There was not the same unanimity of opinion upon the second proposal, namely, the proclamation of the American Trade dollar as legal tender.
The Comptoir d'Escompte, the Chartered Mercantile Bank of India, London, and China, propose to make it legal tender by weight (717 Canton taels to 1,000 dollars).
The Chartered Bank of India, China and Australia, would make it legal tender, provided that it is not chopped, and that it is paid by count, and not by weight. This bank gave as a reason against payment by weight, that the Trade dollar being heavier than the Mexican dollar, 1,000 dollars paid by weight would be found to number only 990 dollars, and it added "the proposal to weigh them, then, seems too absurd to require argument."
The National Bank of India would choose the American Trade dollar, if any addition to the present currency be thought necessary.
The Hong Kong and Shanghae Bank would make the Trade dollar legal tender. The bank would like to advocate the introduction of it as a clean counted coin, instead of weighed, but, unfortunately, though practically of the same purity as the present currency, it is about one per cent. heavier than the standard, and a dual currency of this nature would inevitably lead to endless complications in business.”
The Chamber of Commerce does not recommend the admission of it as legal tender.
Thus two banks would accept it unhesitatingly by weight.
Two other banks would accept it, if necessary, by weight; but not apparently without hesitation.
One bank would accept it by consent; but thus only conditionally on its being clean, and the Chamber of Commerce does not accept it, at all events, for the present.
But the Chamber of Commerce, after declining the proposals of the Oriental Bank, puts forward a proposal of its own, which is entitled to the most respectful consideration, viz., that the Governor should be requested to communicate with the Home Authorities of the Mint, and endeavour to come to some arrangement for the coinage of a suitable dollar for the Colony on similar terms to those now offered by the Washington Government. The Secretary of State, in forwarding the correspondence to this Board, shows that the Colony would appear to appreciate the necessity of introducing a reform of the currency, and to be anxious to place it on a sounder basis.
He adds that the proposal for the supply of a clean dollar, suitable to the wants of the Colony and the China trade, is deserving of attention.
My Lords may add that it is evident throughout the correspondence that the Colony is keenly alive to the mischief and inconvenience resulting from the general use of chopped coins.
There are thus four distinct points before them ---
1. The admission of the Yen as legal tender.
2. The admission of the American Trade dollar as legal tender.
3. The creation of a new Hong Kong dollar.
4. The possibility of eliminating chopped coin from circulation.
It appeared to my Lords that there were grave objections to the first proposal, and that the Order in Council of 9th January, 1863, and its attendant proclamations, would not permit the second to be adopted. The failure of the Hong Kong Mint made them doubtful whether the third proposal would, on economical grounds, be feasible. On the fourth point they felt it difficult to form an opinion without further information.
But before they considered the subject further they were anxious to obtain the assistance of their skilled advisers, and they referred the correspondence to the Deputy Master of the Imperial Mint for careful examination, and they desire me to forward herewith a copy of Mr. Fremantle's report, to which they would invite Lord Carnarvon's special attention.
His Lordship will observe that the desire of the Colony for the admission of new coins as legal tender arises chiefly from an apprehension of a failure in the present sources of supply. They do not, indeed, find throughout this discussion any proof that there has been any real scarcity of Mexican dollars. It is, nevertheless, widely felt that there is inherent unsoundness in the position of a community dependent for its supply of standard coin upon the mint of a semi-civilised country, with which it is not even in direct communication. The changed condition of the silver market has apparently increased the feeling of insecurity, for Hong Kong obtains its coin chiefly from London, and as the demand of the London market diminishes, the quantity of dollars sent to London would probably diminish also, with the necessary result, that the dollars when wanted would be less easily obtainable.
My Lords appreciate fully the weight of this objection to the present system, and by their desire the Deputy Master of the Mint made it the subject of special investigation. His reply is most important.
He comes to the conclusion, after consulting the best authorities of the City of London, "that if at any time during the last ten years, a period marked by serious political disturbances in Mexico, there was a dearth of dollars at Hong Kong, that dearth is to be accounted for by the fact that the rate of exchange in China had for some time previously ruled so low as not to attract shipments of dollars. As regards the future there is no reason, as far as I can learn, to fear that the experience of past years will be falsified, and it may be expected that the supply of Mexican dollars will continue to be at least as plentiful as heretofore."
Now, it is an object of primary importance to the Colony that its legal-tender coins should be accepted by the Chinese traders upon the guarantee of the issuing mint, and without further examination on their part; but it is essential to this object that the currency of Hong Kong should be as simple and intelligible as possible; and the admission of new coins, one of them at least varying in weight from the well-known standard coin of the Colony, would therefore be unadvisable, as tending to confirm rather than weaken the prejudices of a suspicious race. Of course, in cases of emergency, such a measure might become necessary; but my Lords do not understand that such emergency has arisen, and the evidence of Mr. Fremantle is reassuring as to the future. My Lords would be glad to find that their opinions upon this point are shared by the Secretary of State and by the Colonial Authorities.
