CO882-(4-5) — Page 325

PUBLIC RECORD OFFICE

Reference :-

TIC.O. 882

5 PUBLIC RECORD OFFIC

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

DON

Mr J. H.

Gether.

15 July 1897

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COLONIAL CURRENCY COMMITTER:

double rupee under the name of the dollar so as to avoid the alteration in denomination ?—Excuse me, it is an alteration of a very important character.

6592. An alteration of weight, but it would avoid the alteration of denomination to accept a coin which was qual in weight to two rupees and was called the dollar; you might under that system have a complete reciprocal currency running through the East ? — 1 Hong Kong and Singapore adopted the Indian currency, of course they are the chief colonies of England in the East, and the natives round about, as I Bail before, might in the course of time accept those coins.

693. You might preserve the same names, although there would be a difference in the weight of the coins ?-Well, I think the natives would never call it a dollar, because they would say it was different. The native idea of a dullar would be a coin of a certain size and a certain weight, but as regards the question of what you call the coin I think it would be of very little importance.

691. You think it would not ease the strain upon their minds if you kept the mme name although you practically diminished the weight of the dollar?—No, the native would be quite alive to the change; he would not give it the same name as the old one.

095. He night call it a new dollar instead of the old one? I think that is a very minor matter; as regards the question of the double rupee, if they wanted it they might have it.

606. The transformation might be made in order to have that system throughout the East, I am not dwelling on the steps to be taken to pass from one to the other, but you can conceive the system being in- troduced and set perfectly to work?—I can conceive it; but of course it would be a slower process than if it were with European nations.

697. Would it be sufficient to say that on and after a particular date the double rupee, or whatever it is called, should be legal tender, and should alono be received in payment of Government dues and to provide that the engagements which had been entered into on the basis of the dollar, and which were still maintained, should be transformed into engagements with rupees at a fixed rate and thus bridge over the lifficulty ?--Yes, but if you allowed the exchange to remain open in that condition you might expose the Government to all manners of fraud and chicanery, because the natives would be very live to the advantage of having that back door open, and it would require the Government to liave proved to them that ench transaction which was brought forward for con- #ideration had been entered into previons to the

con version.

698. How would the Government be exposed to fraud; the Government knows all the contracts it has entered into with the natives ?-The Government have no contracts with the natives.

650. It would be a difficulty between natives, not a matter for the Government ?-Supposing two men combined to say a man had owed money to the other, on a certain date they would change the date to a period prior to the change of the standard.

700. That would be against the interests of one su in favour of one against other?-You never know what natives would do; it would expose the Government to a considerable amount of risk I think.

701. What if the present relation between a dollar and a rupee ?—Just now I suppose it would be about

190.

702. Supposing it were said that after the 1st of December next all contracts which had been entered into un the basis of a dollar should be payable in rupera at the rate of 190 to 100?-No, if you are to make the rupee the standard the ratio for conversion would be 225 to the 100.

703. I only want to fix figures; it does not matter what they are; but supposing that is done, how can the Government be brought to a difficulty ?-Thure nght be squabbles between two private persons as to

the amount that one owed the other under the new system, but I presume all matters of litigation would be brought into court.

704. (Chairman.) Supposing you were to make the double rupee legal tender and provide that all con. tracts made in dollars shall be satisfied by the payment of these double rupees ?-Of course that would be equitable, provided that the contract in dollars was truly made prior to the date of conversion. 705. (Mr. Courtney.) At a certain ratio ?--At the ratio that the Government fixed for conversion,

706. Would that be a way of getting over the transition ?—As regards paat contracts they would be carried out on the basis of the Government change of standard, but it is as regards the future I am now talking, not the past.

707. (Chairman.) As regards the future, of course, when it had become legal tender the contracts would all be made in relation to the then legul tender?—— Yes.

708. I understood Mr. Courtney to suggest that as to pending contracts you might fix the ratio at which rupees would be taken in satisfaction of dollars? -They would be required to be fixed at the price that the Government arranged for conversion.

709. (Mr. Courtney.) And there would be no difficulty in getting a supply of rupees from the Government in exchange for gold, under present circumstances at all events? I think that you are pressing the point unduly as regards the Straits. I wanted to show that the remedy for the present condition of the Straite, if a change was desirable, Was that the Straits should come under the Indian laws in respect of currency. Therefore the Straits being simply an annexe of India, whatever supply of currency was required by Singapore would be supplied by the banks in the ordinary course of business through exchange operations.

710 (Chairman.) And the result afterwards, when you have adopted this, supposing you have slopted the currency of India as the currency of the Straits Settlements, as regards all operations would be the same as if you had adopted the sovereign ?—I cannot say that, it is in the future.

711. Supposing the rupee keeps at an approxi- mately fixed ratio to the sovereign all the difficulties would be precisely the same as if you were to adopt at once a gold standard at Singapore ?-To the extent that it would be in India.

712. The transactions might as well on in

go Mexican dollars ?-No, the Mexican dollar would be simply merchandise.

713. No, but the transactions, I mean, between Singapore and other countries would still go on in Mexican dollars, those Mexican dollars, of course, varying in their relation to what was the currency of Singapore ?—Yes.

