be, on the rubert of.
currency of coms
Im
£ legal tender, in
the event of M. Muthnots suggestion being adopted, for the repeal of the existing Rozal for comitions, reguliting For currency, & the
whstitution
of a
loul cunctment.
I have to
The Legal Valuation of the Dollar at Hong Kong.
No. 1.
Memorandum by Sir C. Trevelyan.
IT is my duty to call attention to the inconvenient public conse- quences arising from the rate at which the value of the dollar at Hong Kong has been fixed with reference to the sovereign by the Order in Council of the 28th of November, 1844.
This was one of a series of operations upon the currency of the British colonies, which began in 1838, the general object of which was to establish an uniform standard of value throughout the British Empire founded upon the sovereign, but to allow of the concurrent legal circula- tion of such other coins as might be best suited to the circumstances and habits of the different colonies.
The adjustment of the relative value of the gold and silver coins was made according to the average price which standard silver had borne for many years before in the London market, and on this principle the value of the dollar was fixed at 4s. 2d.
This rate was well-adapted to the countries in the neighbourhood of the principal sources of the supply of silver; but the permanent value of this metal in China and the neighbouring countries is so much increased by the expense of transport and other circumstances, that 4s. 2d. was below its worth in gold in that part of the world, even when this rate was originally fixed in 1844; and as the relative value of gold has since been reduced by the discovery of the Californian and Australian gold fields, the degree to which 4s. 2d. falls short of the real value of the dollar has been greatly aggravated of late years.
The average rate at which dollars have been raised by the Commis- sariat at Hong Kong during the last two years has been, 4s. 7. per dollar in 1856-57, and 48. 9. per dollar in 1857-58; and even those which have been purchased by the Master of the Mint in London for transmission to China during the same period have cost about 4s. 53d. per dollar, to which freight and insurance, amounting together to about 23d. per dollar, bave to be added. A detailed statement of the transactions for the supply of the Treasury Chest at Hong Kong in 1856-57 and 1857-58, so far as they are connected with the subject of this paper, is annexed.
The first and most obvious inconvenience arising from this state of things is that, as the dollar is undervalued with reference to sterling, the British public is subjected to a heavy additional charge upon all those payments which are fixed in sterling, but paid in dollars. This is a serious consideration, now that China has become a large and increasing field for the employment of cur Naval, Military, and Civil Establishments. The loss on dollars supplied to the Treasury Chest at Hong Kong in 1856-57, amounted to about 24,000, and in 1857-58, the expenditure having been increased, it has probably been upwards of 62,000/., being, together, more than 11 per cent. upon the two years' transactions. This was the amount paid for supplying the Chest with dollars, over and So far above the legal rate of 4s. 2d. at which they were issuable.
as these dollars were paid away in liquidation of contracts stipulated to be paid in that coin, their full current value may be considered to have been accounted for in the terms of the contracts; but by far the largest
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