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PUBLIC RECORD OFFICE

Reference :--

TELEC.O. 882

5 PUBLIC RECORD OFFIC

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

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Mr. W. Kenwick.

2 July 1893.

COLONIAL CURRENCY COMMITTEE:

At the Colonial Office, Downing Street, S.W.

FOURTH DAY.

Wednesday, 26th July 1893.

PRESENT:

LORD FARRER, in the absence of the CHAIRMAN, presiding.

The Right Hon. LEONARD HENRY COURTNEY, M.P.

Sir REGINALD EARLE WELBY, G.G.B.

Mr. BERTRAM WODEHOUSE Currie.

The Hon. ROBERT HENEY MEADE, C B.

Mr. EDWARD FAIRFIELD, C.M.G.

Mr. GEORGE W. JOHNSON, Secretary.

:

Mr. WILLIAM KESWICK, of Messrs. Jardine, Matheson & Co., Hong Kong, &c., and of Messrs. Matheson & Co.,

London, called in and examined.

742. (Chairman.) Mr. Keswick, you are a member of the firm of Messrs. Jardine, Matheson, & Co., are you not ?-Yen.

743. And you have experience as a merchant in the China trade ?—Yes.

744. You are, of course, aware of what has been done with the Indian rupee 7-Yes.

745. Are you of opinion that that change makes it necessary or desirable to make any change in the cur- rency of Hong Kong? No, I do not think that the change in India reuders a change in Hong Kong necessary.

746. (Mr. Courtney.) Or desirable ?--Or desirable. 747. (Chairman.) You do not think that it would be necessary or desirable to put the Hong Kong currency on a gold basis?-I believe it to be im practicable.

748. For what reason do you think it would be impracticable ?-You would have a long period to elapse before you could get a dollar coined and issued in quantity, and then Hong Kong has no area. It is more a city than a territory; its trade is outside in a great measure; it has become the port to a great ex- tent of Canton, and it would complicate matters of account very seriously in the trade that Hong Kong carries on with Chins and the currency that you would establish if you made a change.

749. In fact Hong Kong's business is so largely with China, which is necessarily and must be for a long while a silver country, that it would cause greater confusion to put the currency of Hong Kong on s gold basis than to allow it to remain on a silver ?—I should think much more.

750. And that would not be counterbalanced by any advantage in a steady exchange with gold-using coun- tries?I see no alvantage that would be derived from it.

751. Have you in your own business experienced much difficulty or loss from the unsteadiness of exchange between Hong Kong and gold-using coun- tries? Undoubtedly the fluctuations of exchange are au element of serious uncertainty in business. That uncertainty and that fluctuation of exchange would not be overcome by establishing a dollar in Hong Kong. The trade internal in Hong Kong is a bogatelle; it is the outer trade that is the important trade of Hong Kong.

752. But suppose you had as your standard coin in Hong Kong a coin which had a fixed gold value, that would give you steadiness of exchange with gold- using countries, would it not ?-Only as regards Hong Kong. The trade of Hong Kong direct is small; the trade in Hong Kong is with the mainland of Chiun.

753. (Mr. Courtney.) But whatever it is with the mainland of China it must in the long rnu be equal with other countries. What goes in goes out ?- Exchange corrects that; if you had a dollar that had the same value out of Hong Kong as in Hong Kong, part of my objection would be removed.

754. (Mr. Currie.) But is not a large part of the trade of Hong Kong with London ?—Yes, to some ex. tent. What becomes of goods which are shipped from this country to Hong Kong and sold there? They are sold not for consumption in Hong Kong where they might be paid for by the dollar of Hong Kong, but they are taken away.

755. (Chairman.) At present that fluctuation in exchange affects the business between London and Hong Kong, and the exchange between Hong Kong and China is steady?—Yes.

750. If you had a gold currency the exchange be- tween London and Hong Kong would be steady, and the exchange between Hong Kong and China would fluctuate, would not that be the fact?—That would be clearly the fact.

