95
shows therefore that the salaries of the European staff
have been expressed in sterling on instructions from
During
the Secretary of State, first given in 1902.
all this time the local currency has been on a pure
silver basis with a sterling exchange value in the
market which has varied from over 5/- to less than 1/-.
It is manifest that in such conditions some forms of
exchange compensation device must be entailed where
salaries are expressed in sterling or in dollars. The
present circumstances to-day are different. Hong Kong
has, for the first time, gone off silver, and the
Hong Kong dollar is for the present a managed currency
managed with the primary policy of maintaining a close
relation with the currency of the Government of China,
which has latterly also gone off silver; the management
of the currency of China has, in novel conditions,
succeeded in maintaining for the last two or three
months a fair stability with sterling, but whether it
can, or intends, to maintain the present level, or
whether it contemplates in due course a reversion or
partial reversion to silver is not known, but whatever
it does it is likely to influence, and poss:
possible dictate,the currency policy of Hong Kong.
to
In these circumstances, it seems to me too
early to decide whether the time has come to abolish
the sterling salaries scheme for European officers in
Hong Kong. It appears to me also doubtful whether any
advantage would accrue from expressing all salaries in
terms of the Hong Kong dollar. There appears indeed
to be a distinct advantage for the present in retaining
the sterling system, for it cannot be expected that
parents and others who influence the stream of
recruitment in this country, take any other view of
the recent currency crises in China and Hong Kong,
than