House
Comin
8
according to the prevailing price of silver relatively to gold; but this was not all, for, as in the West Indies, a silver dollar was deemed to be equal to th of a doubloon, it was concluded that 48. 4d. was also equal to th of a doubloon. Hence it followed that not only silver dollars, but also British gold and silver coins (both being undervalued with reference to the doubloon) were practically excluded from the currency of the Islands.
It was the object of the Order in Council and Proclamation of 1838 to reduce this confusion to order by ascertaining and fixing the relative value of foreign coins to sterling money. The gold coins were rated for circulation according to their contents of pure gold as compared with the pure gold in the British sovereign: the silver coins were rated on the same principle; but as the simple comparison of weight and fineness would not apply in the case of money consisting of different metals, the uncertain element was introduced of rating the silver coins for circulation according to an average of the relative value of gold and silver in the European market. Though fluctuations in the price of one, as compared with the other, were not unfrequent, according to the varying demands arising from the course of exchange between different countries, it was found that for a long series of years the price of silver, of British standard quality, in London, had never greatly deviated from 5s. the ounce, and on this basis the Spanish and Mexican dollar was rated for circulation at 50d.
It is not unworthy of remark that this valuation exhibited a fortunate coincidence of principle and convenience. It afforded a simple rule for the conversion of the dollar into the denomination of British money; and it equally facilitated the conversion of British money into the decimal system of account founded on the dollar, as the halfpenny represented the Toth part of that coin.
The measure was followed by Acts of the Legislatures of the several West Indian Colonies for the purpose of adjusting contracts in the local currencies to the new valuation; and, finally, by the general adoption of the system of account of the United Kingdom corresponding in its terms with the coins of the realm. These proceedings were attended with perfect success. The concurrent use of British with foreign coins at the rates assigned to them was established in the West Indies; but it happened that, although previously to 1838 the currency had been based on a gold standard, the Proclamation of that
year lcd
in the first instance to the general use of silver dollars, and the circulation was principally maintained by the importation of dollars from the Mexican Mint, until the discoveries of gold in California and Australia led to a new direction of the trade in silver.
Mr. Pennington, whose agency was employed in the arrangements of 1838, was, however, too sagacious to suppose that any measure for the adaptation of coins of different metals for concurrent circulation could be regarded in the light of a permanent settlement. A true standard of value can only be founded on a single metal, What is termed a double standard can, at best, be only an alternative standard, hanging on an uncertain balance. The Proclama- tion of 1838 assumed gold, the standard of Great Britain, as the basis to which foreign silver coins should be adjusted according to the then existing relative value of the two metals; but it was observed in Mr. Pennington's book on Colonial currency that, "if the market value of gold and silver should perma- nently vary from the proportion fixed in the Order Council and Proclamation
of 1838, the cheaper metal will practically become the principal measure of value in the Colonies, and all money contracts will be discharged in that cheaper metal."
This result ensued so soon as the discoveries of gold in California had a sensible effect on silver. It then became no longer a profitable operation for the banks to obtain supplies of dollars from the Mexican Mint, and gold coins, or British silver, the representative of a gold currency, took their place. The transition occasioned, probably, soine inconvenience to the banks; but it was effected without disturbing contracts, and without detriment, therefore, to the community at large. British silver, which passes as an unlimited tender in the West Indies, fulfilled an intermediate function throughout, for it continued to circulate as tokens for the fractional parts of the pound sterling, whether that pound was considered to consist of 1,776 grains of fine silver under the Proclamation of 1838, or of 113.001 grains of fine gold contained in the sovereign.
T
9
The currency of the other British Colonics in North America has been regu- lated on the same principle, but, owing to local circumstances, with some variations of detail. It may be observed that, previously to 1838, the proportions assigned by the Mint laws of the United States to the gold and silver coins of that country had rendered the former the cheaper medium of payment. In Canada, foreign silver coins were rated for circulation according to a more strict analysis of the relative value of the two metals, and in consequence there was a tendency to a flow of the silver dollars of the United States from that country, in which they were undervalued, into Canada, where they circulated at their intrinsic value. Some local inconvenience was experienced on the borders of the two countries from this difference in their currency regulations; but, if the attempt had been made to reconcile the discrepancy, by assimilating the law of Canada to the Mint law of the United States, the consequence would have been that gold would have become, by a forced operation, the principal medium on which contracts would have been based in Canada. This change has been since effected, in the natural course of events, by the rise in the price of silver; and the result of the whole series of proceedings is, that gold has become the measure of value throughout North America, the various currencies of the British Colonies and the United States being adjusted to that standard. Many persons who confound the denomination of money with its representative in coins, the sign with the substance, continue to regard the dollar as the general coin of the world; but the dollar of Spain and Mexico, which claimed this attribute, has been banished to the East.
may once have
Sir Charles Trevelyan observes, that "the general object of the operations of 1838 was to establish an uniform standard throughout the British Empire, founded on the sovereign." Whatever may have been the object of those operations, however, it is obvious that, although they have led to the final establishment of a gold standard in the American Colonies, that result has been the effect rather of accident than design. They have not led practi- cally to the adoption of the sovereign as the basis of account in all those Colonies, since Canada, the most considerable of them, has assimilated its system of account to that of the United States, and the adjoining Colonies have adhered to their nominal currencies or money of account, corresponding with no actual coin, and depending as much on the eagle as on the sovereign. The operations referred to have hardly touched the Eastern Possessions of the Crown. Australia and the Cape of Good Hope have adhered to the monetary system of the mother country, and, as foreign coins did not come into use in those Colonies, no regulations for legalising their circulation were required. The currencies of Ceylon and Mauritius are still in an ill-defined and transitory condition. The East Indies, the most important possession of all, has a system of its own. proceedings referred to have the inerit of being based on an intelligible system, adapting sound general principles to local exigencies, but cannot claim the attri- bute of an universal system applicable to all cases.
The
I now turn to the case of Hong Kong. Unlike other British colonics which were originally settlements of this country, or of foreign countries from which they were acquired, the Colony of Hong Kong was established on the confines of a great Empire, amidst a population trained in its own laws and usages, and peculiarly tenacious of its traditions and prejudices.
The general system of the currency of China, and the various practices which prevailed regarding the circulation of coins, at the time of the acquisition of the Colony of Hong Kong, are clearly and succinctly described in Mr. Pen- nington's book on the currency of the British colonics. Sycee silver, which is current by weight, constitutes the standard of value to which all subsidiary coins refer, and the retail transactions of the Chinese are carried on by means At the ports where the natives engage in trade of a copper coin called cash.
From recent information it appears that on one or two occasions gold rose to a premium at Shanghai, above the usual average. It was conjectured that the Chinese functionaries were then buying up gold for transmission as tribute to Pekin, a preference being given to that metal, on account It would seem, then, of its being more easily conveyed than silver through the disturbed districts. that gold is received in Imperial payments as well as silver, but the conditions on which it is received, in regard to the relative quantity of the two metals, are not known; but it is probable that silver is in general the more favourable medium of payment, and that on that account it is the common standard of value. The fact is of no other importance in the present discussion than that it tends to account for some of the excessive fluctuations in the relative price of gold and silver in that part of the world,
D which cannot be referred to any other hypothesis.
107
No comments yet.
Private notes are available after approval.