No. 3.
GOVERNMENT NOTIFICATION.
The Correspondence on the subject of the Establishment of a Mint in this Colony is published for general information.
By Order,
Colonial Secretary's Office, Hongkong, 5th January, 1864.
Hongkong-Confidential.
W. H. ALEXANDER, Acting Colonial Secretary.
DOWNING STREET, 19th April, 1863.
I transmit to you for your information copies of a Correspondence which has passed between Sir Hercules Robinson, this Department, and the Lords Commissioners of the Treasury respecting the establishment of a Mint at Hongkong for the Coins of British Dollars.-I have the honor to be, Sir, your most obedient Servant,
THE
Mr Mercer
The Duke
Newcastle.
Received.
1 In closure.
the subject. -
publication of the concry contence. the mint Bill, and
Reporting first reading
to th
that
The Officer administering the Government of Hongkong.
Sir Hercules Robinson to the Duke of Newcastle.
NEWCASTLE.
BLETCHINGTON PARK, OXFORD, 20th March, 1863.
LORD DUKE, The questions which have been for some time under the consideration of Her Majesty's Government ence to the currency of Hongkong having now been finally disposed of, I desire to bring under your Grace's notice a proposal for the establishment of a Mint at Hongkong for the Coinage of British Dollars not only for use in the Colony, but the requirements of the vast foreign trade of China and Japan.
A similar proposal was made by my Predecessor, Sir John Bowring, some years ago, but it was not favorably received at the time by the Lords Commissioners of Her Majesty's Treasury, chiefly, I believe, on the ground that the Mercantile advocates for the plan were confined to Traders at Shanghai who had, from dissension among themselves, prevented the introduction of Mexican Dollars into that place; and whose obvious interest it was to advocate any scheme which, if it succeeded, would relieve their difficulty and, if it failed, would cost them nothing. Besides this, it would have been premature at that time to have coined Dollars while British Money remained, under the terms of Her Majesty's Proclamation, the Standard of value in this Colony.
However, this is now changed. Mexican Dollars pass current in large quantities even in Shanghai, and have been declared by Royal Proclamation the only legal tender of payment in Hongkong and its Dependencies. But the supply of these appears so insufficient, in consequence of the new demand for Japan, and for the purpose of making payments for Silk in the Valley of the Yang-tze—formerly settled for in Sycee—that undefaced Mexican Dollars have for some time borne a premium. When I left Hongkong in July last, what are called there "Clean Dollars" bore a premium of 7 per cent above their intrinsic value as compared with the price of Bar and Sycee Silver. Since then, I understand these Coins have lately reached a premium of nearly 12 per cent; and I observe they are quoted in the London market in last month's "Price List" at a premium of about 11 per cent—Mexican Dollars being 5/5$\frac{3}{4}$ per oz., and Bar Silver 5/1$\frac{1}{4}$; and though they have recently fallen to 5/3$\frac{1}{4}$ per oz., Bar Silver has also fallen to 5/1, leaving a premium on the Mexican Dollar of 8 per cent. Fluctuations like these in the value of the medium of Exchange in China and Japan must tend to embarrass the operations of commerce.
I propose, therefore, that a free Mint should be established in Hongkong, at the expense of the Colony, for the Coinage of Silver Bullion into Dollars; and that a Mint charge or seignorage should be levied sufficient to cover the cost of coinage.
I believe that such a measure is now urgently called for, and that a British Dollar bearing Her Majesty's effigy and coined in Hongkong would become, in a very short time, the standard measure of value and instrument of commerce not only in Hongkong, where it would be so by law, but throughout all the open Ports in China and Japan. No doubt the measure would be, in a degree, experimental, and it is not easy to foresee the caprices of Chinese prejudice, but I propose that the cost of the experiment should fall on the Colony of Hongkong, and when it is stated that the British share of the foreign trade of China and Japan is estimated at Thirty-five Millions Sterling, and that this vast traffic is carried on chiefly by means of a currency coming from
the opposite side of the globe, the supply of which is so uncertain and insufficient that it bears a premium (so long as it is undefaced) varying from 5 to 12 per cent, nothing further, I am sure, need be added to prove the propriety of Her Majesty's Government attempting, at all events, to find some remedy for a state of things which tends so to surround all trade and commercial operations with needless uncertainty and to obstruct the extension of commerce.
The loss also to the Imperial Government at present is very considerable, as the Naval, Military, Diplomatic and Consular expenses in China and Japan have to be paid in Dollars, raised at a heavy premium either in Hongkong or London, whereas they might be coined, probably for a seignorage of one-and-a-half per cent.
The subject has already engaged the attention of the Hongkong Chamber of Commerce, as will be seen from the letter of the 26th of May last. I extract from a letter which I received from that Body, and which formed enclosure No. 3 in my despatch to your Grace:
"We hope the measures of currency reform which are now contemplated may eventually bring on the larger and more important question of providing a constant supply of one uniform and undefaced Dollar, which shall be established as the standard of value in this place, and serve to supersede the present system of payments by weight in mixed and defaced Silver. The attention of the Chamber will continue to be directed to this interesting subject, and at some future period they may solicit your Excellency's co-operation in devising practical measures to supply this great desideratum."
If Her Majesty's Government should approve of the present proposal for the establishment of a Mint at Hongkong for the Coinage of British Dollars, many questions of detail will then have to be determined, which, however, I need not discuss in this despatch—such as the weight and purity of the New Dollar and the regulations under which the Mint should be conducted.
I have, &c.,
His Grace THE DUKE OF NEWCASTLE, K.G.,
&c.,
&c.,
&c.
See page 20 of Printed Correspondence on Currency of Hongkong.
(Signed) HERCULES G. R. ROBINSON,
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