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PUBLIC RECORD OFFICE

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C.O.8

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882

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2 PUBLIC RECORD OFFICE, LONDON

SIR,

12

Enclosure No. 1 in No. 3:

COPY of DESPATCH from the Right Honourable F. PEEL

to Sir F. ROGERS.

Treasury Chambers, March 12, 1862. WITH reference to your letter of 22d June last, relating to the currency of Hong Kong, I am commanded by the Lords Commissioners of Her Majesty's Treasury to acquaint you, for the information of the Duke of Newcastle, that their Lordships forwarded your letter of the above-mentioned date, with its enclosures, to the Master of the Mint, together with the previous correspondence on the same subject, and their Lordships informed that officer that they were disposed to concur generally in the principle on which it is proposed to settle the currency of Hong Kong; but that the measures suggested by the Governor for the issue of coins subsidiary to the dollar will require careful consideration, and my Lords requested the opinion of the Master of the Mint on the subject.

Their Lordships, at the same time, observed that the success of so much of the proposed scheme as contemplates the issue of coins to circulate in the place of Chinese cash at the rate of 1,000 to the dollar, appears to be very problematical"; and that they are inclined to agree in the opinion expressed by the Duke of Newcastle, that it will be the best course to commence the proposed change of the monetary system at Hong Kong with the aid of cent pieces only, leaving the question of coining other subsidiary pieces for future consideration.

Their Lordships now desire me to forward to you, for the information of the Duke of Newcastle, a copy of the reply which has been received from the Master of the Mint, and to request that you will observe to his Grace that the immediate measures which it is, in the opinion of my Lords, necessary to adopt, in order to establish the currency of Hong Kong, are to issue an Order in Council and Proclamation of the Queen to repeal, from such date as may be fixed by the Governor, the existing Royal Proclamations by which the currency of that Colony is regulated, with a view to the establishment of the Mexican dollar as the sole legal tender of payment for sums, say of five dollars and upwards, and authorizing a subsidiary coinage; and that the Master of the Mint should be instructed to coin one-cent bronze pieces, as proposed in his report, in order to their transmission to the Colony, with a view to the their introduction into circulation contempo- raneously with the passing of the new law.

The question of introducing small Spanish silver money may stand over for further consideration; but my Lords are inclined to agree in the views expressed by the Master of the Mint on the subject.

The wider question of attempting to improve the cash currency of China is deserving of attention; and, although my Lords would be disposed to lean to the opinion that the duty of Her Majesty's Government is confined to the Colony of Hong Kong, they recommend that the interesting report of the Master of the Mint on the subject should be communicated to Governor Sir H. Robinson, for his consideration.

Their Lordships would only observe that the precise position of copper cash in the circulation of China should be clearly ascertained before any attempt be made to interfere with the existing practices of the people of that country.

My Lords consider that it can hardly be correct to describe the "standard of value* in Chins to consist of copper, when it is stated that this coin (that is, the copper cash) fluctuates in "the market with reference to silver," and the whole question of the circulation of that country is beset with so many anomalies that it is very necessary to have clear information on every point before attempting any radical change.

SIR,

Sir F. Rogers,'

&c.

&c.

Enclosure No. 2 in No. 3.

(Signed)

I have, &c.

COPY of DESPATCH from Mr. GRAHAM to Mr. HAMILTON.

F. PEEL

Royal Mint, February 26, 1862.

