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their way here occasionally in considerable numbers from Australia, together with gold dust which is imported largely, in the same way as American eagles are brought with gold ingots from California, but these coins are merely imported as so much mercandise, and on their arrival here are, with the uncoined gold, indiscriminately thrown into the melting-pot, and converted into gold leaf for export into India.
10. In reply, therefore, to one of the questions specially referred to me in the Despatch under acknowledgment, I have to report, that if the existing Proclamation were revoked, persons in the possession of sovereigns at the time would have no fair claim to indemnity; because, as I have shown, all contracts, governmental as well as private, are made in dollars, and it is a mistake to suppose that "such obligations can be discharged in either gold or silver," gold having practically been demonetized by the Chief Justice's decision of 1854.
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Sir J. Bowring to Mr. Labouchere.
No. 181 of December 28, 1867.
11. And here I may observe on the manner in which the Colonial Government accounts are at present kept, that nothing could well be more inconvenient and compli cated. The revenue, as has been observed, is almost all paid in dollars, but it is brought to account in terms of sterling money. The estimates and appropriation Ordinances are made out in sterling, but the contracts for supplies and public works are all made in dollars, and the whole expenditure is paid from the treasury in dollars, while it is charged in the accounts in pounds, shillings, and pence. I am not aware of any one advantage that is gained by all this trouble and confusion; and I therefore recommend, that whether Her Majesty's Government may decide to continue or withdraw the existing Proclamation, in either case permission be at once given to keep the accounts of the local Government in dollars and cents, in the same way as the accounts of every foreign banking and mer- cantile establishment in China are kept. I find that both Sir J. Bowring to Sir E. B. Lytton,
the Executive and Legislative Councils of the Colony No. 33 of February 11, 1859. have already unanimously recommended this change.
12. As regards the Proclamation, I am of opinion that it should forthwith be revoked; because, in the first place, it is at present wholly inoperative; secondly, because the systematic evasion of it, which circumstances have forced on the local Government, is calculated, as Mr. Arbuthnot has pointed out, to bring discredit on the functions of Government; and, above all, because of the insecure foundation
upon which the present practice rests, inasmuch as the legality of the judicial decision of 1854 may, I think, fairly be questioned, and, as another Chief Justice now presides over the Supreme Court, it might at any time be reversed. No time could be more favourable for making the change. I would, therefore, as soon as the necessary arrangements can be made, withdraw the existing Proclamation, and substitute for it another, declaring the dollars of Spain, Mexico, and the South American States, of full and proper weight and value, the only legal tender. A local Ordinance should, at the same time, be passed, declaring that when- ever British sterling money has been specified in any former Ordinance, whether as payments to be made to or by the Government, such sums shall be received at or paid from the treasury in dollars and cents only, at the rate of 44. 2d. to the dollar. am thus brought to the consideration of what coin should be the legal tender in payment of sums less than one dollar; but before recommending the course which, I think, should be adopted in this respect, I must first explain the existing order of things.
Memo. by Mr. Ar- buthnot, Treasury, August 20, 1858.
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13. There is no fixed rule established amongst the European and American community by which small payments are made. There are small quantities of British and foreign silver and copper coins in circulation, and these pass at different rates, according to the caprice of the receiver in each case. Thus, in one place, if the dollar be worth 44. 8d., one shilling and twopence will be required for a quarter dollar (25 cents), while in another, one shilling and a halfpenny will be accepted. Payments of this kind between other than Chinese are, however, very few, as may be imagined, when I mention that the manager of the principal bank here informed me, that 51. worth of small silver and copper coins is sufficient each month to settle all such payments in his bank, fractional parts of a dollar being always paid to Chinese at the bank in broken silver by weight. The reason of this is, that every mercantile establishment and private family here has a Chinese servant, called a "comprador," by whom all domestic monetary transactions are settled. This man (who acts as a sort of banker, and generally is required to find security,) presents his account either in dollars or in cash, which are converted into dollars at the market rate, and receives payment generally by an order on a bank for an even sum. The absence of any settled, well-regulated currency, for making change in domestic circulation, has rendered it very difficult for Europeans to superintend their own household affairs, and the comprador system, which is a very ruinous one, has there-
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fore hitherto been almost a necessary evil. Wages, market and retail transactions, in short, all payments whatever below a dollar, between Chinese, are settled in cash; and this coin may therefore for all practical purposes be considered as the subordinate currency of the Colony.
