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efandum of objections to Hongkong adopting a gold standard while China
remains on a silver basis.
Speaking generally there is no doubt that the Colony would
benefit considerably if it had a gold currency, as fluctuations in
exchange would be small, thus assisting trade, and, there being no fear
of loss through a fall in exchange, sterling capital might be attracted
but here for investment in industrial enterprises &c., although our
present low exchange does not appear to deter same, as is instanced by
the large shipyard works now in progress at Quarry Bay, and the Building
operations going on all over the Colony. The adoption, however, of a
gold standard for Hongkong, while China remains on a silver basis, appears
to me well nigh impossible, owing to its cost, and the various other
reasons detailed below.
1st.
If gold be adopted, it would be necessary to have a large
reserve of the metal. This means the Colony would have to raise
a very heavy loan, in order to be able to finance the immense
trade that centres here, and would probably have to bear extra
taxation to provide for the expense of the Loan.
2nd.
Supposing the loan negotiated, and the currency changed.
Presumably a large note issue would be put in circulation against
the gold reserve. This would involve the risk, in the case of a
panic, of a run being made on the Bank holding the Colony's stock
of gold, ending in the possibility of its becoming exhausted, or
so diminished, that a further loan would be required, with its
attendant expenses, to enable the Colony to maintain its credit.
3rd.
With gold as a standard, and a large subsidiary silver
coinage to supplement it at a fixed ratio, the Colony would, when
silver was cheap enough to make it profitable, be flooded with
counterfeit coins, so well made that their detection would well
nigh be impossible.
4th.
If Hongkong went gold and China did not, the great danger of the Colony's large Banking business being transferred to Canton would have to be faced. Also the checking, or transfer to China
proper, of local enterprises, which with a silver currency are
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