30 -
The argument by the Minority "if possible keep currency inter-changeable between the two ports" in so far as it refers to token currency must be regarded as impracticable. The Chinese Provincial Authorities do not appear to possess the necessary qualifications for such an undertaking and it seems very doubtful in any case whether a satisfactory working agreement for the regulation of a joint token currency could ever be reached.
6. The Case for Prohibition.—The case for prohibition began when the Government undertook to establish and maintain a subsidiary token coinage. A prohibitory clause would then have been in the nature of an insurance policy which every prudent man takes out when: he embarks upon an undertaking involving risk. So soon after the establishment of the sub- sidiary coinage as it became evident that Chinese subsidiary coins were circulating as a medium of exchange in the Colony is became a matter of self-interest to prohibit for every Chinese coin in circulation was obviously usurping the legitimate functions of a corresponding Hongkong cain and so depriving the Hongkong Government of a legitimate prost on its undertaking. So soon as Hongkong coins went to a discount it became clear that supply was in excess of demand and that this state of affairs was due either to an over- issue of Hongkong coins or to the circulation or excessive circulation in the Colony of Chinese coins or to a combination of these causes. I think it will be admitted that long before the Subsidiary Coin Committee was appointed the real causes were common knowledge. The case for prohibition then became one not only of self-interest but of self-preservation. So soon, however, as "so representative a body of public and expert" opinion as the Subsidiary Coin Committee bad inquired into the causes of depreciation and had agreed that they were over-issue by the Hongkong Government and excessive circulation in the Colony of Chinese coins the theoretical case at any rate for prohibition was complete. But the Minority raised doubts as to whether prohibition would not result in a further depreciation of the subsidiary coinage of the Liang Kuang Provinces thereby reducing the purchasing power of the consumers in those Provinces and so adversely affecting the trade of the Colony or in other words whether the Colony would not lose more than it would gain by prohibition.
Let us now examine the action of the Chinese Provincial Authorities then and since as affecting the purchasing power of the consumers in their provinces.
The following are particulars of the ontput from the Provincial Mint at Canton since the year 1907 :-
31-
The following is an extract from the "Wa Tsz Yat Po
of 14th February, 1911 :---- "Another Several Million Dollars Profit made by the Provincial Financial Department.
It is
"The amount of Subsidiary coin notes issued by the Provincial Financial Department has exceeded ten million dollars. The annual profit made thereby is very great. said that the subsidiary coin notes in stock have nearly been exhausteil, and that of the five million whole dollar' notes printed, four and a half million are stock. The Financial Department has proposed to issue three and a half million of these yet kept in 'whole-dollar' notes as subsidiary coin notes by adding a chop subsidiary coin' on them. As, however, the Board of Finance has, only recently, made an order requiring all bank notes issued by all officially recognisel banks to be redeemed gradually within certain number of years, the Financial Department attempts to find a defence for their proposal by saying that these notes being printed long ago are not made to supplement the stock and that the issue of these notes will tend to check the influx of foreign bank notes. Application has been made to the Board through the Viceroy for approval of the issue of such notes; and it is not yet known whether it is approved."
It seems probable that such issues are largely unreserved.
Let us now turn to a consideration of Hongkong interests. The following are examples of losses incurred by Hongkong companies during the past five years :-
$
Hongkong Tramway Co. Tramway Co.
Peak
Star Ferry
Co.
Hongkong, Canton aud Macao Steamboat Co.
Messrs. A. S. Watson & Co.
1
2
3
4
5
$
$
1906
1,177.74
9,860.64
27,444.94
9,304.00
1907
42,457.16
1,482.22
9,037.04
50,532.02
11,280.00
1908
45,371.10
1,501.28
9,346.57
43,831.45
11,998.00
Discount
1909
60.453.24
1,733.00
13,288.18
53,005.14 13,152.00
Year.
Silver Dollar.
1910
93,111.00
1,696.91
17,030.01
30,224,40 12.945.00
20 Cent.
1 Cent.
Highest.
Lowest.
Total.
262,798.84
7,591.15
58,568.44
225,037.95
58,679.00
20 Cent, 10 Cent.
20 Cent.
10 Cent,
21,406.34
1907
969,000
4,910,800
Do
9.62
9.62
3
3
1908
1909
6,820,000 3,133,600 5,001,000 6,624,000
return avail. able. 752,000
9
940
3:45
3:90
8:60
8.98
4:30
6:40
1910
9-54
9.85
2.80
8-70
1911
to
8.85
9:05
0.95
7.20
date
* Taken from Hongkong records.
↑ NOTE: The only information procurable regarding the subsequent operations of the Mint is contained in the following extract from the Ch'i Shib Erh Shang Pao of 8th July, 1912 :--- "The Director of the Canton Mint has telegraphed to the Treasury Board in Peking that, between the date of declaration of Independence (November 9th, 1911) and the end of the Chinese Year (February 17th, 1912), the output of the Mint was 29,214,900 twenty cent pieces and 4.328,375 copper cents. From the 18th February to the 30th June, 1912, the output was 38,762,000 twenty eent pieces and 14,650,000 copper cents.
The silver coins contained 18% alloy and the copper 3.-R. C., 21st Dec. 1912.
(1.) This is an English company and as it has not raised its tariff in consequence of the depreciation of the currency its losses fall on home capital. Such losses, which last year amounted to one-fifth of working expenses, must be difficult to explain to a meeting of English Shareholders and are not likely to popularize Hongkong as an objective for English capital.
(2) & (3). These companies have not raised their tariffs and their losses therefore fall on the shareholders, ie, a section of the consumers of the Colony.
(4.) This company has raised its tariff in consequence of the depreciation of the currency and therefore its losses fall bath on the British and Chinese consumers that patronise it.
(5.) The losses are for the Company's Hongkong business only and more probably than not are shifted on to the consumers of its particular goods.
To the above must be added the losses which would be incurred by the general body of retailers in the Colony if they did not, as would appear almost certain, shift such losses on to the general body of consumers.
To generalize, the effect of a depreciated subsidiary currency must be to raise the prices of goods usually purchased wholly or in part by such currency.
108