1841-1886
309
OF HER MAJESTY'S COLONIAL POSSESSIONS.
27
dollar more than another, or for any coin whatever, except by reason of its greater value as containing more silver.
56. This will be clearer if it be remembered that the real medium of exchange in China consists simply of silver, and whether in shapeless lums or elegant coin is a matter of indifference in the chief marts of trade. This principle is carried so far that the coins received in payment of Chinese Customs dues, and which are taken simply for their intrinsic worth as compared with the standard of pure Hakwan silver, are as a rule melted down indiscriminately by the Chinese into the form of shoes and bars. It may be urged that a system which, strictly speaking, should entail a separate weighing and assaying for each transaction, is indefensibly barbarous and inconvenient. Undoubtedly it is so; but the fact that such has been the custom of the country for centuries, and also that the whole body of Chinese officials is interested in maintaining a practice which gives them innumerable opportunities for cheating, or, as it is called here, squeezing Government debtors and others, is not the less a fact of extreme importance when calculating the chance that people will pay a premium for minting silver into a shape which confers on it no increased purchasing power in China.
57. With the exception of the gratuitous coinage of $376,859 at the commencement from defaced coins, when for some months no seignorage was charged by the Mint, the whole work done by that establishment on which seignorage was paid since 7th of last May to the 30th ultimo, if computed in dollars, has amounted only to $961,726.
58. As your Grace is aware, there are numerous other very interesting questions connected with this subject, quite beyond the scope of this present communication. I must, however, particularize the surprising difficulty of getting rid of subsidiary coins, which one might have imagined would have been eagerly welcomed as a substitute for the little broken pieces of silver still used as change in the neighbouring provinces. Even the copper cents coined for the Colony in England, and on which a net profit of 20 per cent. at least was expected, are now at 35 per cent. discount, independent of heavy charges for freight and manufacture, as they were ordered from England.
59. On the whole I incline to the opinion that, even if efforts now being made succeed in procuring the recognition and acceptance by the Japanese Government of the Hong Kong dollar, the Mexican will for many years be manufactured and laid down here more cheaply than the former can be produced, whilst there is no reasonable ground for supposing that the Hong Kong dollar, unless it contains more silver, that is, unless it costs more to manufacture it than the Mexican, will secure any preference over the latter. At present the Mexican coin, from its general recognition in Japan as well as China, is at a premium of nearly one per cent. over the Hong Kong dollar, which itself maintains here a premium of per cent. over its intrinsic worth.
60. At the same time, so many elements of uncertainty caused by varying exchanges, &c., &c., and the shifting necessities of commerce, must always enter into calculations of this kind, that no one should pretend to form a decided judgment as to almost any result connected with the possible success of the Mint, if that establishment could be permanently maintained. It must obviously be often useful and profitable, to the banks at least; but the propriety of keeping it open for such a reason, even for a month, at the cost of the Colony, is a totally different matter. Even that point, however, is apparently not very easy of solution, for it is a question which has occupied the attention of Her Majesty's Government since last February, and I am not aware that any decision has yet been arrived at.
61. It would be very difficult to decide whether any effect, and, if so, of what nature, has been produced on the success of the Mint by the great commercial depression which has existed in China for the last three years, and the general shock to credit in the East, which has resulted in part, but in part only, from that suffered in Europe at an earlier period in the current year, and which has left but five out of eleven banks remaining at Hong Kong, whilst numerous firms, some of them of the very highest standing, have fallen.
62. These events have been very painful to witness, though ultimately they may evolve good from evil, if hereafter they tend to reduce speculation within more reasonable limits, and curb that extravagant waste hitherto so general in the style and maintenance of the establishments kept up, not in one but in many ports, by those who assumed the position of partners in leading houses. Waste and extravagance are questionable at all times as a matter of good taste or good example, and from the
D 2
1841-1886
309
OF HER MAJESTY'S COLONIAL POSSESSIONS.
27
dollar more than another, or for any coin whatever, except by reason of its greater value as containing more silver.
56. This will be clearer if it be remembered that the real medium of exchange in China consists simply of silver, and whether in shapeless lumps or elegant coin is a matter of indifference in the chief marts of trade. This principle is carried so far that the coins received in payment of Chinese Customs dues, and which are taken simply for their intrisic worth as compared with the standard of pure Hakwan silver, are as a rule melted down indiscriminately by the Chinese into the form of shoes and bars. It may be urged that a system which, strictly speaking, should entail a separate weighing and assaying for each transaction, is indefensibly barbarous and inconvenient. Un- doubtedly it is so; but the fact that such has been the custom of the country for centuries, and also that the whole body of Chinese officials is interested in maintaining a practice which gives them innumerable opportunities for cheating, or, as it is called here, squeezing Government debtors and others, is not the less a fact of extreme importance when calculating the chance that people will pay a premium for minting silver into a shape which confers on it no increased purchasing power in China.
57. With the exception of the gratuitous coinage of $376,859 at the commencement from defaced coins, when for some months no seignorage was charged by the Mint, the whole work done by that establishment on which seignorage was paid since 7th of last May to the 30th ultimo, if computed in dollars, has amounted only to 8961,726.
58. As your Grace is aware, there are numerous other very interesting questions con- nected with this subject, quite beyond the scope of this present communication. I must, however, particularize the surprising difficulty of getting rid of subsidiary coins, which one might have imagined would have been cagerly welcomed as a substitute for the little broken pieces of silver still used as change in the neighbouring provinces. Even the copper cents coined for the Colony in England, and on which a net profit of 20 per cent. at least was expected, are now at 35 per cent. discount, independent of heavy charges for freight and manufacture, as they were ordered from England.
59. On the whole I incline to the opinion that, even if efforts now being made succeed in procuring the recognition and acceptance by the Japanese Government of the Hong Kong dollar, the Mexican will for many years be manufactured and laid down here more cheaply than the former can be produced, whilst there is no reasonable ground for supposing that the Hong Kong dollar, unless it contains more silver, that is, unless it costs more to manufacture it than the Mexican, will secure any preference over the latter. At present the Mexican coin, from its general recognition in Japan as well as China, is at a premium of nearly one per cent, over the Hong Kong dollar, which itself maintains here a premium of per cent. over its intrinsic worth.
60. At the same time, so many elements of uncertainty caused by varying exchanges, &c., &c., and the shifting necessities of commerce, must always enter into calculations of this kind, that no one should pretend to form a decided judgment as to almost any result connected with the possible success of the Mint, if that establishment could be permanently maintained. It must obviously be often useful and profitable, to the banks at least; but the propriety of keeping it open for such a reason, even for a month, at the cost of the Colony, is a totally different matter. Even that point, however, is apparently not very easy of solution, for it is a question which has occupied the attention of IIer Majesty's Government since last February, and I am not aware that any decision has yet been arrived at.
61. It would be very difficult to decide whether any effect, and, if so, of what nature, has been produced on the success of the Mint by the great commercial depression which has existed in China for the last three years, and the general shock to credit in the East, which has resulted in part, but in part only, from that suffered in Europe at an earlier period in the current year, and which has left but five out of eleven banks remaining at Hong Kong, whilst numerous firms, some of them of the very highest standing, have
fallen.
62. These events have been very painful to witness, though ultimately they may evolve good from evil, if hereafter they tend to reduce speculation within more reasonable limits, and curb that extravagant waste hitherto so general in the style and maintenance of the establishments kept up, not in one but in many ports, by those who assumed the position of partners in leading houses. Waste and extravagance are questionable at all time as a matter of good taste or good example, and from the
D 2
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