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PUBLIC RECORD OFFICE

Reference :-

C.O.882

2 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO

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On the

not with a view of favouring the immediate interests of Europeans or Chinese. second suggestion, I wish you particularly to inform me whether in your opinion the Chinese population of Hong Kong and the neighbourhood could be prevailed upon to accept even in small payments a silver coin at any other rate than that of its intrinsic value, and whether there is any chance that the copper coin would be used as popularly as the cash.

With regard to the effect of the proposed change upon existing interests, I wish you to report whether under the circumstances of Hong Kong the holders of demonetized gold would have any fair claim to indemnity; what precautions could be taken, by way of notice, or otherwise, to prevent any such claims from being put forward, or to confine their amount; and (with reference to the amount of gold to be found in Hong Kong) what amount of claim might at worst be anticipated.

I also wish you to report as to the proper mode of dealing with obligations, which, under the present law, may be discharged, at the option of the debtor, in gold or silver, but after the proposed change will only be dischargeable in silver. These obligations may involve debts either from Government to individuals, or from individuals to Government, or from individuals to individuals.

On the first point, you will perceive that Her Majesty's Government are prepared to admit that the salaries of civil servants which are stated in pounds sterling may properly be discharged at the rate of 4s. 2d. a dollar. But it is not considered that equity requires the same rule to be applied to the payment of troops, and I should wish you to indicate any other obligations in respect of which the same question would arise. On the second point, it appears to me that a Colonial Ordinance might properly be passed converting all fees and taxes now calculated in pounds, shillings, or pence into dollars at the rate of 45. 2d. a dollar. Obligations arising from contracts could not be thus summarily dealt with. I should be glad to learn to what extent such obligations exist, and what will be the equitable mode of dealing with them. The third point, that of debts due from indi- viduals to individuals, however difficult in theory, is not, I am led to believe, of much practical moment in Hong Kong, since the existing law is, as between individuals, a nullity, obligations being (with exceptions wholly unimportant) never contracted or discharged in pounds, shillings, and pence.

I shall be glad to receive your opinion on the general subject of the Hong Kong currency, with special reference to the points to which I have now drawn your attention; and I should particularly wish to be informed at the present moment whether steps could properly be taken at once in the Colony to facilitate the proposed alterations in case Her Majesty's Government should find a favourable opportunity for adopting them.

I have, &c. (Signed) NEWCASTLE.

Governor Sir H. Robinson,

&c.

&c.

&c.

MY LORD DUKE,

No. 2.

Copy of DESPATCH from Governor Sir H. ROBINSON

to his Grace the Duke of Newcastle, K.G.

Government Offices, Victoria, Hong Kong, March 9, 1861. In compliance with the desire expressed in Sir C. Lewis' confidential Despatch of the 3d November last, I have the honour to submit to your Grace my views on the subject of the currency of Hong Kong.

Order in Council and Proclamation.

Windsor, November 28, 1844.

Published in Hong Kong, on May 1,

1845.

2. The currency of the Colony is supposed to be regulated by the Queen's Proclamation of 1844; but this Proclamation, for the reasons which I will explain, has from the date of its publication been a dead letter as regards all mercantile transactions, and it has now for some years been equally inoperative as regards the transactions of the local Government.

3. The Proclamation was apparently founded on the supposition that gold either was or might be made the standard of value in Hong Kong. Acting on this assumption, it sought to assimilate the currency of the place to that of other British Colonies, and made provision for the concurrent legal circulation of certain foreign coins, and coins of the East India Company, with the coins of the United Kingdom, at certain fixed rates specified in the denomination of British sterling,

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4. The legal effect of the regulations thus established was supposed by the Home Authorities to be that thenceforth all pecuniary contracts See p. 179 of Mr. Pennington's

work on the currency of the and engagements entered into at Hong Kong and its depen- British Colonies.

dencies in the terms of the sterling money of the United Kingdom might be discharged with any of the coins specified in the Proclamation at the rates respectively assigned to them; and that "agreements at Hong Kong to pay a "certain amount of dollars might be discharged by the payment

of gold

Page 180. "sovereigns at the rate of 4 dollars 80 cents, or of rupees at the rate of

"44 cents, or of British shillings at the rate of 24 cents."

