A
Closure 4
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together with a minute, copy enclosed, by myself upon it, were
considered by the Executive Council on the 14th instant. The
Council advised that no action should be taken in the matter at
present.
With regard to the minute referred to it is necessary to explain that owing to the limited supply of one dollar notes it is not possible to pay to Police, or Sepoys, the whole of their pay in notes. Thus a man to whom Seven Dollars is due will be paid one 25 note and two silver dollars. In the Police Department, where the whole of the pay due monthly to Police is drawn from the bank in notes, the expedient has been adopted of buying sufficient silver dollars to make any neces- sary payments in single dollars. The discount gained is credit- ed to the Fine Fund which is maintained for the general benefit
of the members of the Force.
3.
The high discount on silver dollars is due to a variety of causes, the principal among which is the stagnation in trade. I am informed that the banks in Hongkong alone have £30,000,000 in silver lying idle in their vaults. In Shanghai the amount of idle silver is also very large. Again bank notes are very popular owing to their convenience, and the prevalence of robbery and piracy in China has rendered them to be more in demand than usual because they can be easily concealed.
4.
I recognise that it is unsatisfactory that the standard coin of the Colony should be at a discount, but I am not at present in a position to suggest any palliative measures though some proposals are being made to me on the subject. It may be that the condition may be re-adjusted by natural causes for at the time of writing the discount on silver dollars has fallen to 5%. It has been as high as 11%.
I have the honour to be,
Sir,
Your most obedient, humble servant,
Covernor, &c.
!
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