14. The cash or "tsien," the only coin issued by the Chinese Government, is made from an alloy of copper, iron, and tutenague. It is circular, nine-tenths of an inch in diameter, and has a square hole in the centre, by which the pieces are strung in parcels of a hundred, for the convenience of counting as also of carrying. It is cast, and not stamped or minted. The obverse bears the name of the province in which it is cast in Manchu writing, on the right side of the square hole, and the Manchu word for "money" on the left.
On the reverse are four Chinese characters; those above and below the hole giving the Emperor's name (as Táu Kwang, Hien fung, &c., and the words "tung pau)," signifying current money, on the left and right of it. The weight of each piece should be 57.98 grains, or one mace (tsien), and hence it is called by the same name, but modern pieces weigh from 62 to 64 grains each. The value of the coin, as fixed by Government, is the thousandth part of a tael's weight of silver, at which rate about 700 would be equal to a dollar; but through the rapacity of the provincial governors (there being mints in most of the provinces), or the fraud of the workmen employed, the coin has for many years been debased, in the coarsest manner, with iron dust and sand; and the price of it in the Canton market at present is about 1,358 cash for a tael, or 970 for the Mexican dollar. The cash thus made by the Government is not issued to the public, but only to the Imperial troops, and the issue is made to them at the market rate, except that in every 100 taels five are issued at the rate of only 1,000 cash; thus causing a slight loss to the recipients. The value of the cash in the Canton market is fixed daily by the money brokers, who meet in conclave, and determine the price, which, as far as I can learn, appears to fluctuate above the intrinsic value of the coin, according to the supply of it in the market.
15. I forward with this despatch specimens of the cash issued by the Chinese Govern- ment in each reign since the commencement of the present dynasty in A.D. 1644, an inspection of which will at once show the manner in which these coins have been depreciated, especially during the present reign.
16. By the existing Proclamation Chinese cash are made a legal tender to the extent of one shilling sterling, at the rate of 1,200 for one dollar, but as 970 of even the present depreciated Government cash are equal to one dollar, the Proclamation, in this respect as in all others, has been a nullity.
17. Until very lately, however, a number fully equal to that specified in the Procla- mation has passed in the Colony for a dollar, in consequence of the large quantity of spurious cash which has been in circulation throughout China for years, notwith- standing the strong measures taken by the Government to suppress the illicit manufac ture of it, by awarding death as 'the punishment for forging. The established rule amongst the shopkeepers of the Colony, until lately, has been to accept cash in payment, provided each string did not contain more than a certain number of forged cash. The proportion, I believe, was generally about two-thirds Government cash to one- third forged cash; but sometimes the proportion of the forged cash rose to one-half, and even seven-tenths. This mixture, of which I forward a specimen, went by the name of "current cash," and from 1,200 to 1,300 have usually been considered equal to a dollar. The forged cash have, however, been gradually deteriorating in quality, and at last became so bad, owing to the operations of a gang of forgers, who established themselves on the opposite shore of Kowloon, that the shopkeepers were obliged, in self-defence, some months since, to come to an agreement not to accept in payment any but Government cash, which last alone now pass current here at the same rate as in Canton, i.e., at present 970 to the dollar.
18. Such changes as these in the domestic currency of the country bear with peculiar hardship upon the poorer classes; for the sellers of commodities being fewer in number, and generally more intelligent than the purchasers, take care, whenever a fall takes place in the value of cash, if they have not already anticipated it, to raise the price of their commodities at once; but when, as lately, the cash rises in value, the old prices are maintained as long as possible, and, until they are forced down by competition, the effects of which wholesome principle are slower in China than in any other part of the world, in consequence of the combinations which exist amongst the members of all trades and guilds. Thus, for example, complaints have been made to me, and, I believe, with truth, that the prices of all commodities in the market here, in cash, are the same now as before the recent increase in the value of that coin of nearly 25 per cent, and I have in consequence been urged to adopt
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