757. And you think that that fluctuation between Chins and Hong Kong would be a greater dis- advantage than the fluctuations between London and Hong Kong?-Precisely. You see, the trade of Hong Kong is so very much connected with the trade of Shanghai, Foochoo, and all the other parts of Chins, and also with Japan, that simply to make an alteration that would produce a stability between Hong Kong and London would leave unaffected altogether the want of stability elsewhere, and it would be no use, as it were, tinkering in the smaller matter, leaving the greater untouched.

758. (Mr. Courtney.) But why smaller or greater; I was rather putting it to you that it must be nearly equal? Which?

759. Those which you call smaller and greater. Hong Kong is a place through which goods as P A great many goods pass through Hong Kong simply in transit.

760. Quite so; it does not matter about that — The money, I mean, does 'not affect it.

761. What I point out to you is this: Hong Kong is not a producing place ?—No.

762. You as merchants collect produce directly or through intermediaries from China and other places and you send it to Europe?-Not from Hong Kong: that is the trade that would be carried on with Foochoo or Shanghai; it does not affect Hong Kong specially, except that the merchants of Hong Kong are also merchants of those other places.

768. Well, that comes to the same thing; it need not pass through Hong Kong, but the merchants of Hong Kong are the same? Yes, but the dollar of Hong Kong would not be valuable, or at least would not have any practical value, beyond its value in silver elsewhere than in Hong Kong.

764. Yes, I have not reached that point at all. You collect goods directly or indirectly from Chine, And you send them to Europe, passing through Hong Kong or not. On the other hand, you get goods from Europe to Hong Kong, and distribute those goods through China, and the trade in the long run balances one another; your transactions with Europe must be

MINUTES OF EVIDENCE.

nearly equal to your transactions with China?—Not necessarily.

765. Well, where is the difference?-Transactions between Hong Kong and Europe dɔ yen mean?

766. Between Hong Kong merchants, your firm, and other merchants with Europe; what you get from one to pass on to the other. Of course you get a profit on the transaction and intercept something, but the bulk of the trade must be nearly equal; the bulk of the transactions ?—I do not follow that.

767. (Chairman.) Is the bulk of the trade direct from the Chinese ports to London ?—Yes.

768. Or is it from those ports to Hong Kong, then a purchase at Hong Kong, and then a sale by Hong Kong to Loudou ?-With the exception of many of the merchants in Hong Kong being interested in what is done elsewhere the trade between the ports and Europe and America is direct between those places

and London.

769. It is not a sale by a merchant at Shanghai to a merchant in liong Kong, and a further sale by the merchant in Hong Kong to a merchant in London ?--- Practically Hong Kong does not come into it.

770. (Mr. Currie.) But is not Hong Kong the banking centre; is not the head office, for instance, of the Hong Kong and Shanghai bank there ?-It is;

yes.

771. So that settlements are made there; that is the place in which the bills are drawn, is it not ?—No, they are equally made by bankers in Foochoo, Tientsin and Hong Kong.

772. Is not Hong Kong the head office ?-It is the head office, but then this does not affect the direct business.

773. (Mr. Courtney.) But though a cargo may be shipped at Hong Kong or Foochoo for Europe, who is it that orders that cargo to be sent ?-Shanghai, or Foochuo, or Hangkow, if shipment be from the ports. 774. Are those branches of Hong Kong firms ?— Some are independent. There are firms in all these places quite independent of Hong Kong.

775. (Mr. Mende). In fact, Hong Kong is a counting house for the transactions between England aul China?-Not necessarily ; there aro a great many firms in Shanghai whose business has no connexion with Hong Kong, who do a direct business between Europe and China.

776. But the trade is not so much between Houg Kong itself and England, but Hong Kong is a dis- tributing point, and it therefore is a counting house for trade distributed from Hong Kong over China? -Not so entirely; there is an immense trade done by Shanghai representing China that has no connexion with Hong Kong.

777. (Mr. Courtney.) Both export and import ?- Both export and import, probably the only connexiou is that the vessel carrying the produce or the manu- factures passes through the harbour of Hong Kong; that is about the only connexion.