Passing next to the special proposals before them, my Lords have no hesitation in stating that the Yen ought not to be admitted as legal tender. Public opinion in the Colony is evidently against such a measure, and the progress of events, since the subject was under consideration in the Colony, has tended to show that the doubts of the mercantile community were not unreasonable, for my Lords understand that the Japanese Government has removed the able director of the mint, in whom well-grounded confidence was placed.
My Lords have remarked on the difference of opinion which exists in the Colony with regard to the American Trade dollar; but there is a further objection to the admission of it into the currency. The law, as it stands, requires that any silver dollar declared legal tender must be of equivalent value with the Mexican dollar, whereas it is well known that the Trade dollar is the heavier of the two to the extent of 1 per cent. or thereabouts. Even did the law not interpose an obstacle, it can hardly be doubted that the concurrent circulation of two dollars varying in value, but varying so slightly, would give rise to difficulties which would be better avoided.
A British dollar, i.e., a dollar coined in England for circulation in Hong Kong, as suggested by the Chamber of Commerce, would be free from the special objections which attach to the Yen and to the American Trade dollar. But before this proposal could be entertained, the cost of such a dollar must be accurately ascertained. Lord Carnarvon will observe that the facts reported by Mr. Fremantle are unfavourable to the scheme. The mint charge of the United States for the coinage of silver is only one-half of one per cent. It is difficult to suppose that this seigniorage can cover the cost of coinage; but, without further information, my Lords can form no opinion as to the ground upon which so small a charge has been adopted. It is evident in any circumstances that a dollar coined in England, or indeed in Calcutta, must cost more than dollars purchased in the open market; and it is also evident that the difference must be borne by the Colonial Government, for, as Mr. Fremantle observes, no person will be willing to pay an extra sum for a "Hong Kong dollar" if he can get an equivalent coin for less. This most important question of cost in great measure escaped the Chamber of Commerce, as my Lords find it hardly touched upon during the debate. One speaker, indeed, did allude to it, anticipating a profit as possible. My Lords regret that more attention was not paid to this aspect.
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There was not the same unanimity of opinion upon the second proposal, namely, the proclamation of the American Trade dollar as legal tender.
The Comptoir d'Escompte, the Chartered Mercantile Bank of India, London, and China, propose to make it legal tender by weight (717 Canton taels to 1,000 dollars).
The Chartered Bank of India, China and Australia, would make it legal tender, provided that it is not chopped, and that it is paid by count, and not by weight. This bank gave as a reason against payment by weight, that the Trade dollar being beavier than the Mexican dollar, 1,000 dollars paid by weight would be found to number only 990 dollars, and it added "the proposal to weigh them, then, seems too absurd to require argument."
The National Bank of India would choose the American Trade dollar, if any addition to the present currency be thought necessary.
F
The Hong Kong and Shanghae Bank would make the Trade dollar legal tender. The bank would like to advocate the introduction of it as a clean counted coin, instead of weighed, but, unfortunately, though practically of the same purity as the present currency, it is about one per cent. heavier than the standard, and a dual currency of this nature would inevitably lead to endless complications in business.”
The Chamber of Commerce does not recommend the admission of it as legal tender.
Thus two banks would accept it unhesitatingly by weight.
Two other banks would accept it, if necessary, by weight; but not
apparently without hesitation.
One bank would accept it by consent; but thus only conditionally on its being clean, and the Chamber of Commerce does not accept it, at all events, for the present.
But the Chamber of Commerce, after declining the proposals of the Oriental Bank, puts forward a proposal of its own, which is entitled to the most respectful consideration, viz., that the Governor should be requested to communicate with the Home Authorities of the Mint, and endeavour to come to some arrangement for the coinage of a suitable dollar for the Colony on similar terms to those now offered by the Washington Government. The Secretary of State, in forwarding the correspondence to this Board, shows that the Colony would appear to appreciate the necessity of introducing a reform of He adds that the currency, and to be anxious to place it on a sounder basis.
the proposal for the supply of a clean dollar, suitable to the wants of the Colony and the China trade, is deserving of attention.
My Lords may add that it is evident throughout the correspondence that the Colony is keenly alive to the mischief and inconvenience resulting from the general use of chopped coins.
