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CORRESPONDENCE.
THOUGHTS ON THE CURRENCY QUESTION.
TO THE EDITOR OF THE "DAILY PRESS." Hongkong, 26th March. SIRAs the resolution to submit our cur rency question to the Straits Commission was carried the other day, it will doubtless be duly forwarded to the proper quarter. It may not be altogether a waste of time now that the ocntention is over, to examine a few of the points at issue and to see why that resolution did not carry the support if so many of the most powerful trading interests in the Colony. We all agree that low exchange is disagree- able to the foreigner, but there seems to be in. the minds of some a feeling that the hauking interests are responsible for the low exchange and are revelling in enormous profits brought about thereby. Is not the chief reason the euormons indemnity extracted from China, who from being a possible consumer of silver is turned into a constant seller of it, in order to meet her gold liabilities? Are we not being ground between the upper and nother millstones of European rapacity and Chinese foolishness ? Would it not be better to bring this forward and make a general attempt to place China herself on a gold basis, which a conference of all the Chambers of Commerce on the China coast, in Shanghai, might do something towards? It the governments of the world are brought to realise that their efforts to improve the status of their subjects have resulted to their detriment, they might by international agree- ment succeed in placing China un a gold basis. There are schemes already afloat to that effect, For this Colony to refuse to attempt any general policy such as this and to prefer isolated action before ever attempting it, seems selfish and shortsighted. The principle of a locally restricted and protected currency is opposed t☛ all the free and liberal traditious upon which the Colony has risea and flourished; and will it pay? The whole question boiled down produces two queries. Is it possible? 2. If it is possible, is it adrisable? Let us take them in order. If we go on a gold basis We must get the gold from somewhere. The idea put forward by Mr. Osborne was to have a supply of gold in London and work away with shillings aud pence and incontrovert- able paper notes. But how to get the gold ? and how much would be required? Some say £2,000,000. How they arrive at that amount I can't say the present notes issued amount to nearly $20,000,000 and would be more if there Were more issuing banks. But let us take £2,000,000 for the sake of argument. We are not going to get that as a gift from the British Government. We must raise it our- selves.
What security has the Colony to offer for such a loan? What undiscovered sources of evenue bave we got to enable us to pay to interest, much less return the principal? At
3 per cent. the annual interest would be £70,000; allow £38,000 for sinking Innd, that means £100,000 a year or au increase of about $1,300,000 per annum to our taxation. And would we be able to borrow all this gold? The bounty of nature has given this Colony anchorage and nothing more.
a fair India and the Straits can largely pay for the cost of changing į their standards by making large profits on the silver tokens which they circulate.
But in those countries there are millions of people, and being self-contained they can protect themselvos better than we can against the introduction of false coins. In any case the amount of silver tokens to Le used here by the 200,000 to 300,000 residents would not produce enough profit to materially reduce the cost of the loans required to put us on a gold basis, and the full weight of the loans we must therefore be prepared to face To prevent the introduction of false coins which might be in every respect as good as the legal coins, and still show a big rofit to the viners, would be an impossibility bere with our constant communication by junk, sampan, and steamer to all the surrounding country. Even in India the false coinage is generally thought to be considerable ad i Java it is known to be so. The cost of an efficient protective service would have to be added at the Colony's expense. And the idea of incontrovertible paper must be dis.. missed. People will not have it unless at a discount, and in time of trouble it would net be negotiable. The gold must be held, to be with- drawn as required, and is this Colony's credit strong enough to go on borrowing to replace the gold as it is withdrawn? If the gold were in London the notes would be a favourite form of remittance home and would be cashed there; 30 the gold might as well be here. But would i it not at times tend to disappear into China? And if the supply rau short, we would have! to go on borrowing to replace it. The ananal cost to the Colony would be great. Would not the taxation required tend to increase the cost of living? A gold standard in Japan has done that. Why should we fare differently?
I have taken £2,000,000 as a basis for the gold required as it is the smallest estimate put forward. It allows for no expansion in trade, which if it takes place (as we all hope and think it will) would necessitate further loans and increased cost to the Colony. There may be some other ways of providing the gold, but those advocating this great experiment have not put them forward.
Is it advisable? As this Colony produces nothing and the source of profit for all trade is the Chinaman, we must base our calculatious in the first place on the metal he has to pay with-- which is silver. All our society with its pro- fessional and literary elements is a superstructure based upon the trace. If that diminishes they mast suffer with it. Let us suppose for a moment that we are put on a gold basis and that money from home is brought here i
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