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the excessive issue of inferior subsidiary coin from the
various provincial mints in China in recent years, while
the comparatively depressed condition of trade in the
Colony and South China throughout 1905 may have also had
some effect. At present the rate of discount on Hongkong
subsidiary coin in the Canton market stands at about one-
-half to one per centum.
3.
Mr. Smith strongly deprecates any
action being taken in the matter until the result of the
next selling season has been ascertained, but it may be
well to consider what should be done in the event of its
proving a failure for the second year in succession.
There are only two effective
courses which have occurred to me to follow, viz.:- (1)
to sell the coins at the market rate of discount or there-
-abouts; and (2) to send them to England or possibly
Shanghai for the purpose of being re-melted and sold as
bullion.
The objections to the first
course are that it might lower the Colony's credit, and
sale at a discount would probably depress the market value
of the coinage below the price then rulling whereas the
objections