714. (Mr. Courtney.) I was merely trying to get through the mechanical difficulties of the transition, which, in my judgment, I thought you had exagger- ated ?--I do not think so, I have made them very Pasy. I said the Government should, up to a certain date and a certain hour, receive dollars and give in exchange rupees which they got from the Indian Government.

715. Why should the Government be bound to do that? Well, that is my way of working out the change.

716. (Chairman.) I understood you to suggest that as regards the dollare which people had in their possession, it would not be fair to demonetise them without enabling the people who held them to obtain what became the legal tender in their place ?- You would produce a revolution if you did not; in fact you would not dare do it.

717. (Sir R. Welby.) But I think, however, that the Colonial precedent is pretty well established that that is the way in which the exchange has been made, that up to a certain date the new coin has been altere.l for the old.

The witness withdrew.

MINUTES OF EVIDENCE.

Mr. EwEN CAMEEon, Manager of the Hong Kong and Shanghai Banking Corporation, called in and examined.

718. (Chairman.) You are manager of the Hong Kong and Shanghai Banking Corporation ?—Yes, in London.

719. And you are well acquainted with exchange operations between China and other countries ?—Yes.

720. &t the present time the Mexican dollar is alone legal tender in Hong Kong ?—I believe it is. There is a movement on foot for introducing the Japanese yen. Whether that has been carried out at the present moment I am not quite sure.

721. Can you tell us what is the cause of that move- ment, the Colony having at one time opposed the making the yen legal tender; can you tell us what has been the cause of the change of opinion?--I can only guess at it, because it is only by telegraphic advice that we know of it. According to our last written advice, there was no mention made of this, so I fancy, perhaps, in view of the contemplated duty by the Mexican Government upon their dollars that the Colony wish to have another string to their bow.

722. In case the Mexican Government should make s change?-Yes, in case the Mexican Government should make a change by imposing an export duty on the Mexican dollar.

723. Suggestions have been made that, having regard to the change that has taken place in regard to the currency of India and the present prospective state of the silver market, some change should be made in the Hong Kong currency with the view of making a stable exchange between silver and gold, the silver currency, whatever it may be, and gold; have you considered that question at all?-As far as Hong Kong is concerned I believe it is quite impracticable.

724. Will you kindly tell us the reasons why ?-- Hong Kong is only a port; it produces nothing itself and it is dependent entirely upon China proper. The large port of Canton is within a short distance, where the Chinese will only use their own currency, which they can import independently of Hong Kong. The tendency would be to divert business from Hong Kong to Canton.

725. It would transfer the depôt trade of Hong Kong to Canton?—Yes, to some extent.

720. Does the yen circulate in Canton at all ?—Not yet.

727. Do you think that making the yen a legal tender in Hong Kong would create any difficulty on that account ?—It would be a long time before the Chinese would take freely to the yen or any new coin.

728. But then Hong Kong would still nood Mexican dollars then ?—Yes, they would still need Mexican dollars.

729. So that what you would contemplate would be the substitution of the yen for the Mexican dollar for Hong Kong purposes, and the use still of the Mexican

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dollar for business purposes with China ?—No, they would circulate together; when there would be too few Mexican dollars the yen would help to increase the circulation.

730 But in practice the Mexican dollar alone would go to China?--It would be used more in China than the yen.

781. Or do you think the yen would find its way there?-Gradually it would, but the Chinese are very conservative in the matter of any new coinage.

732. But as regards the bank issues it would be immaterial to you whether you had your silver reserve against them in yen or Mexican dollars ?Quite, as they are exactly the same fineness and weight.

738. Is the trade of Hong Kong_almost exclusively with China ?-No, it trades with Europe as well as America. Hong Kong has practically no trade of its

OWNL.

734. That is to say, it distributes into China, collects from China, and sends to Europe ?-Exactly, to Europe and other places.

735. Of course you are alive to the difficulty, what- ever its extent, arising in the transactions between Hong Kong and Europe owing to the divergence between silver and gold ? Yes.

736. But having in view that your opinion is that upon the whole it would be disadvantageous to Hong Kong to make any currency change such as has been suggested ?-Decidedly. I do not think it is practicable even; a stable exchange would be a great advantage if it could be in any way carried out. Hong Kong in situated differently to the Straits where something might be done, but not in Hong Kong.

737. Have you banking relations with the Straits at well as Hong Kong ?-Yes, but I have never been in charge of a bank in the Straita.

738. Have you considered the question at all in relation to the Straits Settlement ?-I have.

789. You think that there it would be more practic. able than in Hong Kong ?-Much more so, for the reason that in the Straits what they produce is not produced in any other part of the world; it is dif ferent from India; they would have less competition through any rise in exchange.

740. But there they do a large depôt business too, do they not?--Yes, the town of Singapore does; but I was thinking of the Straits Settlements as a whole.

741. Do you think that their depôt business would be likely to be prejudicially affected by a currency change ?—No, not to any extent; there would be in- conveniences, of course, in Introducing a currency change, as it would require a new noin, and it would be necessary to demonetize the coins sirendy current there. It would be a great undertaking.

The witness withdrew,

Adjourned till Wednesday next at 11 am,

D 2

Mr. E. Cameron.

19 July 1893