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be necessary than that recommended to be prepared immediately by the Master of the Mint, in his letter to the Lords of the Treasury of the 26th February 1862, viz., 5,000 dollars.

I am of opinion that the smallest quantity of these coins which would suffice to start with would be one million, or 10,000 dollars.

I have, &c. (Signed)

His Grace the Duke of Newcastle,

&c.

&c.

&c.

No. 5.

HERCULES G. R. ROBINSON.

Cory of DESPATCH from Governor Sir H. ROBINSON to his Grace the Duke of NEWCASTLE, K.G.

MY LORD DUKE,

Hong Kong, May 26, 1862.

I HAVE Carefully considered the observations made by the Lords Commissioners of Her Majesty's Treasury and the Master of the Mint with respect to my proposal for the issue of silver pieces of ten cents, and of British copper cash, referred to me for further report in your Grace's despatch of the 26th March last, in which you announce the measures determined upon by Her Majesty's Government for the reform of the system of currency in this Colony.

2. In my former report on this subject I recommended that the existing Proclamation regulating the currency should be revoked, and another substituted for it, declaring the dollar and its parts the only legal tender in Hong Kong; that the basis of the subsidiary currency to the dollar should be a new British cash, to pass at the rate of 1,000 to the dollar, and to be a legal tender to the extent of one dollar; and that, although not absolutely necessary, still, to render the system complete, and for the convenience chiefly of Europeans, a copper cent and a silver piece of ten cents should also be issued, the former to be a legal tender to the extent of one and the latter to the extent of two dollars.

3. Her Majesty's Government have now agreed to the issue, as proposed by me, of a new Proclamation, but consider " that it will be the best course to

very

Mr. Peel to Sir F. Rogers," commence the proposed change of the monetary system at

March 12, 1862.

Hong Kong with the aid of cent pieces only, leaving the ques- "tion of coining other subsidiary pieces for future consideration," and propose to make the new cent pieces a legal tender up to the amount of five dollars.

little advantage. An 4. I am afraid that such a change will be productive of improvement will no doubt thereby be made in the system of keeping the Government accounts, and in the small receipts at the Treasury, but it will effect no general reform.

5. The cent is far too large a subdivision of the dollar for the daily domestic purposes of the Chinese. Any one going through the shops and markets and hucksters" stalls of this city, and seeing the almost innumerable number of articles that can be purchased for a cash each, would at once understand this. If the proposed change, therefore, were carried out with the cent alone as the sole subsidiary coin to the dollar, our population of over 120,000 Chinese would continue as now to purchase their daily food with Chinese cash. All the small disbursements of Europeans, made through their compradors, for market supplies and wages, would be paid in cash. The cent would have no fixed value as regards the cash, any more than the dollar, of which it would be a representative part, has now; and for all practical purposes the Chinese cash would continue the subordinate currency of the Colony, and all the evils inseparable from such a fluctuating measure of value, which I detailed fully in my last despatch, would remain unabated.

the new subsidiary currency is ever to find 6. For this reason I consider that

favour with the Chinese, the basis of it must be a coin of as small a denomination as a thousandth part of a dollar. The new British copper cash, a specimen of which was transmitted by the Master of the Mint, and accompanied your Grace's despatch of the 26th March last, would, I think, answer very well. It would not displace the Chinese cash in circulation here so rapidly as it would have done if it could have been made of the same weight and of equal or greater intrinsic value, but I am sure that it will do so gradually as the Chinese come to understand and appreciate the advantages of a legal tender. To show that the Chinese are not unwilling to adopt new systems which commend themselves to their good sense, I may mention that the notes of the chartered banks established here are taken unhesitatingly throughout the Colony, and I am told

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are cashed in the interior of the Kwangtung province, seventy or eighty miles above Canton, by native bankers, for a charge of about one-tenth per cent., or 28. in the 100%

7. As regards the proposed silver piece of ten cents, I still consider that it is very desirable, especially for the convenience of Europeans; that it should be coined at the Mint in London; and that, like the British silver coinage, it should circulate at a rate above its intrinsic value sufficient to cover the cost of manufacture and other contingent Without such a coin the European portion of the community would not carry about them cents to defray the small disbursements which they make personally, but would continue to use the endless variety of small British and foreign silver coins at present in circulation.

expenses.

8. I do not think there would be the slightest use in carrying out the proposal of the Master of the Mint to introduce here, as an experiment, a certain amount of Spanish real and double real silver pieces, which are coined by the Spanish Government at their intrinsic value. Millions upon millions of dollars are imported into the Colony every year, and are passed on in payment of Chinese produce purchased out of the Colony. The Spanish small silver coins would be treated as so much bullion, passing like dollars by weight of $10-taels 7.1.7, and could not be kept in circulation as a currency, nor retained in the Colony. My opinion is, that the new silver pieces of ten cents should be coined at the Mint of less fineness than the dollar, for, if made, as proposed by the Master of the Mint, of the standard fineness of the dollar (9/10), but of less propor- tional weight, they would still, notwithstanding the small loss that would be incurred thereby, be used in many instances as make-weights. And although such a proceeding would be no loss to the Government, as these coins would be issued at a profit, still it might cause inconvenience, considering that our supply of these coins would have to be drawn by order from the other end of the world.