778. Suppose a firm shipped a cargo of tea at Shanghai for London, what do they draw in from Lolun for the payment of that?-They draw starling bills ou London.

779. (Chairman.) What is the advantage that Hong Kong gets out of transactions of that Kind ?— There would be no advantage to Hong Kong in business of that kind boyond that the vessel conveying the produce or the imports into China passes through Hong Kong, and leaves some sort of toll in its passage; there is no other advantage.

780. (Sir R. Welby.) Does all the trade pass through Hong Kong or do vessels go direct from Shanghai and so on to Londou ?—A few go direct; but almost invariably trade is by steamer now, and of course all steamers touch at Hong Kong.

781. (Mr. Courtney.) But they are merely calling? They are calling, and they have cargo for all places; they probably discharge a fair amount of cargo for Mong 16 sug

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782. (Chairman.) Do they take in a good deal of cargo at Hong Kong ?--A good deal that comes from Canton.

783. The trade does not go direct from Canton to England ?-No.

trans-shipment.

784. There is a trans-shipment there?—Yes,

785. (Sir R. Welby.) Take a case of tea going to Australia, would that be trans-shipped at Hong Kong into an Australian going vessel; would that kind of transaction, I mean, take place ?—Some- times there is a trans-shipment, but it hardly affects Hong Kong beyond in this manner, that a coasting steamer coming from Foochoo, probably unites with a steamer in Hong Kong going to Australia. The trans-shipment occurs, but that is only a process of taking it from one vessel and patting it into another.

786. (Chairman.) Do you think that putting the currency of Hong Kong on a gold basis would have any effect in diminishing or injuring the business that Hong Kong now does, as a place of entrepôt and of trans-shipment?—It is difficult to express an opinion upon that point; it would take a long time to establish; there would be a great many complications and Auctuations, and trouble in adopting it. What the effect would be I am not prepared to say.

787. Then to go to another point. You have heard of some alarm lest there should not be a sufficient quantity of currency at Hong Kong? -Yee.

788. And various suggestions have been made : one that the Japanese yen should be made a legal tender In Hong Kong-put upon the same footing as the Mexican dollar; what do you say to that ?-The yen la preserved its purity and value as silver. I think that it would be a convenience, seeing that a coin is wanted. I believe at the present moment there is n considerable scarcity.

789. Sourcity of currency, do you speak of that from your own experience?-When I was in China we had not that difficulty except very occasionally, very seldom, and it was discussed in the Legislative Council for some time whether we should adopt the yen as currency. I think it was adopted in the Straits Settlements, but Hong Kong declined to adopt it as a legal tender.

-790. Do you know why they refused to adopt it then-It had not been long coined, and there was the uncertainty as to the future of the coin.

791. And the Japanese bave maintained its purity ? -They have maintained its perfect purity.

792. So that there is a different feeling about it now ?-I believe that to be the case.

793. In what way does the scarcity of currency show itself; is it tint when you want dollars to pay a balance you cannot get them ?-A great many dollars are drafted off to Canton at one season of the year, the coin disappears, or at any rate it is taken away in large amounts, and it follows, as it were, a tide and comes back again. Frequently a period comes during which the amount of coin is reduced.

794. And does that cause inconvenience ?—I do not think that the inconvenience is at all serions.

795. Is there a lack of eoin used in Hong Kong for ordinary purposes of daily life?—No, I should not think so.

796. It is only for mercantile transactions ?-Only for mercantile transactions; there is no scarcity otherwise.

797. (Mr. Currie.) Would it not be possible to bestitute silver in that case and to send silver to China to be taken by weight ?—Yes.

798. So that it is difficult to see how there could be a scarcity ?—In the Canton provinces they have become accustomed very much to the coin which had been in use for so long a period, and consequently the Southern Chinese prefer instead of weighing a piece of silver a coin that they know.

799. But at a slight difference in price?-But they will take the other for large transactions.

DS

Mr. W. Kemick.

26 July 1698.