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12 Apart from the question of cost, the proposal in the last paragraph of that letter appears quite inadmissible. There is little enough check on the issue of subsidiary coinage under the present system and it is poured into China much in the same way as silver sterling is poured into West Africa, with very little regard as to what would happen if returned into the hands of the Colonial Government. To extend this system by allowing the Banks to bring silver to be coined into subsidiary token coinage at a charge is an idea which I cannot recommend, and which I should not have expected the Colonial Office to have entertained for one moment. In the first place it will diminish or destroy the profits to which they look to run their Mint. The charge must be something less than the profit, otherwise there will be no object in bringing the silver for conversion into tokens, and the difference between the charge and the profit will be the amount of the Government loss. But a fall in the price of silver would bring silver from outside for coinage, and a rise would check it, so that the Government would always be at a disadvantage unless they adopted a sliding scale. But it would be impossible to put any limit on the out-turn so long as it was profitable to the Banks, and they could continue to get rid of it in China.
13. It is not difficult to conceive circumstances arising under the peculiar political conditions of China in which British coin would be repudiated. There are plenty of Mints in China, and the question might easily be asked "why should we take all this British stuff" and Hong Kong would be flooded with subsidiary coin which it could not absorb, which is limited in tender and which it could only get rid of at a serious loss, possibly ruinous. The Mint could only be worked at a loss, probably closed as in the former experiment. The proposal is put forward solely as a source of revenue, but is this the point of view from which to judge questions of this kind? I am unable to form an estimate of the minimum amount of out-turn of coin to enable the Mint to be run without loss.
(Sd) Horace Seymour.
18th April 1901:
I need hardly point out that if this coinage were executed at Hong Kong the payments at present made for its execution elsewhere would not be saved. So far as our charge of 8/- per 1000 pieces is concerned we make no profit - on the contrary.