5. In the adoption of these provisions, the exceptional condition of the Colony, without agriculture or manufactures, producing nothing either for consumption or exportation, would seem to have been overlooked. Hong Kong is a mere barren rock, from whence are directed the operations of a large portion of the vast foreign trade of China carried on outside it. Here is not to be found in connexion with that trade either the buyer or the seller, the producer or the consumer; and the Colony has not and never had, I conceive, any pretensions whatever to establish an isolated system of currency at variance with that of the great empire on the confines of which it is established. I believe it is not too much to say that if it had been possible to enforce the Proclamation referred to on the mercantile community, and such a step had been attempted, it must have proved fatal to the very existence of the Colony as a commercial entrepôt.

6. The mercantile community, however, has never recognised the Proclamation, or governed themselves in the slightest degree in their mutual transactions by its conditions. Silver remains the standard of value. All accounts, except those of the Government departments, are kept in dollars and cents; and the sole instrument of commerce and medium of exchange, both here and at all the open ports in China, except Shanghae, is now the dollar current by weight, the weight almost universally specified in all contracts being "dollars weighed at 7 · 1 ·7," which means dollars weighing at the rate of 1,000 to 717 taels weight, or equivalent to 41574 grains troy each.

Sir G. Bonham to Duke of Newcastle,

No, 27 of March 10, 1854.

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7. As regards the transactions of the Colonial Government, the Proclamation may said to have remained in force until 1854, up to which time I find the greater portion of the revenue was paid into the treasury in British sterling money, entailing thereby incon- venience to the local Government, and serious loss to the public servants. Early in that year, however, was decided by the Chief Justice, in a trial before the Supreme Court, "that when contracts were made in dollars, payment must be made in such coins, and not in "those specified in the Queen's Proclamation of 1844." This decision was in effect tantamount to a repeal of the Proclamation. From time to time the local Government made the necessary verbal alterations to secure the payments of all rents, taxes, licences, and other dues in dollars; and the result now is that (with the exception of a few fines and fees and such like receipts, altogether unimportant in amount, but specified in the old Ordinance under which they are levied in terms of sterling money) the whole of the public revenue is received in dollars at 4s. 2d. The payments from the treasury are in like manner made in dollars at the same rate. Thus I find that out of a revenue of 94,000%. received during the year 1860, only 1,600l. was received in sterling, and of this amount 1,2001. was received in payment of fractional parts of a dollar, for which, under the present system, there was no other legal tender.

8. The financial transactions of the Imperial Government here are mostly confined to payments on account of the Naval, Military, and Consular Services. The Commissariat Chest in supplied with dollars by the sale of bills on London or India, and by the impor- tation of specie. All pay and allowances, although specified in sterling, are issued from the Commissariat Chest in dollars at 4r. 26., and almost all contracts entered into dis- tinctly stipulate that payment is to be made by the Government in dollars, and conse- quently, under the decision of the Chief Justios, they cannot be liquidated in any other coin. Occasionally it is stipulated that contracts shall be paid for in bills on London, especially in the hire of transports and other naval contracts; but the price of these bills in the market at theexchange of the day is of course taken into account in the terms of the contract. The Home Government are rarely receivers of money here, except from the post office, to which I will presently allude, and occasionally for the male of damaged commissariat and ordnance stores, when one of the conditions of sale is invariably that payment is to be made in dollars.

9. All these circumstances combined have gradually led to the total withdrawal of the sovereign from circulation here. It is now a mere fancy coin, which is not even kept by the banks; and if their customers require any on returning to Enrope, the banks have to send to the money changers or gold-workers to purchase them. Sovereigns and

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