[This Document is the Property of His Britannic Majesty's Government.]
AFFAIRS OF CHINA.
CONFIDENTIAL.
C
[33545]
31428 RECO
[September 15.]
Rrs 13 10.
SECTION 1,
No. 1.
Colonial Office to Foreign Office.-(Received September 15.)
Downing Street, September 14, 1910.
Sir,
I AM directed by the Secretary of State for the Colonies to transmit to you, with reference to the letter to the Colonial Office of the 25th January, copy of despatches on the subject of the measures recently taken in China for the establishment of a new uniform currency on a silver dollar basis.
I am, &c.
FRANCIS J. S. HOTWOOD,
Enclosure 1 in No. 1.
Sir,
Colonial Office to Treasury.
I AM directed by the Earl of Crewe to transmit to you, to be laid before the
Downing Street, April 8, 1910. Lords Commissioners of His Majesty's Treasury, the accompanying copy of a despatch with enclosures from the Governor of Hong Kong, in which proposals are made for the rehabilitation of the colonial subsidiary silver coinage.
2. Lord Crewe would be glad to receive the observations of the Lords Commis- sioners upon the proposals put forward in the eleventh paragraph of Sir F. Lugard's despatch, which his Lordship is disposed to think cannot be approved.
3. It appears very doubtful whether it is possible to prevent the circulation in Hong Kong of Chinese subsidiary coins; and, even if it were possible, the dislocation of the trade with the Chinese provinces which would follow renders it undesirable to make the attempt.
4. Lord Crewe is inclined to think that no effective action could be taken to rehabilitate the Hong Kong coinage in Hong Kong until Chinese coinage is excluded, since, if a margin of value were established between the Hong Kong and Chinese coins, it does not seem likely that two similar coins of the same intrinsic value would for long circulate at values differing in a fixed ratio, and the Chinese coins, being of lower value, would tend to drive the Hong Kong coins out of circulation; the Hong Kong coins would then have to be redeemed or would eventually lose their higher value. Moreover, the establishment (even temporarily) of a higher value for Hong Kong coins in the colony would attract the enormous mass of Hong Kong coins now circulating in China, and their importation would either sweep away the increase of value or would oblige the Government to continue their operations at a cost which is quite beyond the present means of the colony. This last difficulty would also arise if Chinese coins were excluded from Hong Kong,
5. Sir F. Lugard's proposal seems, therefore, likely to be both expensive and ineffectual, and Lord Crewe cannot suggest any alternative method of a similar character; the mischief is on so large a scale that the continuance of the system of withdrawal of subsidiary coins paid in to the Treasury is a useless expense. The only way of proceeding in this unfortunate matter is, apparently, by co-operation with the Chinese Government-Chinese coins being allowed to circulate in Hong Kong, and Hong Kong subsidiary coins continuing to enjoy the currency which they now possess in the large area through which they circulate. At the same time, it seems desirable to move the Foreign Office to bring the strongest possible pressure on the Chinese Government with a view to a substantial restriction in the issue of their subsidiary coins in the interests of China as well as of Hong Kong. Should the Chinese Government refuse to assist His Majesty's Government in this matter, it appears to Lord Crewe that the coinage, whether Chinese or colonial, must continue to depreciate until it reaches the intrinsic value of the silver.
6. A copy of another despatch from the Governor on the subject of the acceptance
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