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with foreigners the use of dollars was introduced, which passed current, at certain rates, by weight, with reference to the tael of sycee silver. But many anomalies, arising from the caprice of the Chinesc, prevailed in regard to the description of these coins in use. They did not pass current according to their ascertained contents of precious metal, but in varying estimation, according to the mints at which they were coined and the devices which they bore. The old Spanish dollars of the coinage of Ferdinand and Carolus IV obtained a prefer- ence over all others; and the conditions under which these passed current varied at different places. At Canton, for example, the practice prevailed among native merchants and shroffs, of authenticating the coins which passed through their hands by stamping them with their device or chop. This process, in time, destroyed the integrity of the coins, and they passed current, by weight, in broken pieces. At Shanghai, on the other hand, whole coins of the reign of Carolus IV, undisfigured by chop marks, alone passed current; and the prefer- ence was not only given to coins of that monarch, but to those which bore a particular Mint mark. At each port the exchanges were calculated in the coin which passed current there, and other coins were received only at a discount varying with the course of exchange.
coins
In this condition of things the Proclamation of 1844 was passed, the object of which was to assimilate the currency of Hong Kong to that of other British Colonics. It declared the dollars of Spain, Mexico, or the South American States, and the gold mohur and silver rupee of the East India Company, to be a legal tender of payment, in like manner as the gold, silver, and
copper of the United Kingdom, at certain fixed rates specified in the denomination of British sterling. Those rates were calculated according to the contents of precious metal in each coin, the value of the silver coins being ascertained according to the principle adopted in the West Indian Proclamation of 1838. It was expressly declared that the said coins should be perfect coins, and of full and proper weight and value.
The Proclamation thus sought to overrule the prejudices of the natives, and to substitute for the capricious currency in use a system founded on the intrinsic value of the coins rated for circulation. In furtherance of this object it not only introduced the coins of the United Kingdom and other coins, to which the natives were unaccustomed, but sought to exclude from circulation the only coins which they willingly received in payments, namely, the chopped Spanish dollars. It was hoped that, by this course, the monetary transactions of the Colony would be facilitated, without occasioning any difficulty or embarrass- ment with the Chinese at Canton and other places in China.
This expectation, however, was not realized. Hong Kong, situated at the mouth of the Canton river, is too closely associated with the trading community of that place, to allow of the effectual establishment in the island of an isolated system of currency. The proceedings of the Government were met by measures of the shopkeepers for counteracting them. Nominal prices were raised in cases in which it was supposed that payment would be made in British money or any Merchants con- coin but that which was preferred by the Chinese inhabitants. tinued to keep their accounts, and to regulate their transactions, by the current dollar; and, except as regards the receipt of duties and Government payments, the proclamation had no sensible effect.
Still it is possible that, if no circumstances had occurred to disturb the usual course of trade with China, if no permanent alteration had taken place in the relative value of gold and silver and the exchange with the East had not been violently affected by other causes, the measure might, in the end, have worked its aim. Some discontent was expressed by soldiers and others who received Government in coins for which they could not obtain the full value in
pay exchange; but none of the inconveniences which are dwelt upon in Sir Charles Trevelyan's Memorandum at first occurred. The rates of exchange between London and China were, for some years, favourable to this country, and it will be seen from the annexed statement of the negotiations by the Commissariat officers for bills on England, from 1844 to the early part of 1850, that the dollar was generally obtained at the par rate fixed by the Proclamation and not unfrequently at lower rates.
In that year the new discoveries of gold began to have a sensible effect on the price of silver. It was the natural consequence of the increased supply of gold, that a new distribution of the precious metais should take place throughout
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the world. Other things remaining the same, countries which used silver alone as the medium of exchange, would obtain their share of the aggregate addition to the currency of the world, by withdrawing a proportionate amount of silver from countries which used a mixed currency. Gold would displace silver from countries using a double standard, and the latter would flow to other coun- tries, where it constituted the sole standard of value. This operation would be brought about through the exchanges, which would be generally unfavourable to countries using a gold standard, until the restoration of the equilibrium in the distribution of the precious metals. There were, however, other causes at work, which seriously affected the exchanges between this country and China. The development of free trade bad, at the same time, given a vast impulse to the commerce of Great Britain with the rest of the world. The demand for Chinese productions, both from this country and the United States, greatly increased, leading to an amount of exports from China far exceeding the quantities of former years, without any corresponding increase in the returns of European or American produce; and this unfavourable tendency of the balance of trade was further increased by the failure of the silk
crop in France, which led to large and speculative purchases of silk in China. The state of transactions, too, with the East Indies, influenced by the employ- ment of British capital in the construction of railways in that country, confirmed the tendency to a course of exchange with the East, generally unfavourable to England. Hence a condition of trade arose, in which the engagements with China could only be settled by the transmission thither of specic; and, as in the cycle of trade, the transactions between China and the United States are adjusted by bills on London, the exchanges became so adverse to this country, that a long continued and unprecedented demand for silver for exportation to the East
arose.
It is necessary to advert to these circumstances, because they account for the fact that the disturbance of the trade in the precious metals far exceeded anything that can be attributed immediately to the gold discoveries. Not only was Europe ransacked for all the silver that could be drawn from it, and this exceeded the quantity which could have been required for the mere readjustment of the distribution of the precious metals, but increasing supplies of silver from America were shipped off as soon as they were obtained. We should, therefore, greatly err if we entered upon the consideration of the present state of the currency of Hong Kong, under the supposition that we have only to deal with a simple question arising from an alteration in the relative supply of gold and silver in the world.
Yet, as the course of the exchanges is the regulator by which the distribu- tion of the precious metals is determined, and a continued adverse exchange with the East has, for the time being, an effect on the relative value of gold and silver. similar to that which would arise from an increased supply of gold, we inay, for the purpose of considering the proposed settlement of the currency of Hong Kong, drop the distinction, and refer, for the present, only to the fact of a very great increase in the value of silver relatively to gold, since the passing of the Proclamation of 1844. The effect of the change has been to depreciate
the sovereign greatly as compared with the dollar at Hong Kong. A state of things has arisen like that contemplated by Mr. Pennington in reference to the West Indian Proclamation of 1838. Why is it that the same results have not ensued? Why is it that the cheaper metal has (not) practically become the principal measure of value" at Hong Kong, and that "all money contracts are (not) discharged in that metal ?" The answer is, that the Proclamation of 1844 has not affected money contracts. The trading community has not recognized it, or in the slightest degree governed their mutual transactions by its condi- tions. Except as regards the payments and receipts of Government, it is a mere nullity. It assumes to regulate the currency of the place on the supposi tion that gold is the standard of value; but silver remains the practical standard of value in spite of it, and a sovereign as a medium of exchange has no more value than an equivalent amount of dollars would have in London. Should wc, then, mend the matter by issuing a new Proclamation to alter the legal rating of the dollar, according to its present value, as compared with the sove- reign at Hong Kong? The losses incurred by the Home Government in the transactions of the Treasury Chest might be mitigated by such a proceeding; but in all other respects, that is, as regards the money transactions of the
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