9. With respect to the maximum amount up to which the subsidiary coinage of the dollar might be made a legal tender, I recommended in my former report that the new copper currency of British cash and cents should be a legal tender to the extent of one dollar, and the silver piece of ten cents up to two dollars. I observe in the correspon- dence transmitted to me that Her Majesty's Government propose to make the new cents a legal tender to the extent of five dollars. No reason is given for the increase, for which, therefore, there may be good grounds, with which I am not acquainted; but it appears to me that two dollars is the maximum amount to which the subsidiary currency should be allowed to be a legal tender.

10. I observe also, in Mr. Peel's letter to Sir F. Rogers, of the 12th March last, that it is contemplated by Her Majesty's Government in the new Proclamation to make "the Merican dollar the sole legal tender of payment." I think it would be better to make use of the words of the existing Proclamation, "the dollar of Spain, Mexico, or the South American States," as there are some Spanish and South American dollars in circulation here at present, although not in any great number.

11. I would strongly urge, therefore, for the reasons I have given, that if the new Royal Proclamation has not been despatched to the Colony before the receipt of this communication, it should declare the subsidiary currency to the dollar to be British copper cash or mils, copper cents, and silver pieces of ten cents, and that these coins should be all made a legal tender to a limited extent. I would also recommend that the number of these coins asked for in my despatch of the 9th March 1861, viz.,

20,000,000 British cash or mila

1,000,000 Bronze cents

100,000 Ten-cent silver pieces

Total

$20,000

-

10,000

=

10,000

- $40,000

should be forthwith obtained from the Mint in London, and transmitted to the Colony.

12. I feel so convinced of the necessity of commencing the new system by a simulta- neous issue of cash or mils, cents, and ten-cent pieces, that if the new Proclamation and the cent pieces alone shall have been despatched from England before the receipt of this letter, I will leave directions with my temporary successor not to move in the matter upon the receipt of the Proclamation until an answer be received to this despatch, in the hope that Her Majesty's Government will consent to the issue of a supplementary Proclamation, and the transmission of the mils and silver pieces now applied for.

13. With reference to the instructions contained in the concluding paragraph of your Grace's Despatch under acknowledgment, I have to Duke of Newcastle to Sir H. Robinson. observe that the legislative measures necessary to

Separate of March 26, 1862.

prepare for the proposed changes in the currency system will be prepared at once; but, inasmuch as they will be opposed to the existing C

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Royal Proclamation, it would not be right to bring them before the Legislative Council until the new Proclamation shall be received in the Colony, revoking, from a date to be fixed by the Governor, the present Order in Council and Proclamation of the 28th of November 1844.

14. I do not consider it necessary to postpone, until the introduction of the new system of currency, the change sanctioned by Her Majesty's Government in the mode of keeping the Government accounts, and I have accordingly directed that, on and after the 1st July next, the public accounts of the Colony shall be kept in dollars and cents.

15. I have been anxious to ascertain, for the information of Her Majesty's Govern- ment, whether my views on the currency of Hong Kong are shared by those here most your competent to form a correct opinion on the subject. Upon the receipt, therefore, of Grace's last despatch, I addressed the Chamber of Commerce, asking that a Committee might be appointed to peruse the correspondence which bad taken place upon the subject of the reform of currency of the Colony, and to furnish me with the opinion of the Chamber upon certain matters of detail still undecided, which I would submit in the shape of queries, and upon which the local experience of the Chamber would be very valuable. The correspondence which passed forms Enclosure No. 1 to this Despatch.

16. I also enclose an opinion in answer to the same queries, which I obtained from a gentleman now residing here, and whom I consider to be one of the best authorities in China on questions relating to currency, Mr. James Mackenzie, a partner in the house of Dent and Co., a member of the Hong Kong Chamber of Commerce, and for two years President of the Calcutta Chamber of Commerce.

17. It will be seen that both the committee of the Hong Kong Chamber of Commerce have expressed in this as well as Mr. Mackenzie concur entirely in the views which despatch as to the necessity of issuing British cash or mils and silver ten-cent pieces, making the former the basis of the new subsidiary currency to the dollar.

18. It has been suggested to me that it would be useful, as explanatory of the

Sir G. C. Lewis to Sir H. Robinson. Confidential of November 3, 1860.

Sir H. Robinson to Duke of Newcastle. Confidential of March 9, 1961.

Duke of Newcastle to Sir H. Robinson. Separate of March 26, 1862, with Enclosures.