There are thus four distinct points before them ---
1. The admission of the Yen as legal tender.
2. The admission of the American Trade dollar as legal tender.
3. The creation of a new Hong Kong dollar.
4. The possibility of eliminating chopped coin from circulation.
It appeared to my Lords that there were grave objections to the first proposal, and that the Order in Council of 9th January, 1863, and its attendant proclamations, would not permit the second to be adopted. The failure of the Hong Kong Mint made them doubtful whether the third proposal would, on economical grounds, be feasible. On the fourth point they felt it difficult to form an opinion without further information.
But before they considered the subject further they were anxious to obtain the assistance of their skilled advisers, and they referred the correspon- dence to the Deputy Master of the Imperial Mint for careful examination, and they desire me to forward herewith a copy of Mr. Fremantle's report, to which they would invite Lord Carnarvon's special attention.
His Lordship will observe that the desire of the Colony for the admission of new coins as legal tender arises chiefly from an apprehension of a failure in the present sources of supply. They do not, indeed, find throughout this discussion any proof that there has been any real scarcity of Mexican dollars. It is, nevertheless, widely felt that there is inherent unsoundness in the position of a community dependent for its supply of standard eoin upon the mint of a semi-civilised country, with which it is not even in direct communi-
3
cation. The changed condition of the silver market has apparently increased the feeling of insecurity, for Hong Kong obtains its coin chiefly from London, and as the demand of the London market diminishes, the quantity of dollars sent to London would probably diminish also, with the necessary result, that the dollars when wanted would be less easily obtainable.
My Lords appreciate fully the weight of this objection to the present system, and by their desire the Deputy Master of the Mint made it the subject of special investigation. His reply is most important. conclusion, after consulting the best authorities of the City of London,
He comes to the "that
* *
*
if at any time during the last ten years, a period marked by serious political disturbances in Mexico, there was a dearth of dollars at Hong Kong, that dearth is to be accounted for by the fact that the rate of exchange in China had for some time previously ruled so low as not to attract shipments of dollars. * As regards the future there is no reason, as far as I can learn, to fear that the experience of past years will be falsified, and it may be expected that the supply of Mexican dollars will continue to be at least as plentiful as here- tofore."
Now, it is an object of primary importance to the Colony that its legal- tender coins should be accepted by the Chinese traders upon the guarantee of the issuing mint, and without further examination on their part; but it is essential to this object that the currency of Hong Kong should be as simple and intelligible as possible; and the admission of new coins, one of them at least varying in weight from the well-known standard coin of the Colony, would therefore be unadvisable, as tending to confirm rather than weaken the prejudices of a suspicious race. Of course, in cases of emergency, such a measure might become necessary; but my Lords do not understand that such emergency has arisen, and the evidence of Mr. Fremantle is reassuring as to the future. My Lords would be glad to find that their opinions upon this point are shared by the Secretary of State and by the Colonial Authorities.
Passing next to the special proposals before them, my Lords have no hesitation in stating that the Yen ought not to be admitted as legal tender. Public opinion in the Colony is evidently against such a measure, and the progress of events, since the subject was under consideration in the Colony, has tended to show that the doubts of the mercantile community were not un- reasonable, for my Lords understand that the Japanese Government has removed the able director of the mint, in whom well grounded confidence was placed.
My Lords have remarked on the difference of opinion which exists in the Colony with regard to the American Trade dollar; but there is a further objection to the admission of it into the currency. requires that any silver dollar declared legal tender must be of equivalent The law, as it stands, value with the Mexican dollar, whereas it is well known that the Trade dollar is the heavier of the two to the extent of 1 per cent. or thereabouts. Even
did the law not interpose an obstacle, it can hardly be doubted that the con- current circulation of two dollars varying in value, but varying so slightly,, would give rise to difficulties which would be better avoided.
A British dollar, ie, a dollar coined in England for circulation in Hong
Ge Kong,
as suggested by the Chainber of Commerce, would be free from the special objections which attach to the Yen and to the American Trade dollar. ✔ But before this proposal could be entertained, the cost of such a dollar must be accurately ascertained. Lord Carnarvon will observe that the facts reported by Mr. Fremantle are unfavourable to the scheme. The mint charge of the United States for the coinage of silver is only one-half of one per cent. difficult to suppose that this seigniorage can cover the cost of coinage; but, It is without further information, my Lords can form no opinion as to the ground
upon which so small a charge has been adopted. It is evident in any circum- stances that a dollar coined in England, or indeed in Calcutta, must cost more than dollars purchased in the open market; and it is also evident that the difference must be borne by the Colonial Government, for, as Mr. Fremantle observes, no person will be willing to pay an extra sum for a "Hong Kong dollar" if he can get an equivalent coin for less. This most important question of cost in great measure escaped the Chamber of Commerce, as my Lords find it hardly touched upon during the debate. One speaker, indeed, did allude to
it, anticipating a profit as possible. My Lords regret that more attention was
97
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