I HAVE the honour to acknowledge the receipt of your letter of the 27th August last, enclosing a letter from the Colonial Office, dated 22d June, with a copy of the despach from the Governor of Hong Kong (with parcels of Chinese coins attached) together with former correspondence, as noted on the margin of your letter, relative to the currency of Hong Kong. You add, that the Lords Commissioners of Her Majesty's

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are disposed to concur generally in the principle on which it is proposed to Treasury "settle the currency of Hong Kong; but the measures suggested by the Governor for "the issue of coins subsidiary to the dollar will require careful consideration, and their Lordships request your opinion on the subject." You further proceed to state that their Lordships "would observe at the same time that the success of so much of the proposed scheme as contemplates the issue of coins to circulate in place of Chinese "cash at the rate of 1,000 to the dollar appears to be very problematical, and my Lords

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are disposed to agree in the opinion expressed by the Duke of Newcastle, that it will "be the best course to commence the proposed change of the monetary system at Hong Kong with the aid of cent pieces only, leaving the question of coining other subsidiary "pieces for future consideration." It appears important to preserve the separation here indicated of the dollar and "cash" system of currency. The suggestion made in the Governor's despatch would amount to the creation of a "mil," or thousandth part of a dollar; but such a coin should not be confounded in name, or otherwise, with the Chinese cash.

First, then, of the dollar currency for Hong Kong. The introduction of a cent piece appears desirable, both with the view of supporting the dollar system, and also of fixing its decimal division. A cent can be recommended of bronze of the same weight and size as the British halfpenny, having the effigies and titles of Her Majesty on one side, as on the halfpenny, with "Hong Kong, One Cent, 1862," and the equivalent in Chinese characters on the other side. (See figure.) The cent described in the Governor's despatch is of copper, and analogous to the old Anglo-Indian coins. But the last are in course of being altered, and in the change it appears well to maintain more of uniformity and of the imperial character than formerly prevailed. The bronze cent described could be coined with a considerable profit. If the piece was approved by their Lordships, the single die required might be engraved, and the coin be struck at the Mint within a few

weeks.

The subsidiary coin to the dollar in silver required by the Governor appears highly desirable, and must sooner or later be supplied, but it is impossible to proceed with confidence at present in the preparation of such a piece. With the view of advancing the question a step, the following proposal is offered. Bearing in mind that it is the Mexican or Spanish dollar which is to be dealt with, and also that the silver piece, the 10 cents required by the Governor, already exists in the Spanish double real, it is suggested that a quantity of the last-named piece, or of the real (5 cents) and double

is money real, should be procured, and transmitted to Hong Kong. Small silver sented as very scarce in Spain; but I have reason to believe that such an amount as 2,0004. could be procured at present from the bank of Madrid, at little more than the cost of carriage and insurance.

repre-

The small Spanish pieces of silver referred to are coined at their intrinsic value. An important point, at present doubtful, would soon be settled by their issue at Hong Kong. Could such coins be retained within the Colony? As dollars circulate there by weight, and very much as bullion, the danger to be apprehended is, that the small pieces would come to be used as make-weights rather than as money, and be dispersed in payments made beyond the limits of the Colony. This accident would be inconvenient, but not attended with pecuniary loss.

If it was found that the Spanish small pieces could be preserved, then it might be considered whether corresponding British pieces, with perhaps a British dollar, might not be struck, to maintain the circulation at the same rate of coinage. On the other hand, if the small coins disappeared, then Government could turn to the alternative of a silver coinage like the British, circulating at a rate above its intrinsic value. As proposed by the Governor, the small pieces under a dollar could be coined of proportional weight, but of less fineness than the dollar, or, what would be better, I believe, of the standard fineness of the dollar (9/10), but of less proportional weight. Why not try a token coinage such as this, in the first instance? The answer is, that it is very doubtful whether a silver coinage on that principle would be properly appreciated by the Chinese, From their knowledge of assaying, the lowering of the standard, if practised, would be immediately discovered by them; and a reduction in weight would be still more obvious. They would be too apt to rate the new pieces at their intrinsic value, and so destroy their use as money.

Secondly, with respect to the coinage of copper cash. The Governor attaches much impor- tance to the improvement of the cash, the domestic currency of upwards of 100,000 Chinese inhabitants of the Colony. The cash is the only coin of China; and, notyeitästanding the inferior quality of a large proportion of this coin, it appears to circulate at rather more than its intrinsic value, calculated by the price of metals in Europe. The cash is essentially B 3