The present despatch, with its enclosures.

proposed changes in the currency of the Colony, to publish for general information, before the introduc tion of the new system, the correspondence which has taken place on the subject, as noted in the margin. I should be glad to be informed whether your Grace would see any objection to the adoption of such a

I have, &c. (Signed)

course.

His Grace the Duke of Newcastle, K.G.,

&c.

SIB,

&c.

&c.

HERCULES G. R. ROBINSON.

Enclosure No. 1 in No. 5.

LETTER from the COLONIAL SECRETARY to the CHAIRMAN of the CHAMBER OF

COMMERCE.

Colonial Secretary's Office, Hong Kong, May 12, 1862. THE question of the currency of Hong Kong has for a long time been the subject of correspondence between Her Majesty's Government and the Government of this Colony.

Her Majesty's Government have acceded to the proposal made by this Government for the establishment of a new system, but have referred one or two questions, as to the nature of the coin that should be subsidiary to the dollar, for further consideration; and I am directed to inform you that his Excellency is very desirous of having the opinion of the Chamber of Commerce on the point.

you would very glad if His Excellency desires me therefore to say, that he would be

per- name three or four of the members of that body to form a committee to confer sonally with him, after they have read the correspondence that has passed on the subject. I may add, that owing to the greater part of it being bound up, this correspondence can only be perused at the Government offices.

James Macandrew, Esq.,

Chairman of the Chamber of Commerce,

Hong Kong.

I have, &c.

(Signed) W. H. ALEXANDER,

Acting Colonial Secretary.

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Enclosure No. 2 in No. 5.

QUERIES submitted by Sir H. ROBINSON to the Chamber of Commerce. Memorandum.

The points upon which I should wish to have the opinion of the Chamber of Com- merce are as follow:-

1st. Whether, in the opinion of the Chamber, the new system by which the dollar and its parts will become the only legal tender in Hong Kong will work satisfactorily with the cent piece alone, as the sole subsidiary coin to the dollar; or whether, as recommended by the Governor, a silver ten-cent piece, and a copper cash or mil, will not also be necessary to perfect the system.

2dly. If the Chamber should concur with the Governor, then whether the copper cash or mil, of the description furnished by the Master of the Mint as a specimen, would be likely to be favourably received by the Chinese, and to supplant in the Colony the Chinese cash at present in circulation.

3dly. Whether the 10-cent piece should be a silver coin specially coined at the London Mint for Hong Kong, and intrinsically worth less than its rated value, or whether the Spanish double real, which is coined at its intrinsic value would answer, and could be retained in the Colony.

4thly. The opinion of the Chamber as to the amount which should be named in the proposed Proclamation above which the dollar alone, and below which the subsidiary coinage might be a legal tender-query one dollar or five-or what number?

Enclosure No. 3 in No. 5.

(Signed) H. G. R. R.

OPINIONS of the Committee of the Hong Kong Chamber of Commerce transmitted to Sir HERCULES ROBINSON.

SIR,

Hong Kong, May 23, 1862. THE undersigned, appointed by the committee of the Hong Kong General Chamber of Commerce to confer with your Excellency regarding the proposed changes in the currency of this Colony, have the honour to submit to your Excellency their opinion on the various points which appear mainly to call for remark in the communica- tions that have passed between the Colonial and Home Governments on this subject.

Respecting the alteration in the public accounts, and the changes which this may bring about in the levying of fines, fees, rents, postages, and other sources of revenue, it is only necessary to say that they all appear to be steps in the right direction towards establish- ing that simple and uniform measure of value which is so very desirable as a commercial reform.

r

Assuming that any new Order in Council will make the dollar and its parts the only legal tender, our attention has been principally directed to the subsidiary coinage, or small change of the proposed currency.

We are satisfied that any supersession of the existing mixed coinage of smaller denomi- nations than a dollar must be very gradual, and we therefore think it would be most advisable to commence the experiment by the introduction of those coins which are new or least plentiful here, leaving to a later period the substitution of new half and quarter dollars for the endless variety of small coins which at present do duty under their names. In this view, and looking to the admitted and serious evils caused by the fluctuating and uncertain value of the Chinese copper cash, we consider the new cash or mil the basis of the system, and strongly recommend its early introduction. The specimen coin received from the Mint in London appears to us well adapted to its intended purpose, and we do not conceive that the circumstance of its being somewhat lighter than the native cash will prove an impediment to its free circulation. At the same time, it is not easy to foresee the caprices of Chinese prejudice; and although the results can only be ascer- tained by actual experiment, we consider the experiment well worth trying, even though it should be the means of entailing some expense on the Colony. Our own belief, how- ever, is, that the new cash would prove no less popular than useful, and that a continuous supply would be required from the Royal Mint for some time.

The circumstance of the name "cash clashing with that of the native coin does not appear to us material, while its adoption would probably tend to facilitate the general substitution of the British for the Chinese coin, as showing the design of Government to be the local abolition of the latter,

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