CO129-331 - Public Offices - 1905 — Page 326

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No. 263 OF 1903,

GOVERNMENT OF INDIA.

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FINANCE AND COMMERCE DEPARTMENT.

ACCOUNTS AND FINANCE.

Coinage,

THE RIGHT HON'BLE LORD GEORGE FRANCIS HAMILTON, G.C.S.I., His Majesty's Secretary of State for India.

MY LORD,

Simla, the 20th August 1903.

We have the honour to offer, as requested in Your Lordship's Despatch, No. 118 (Financial), dated 10th July 1903, the following observations on the letter from the Hong Kong and Shanghai Banking Corporation and the Chartered Bank of India, Australia, and China, dated 15th June 1903, in which they deprecate our proposal to increase the seigniorage on the coinage of British dollars from one to two per cent, and to give precedence to the coinage both of Indian rupees and of the new Straits dollars over that of British dollars.

2. The Banks have not adduced any strong arguments in support of their request that the terms of the present contract should be continued, and it there- fore appears to us to be unnecessary to give more than a brief statement of our position. The Government of India agreed in 1894 to coin dollars at an ex- tremely low rate of seigniorage because they then expected that the time of the Mints would not be fully occupied, and there were manifest advantages in em- ploying them on outside work. The circumstances have now entirely changed: the requirements of our own coinage (including the recoinage of 1840 rupees) and the coinage of the new Straits dollars will probably be sufficient to occupy the It will therefore be of little whole time of the Mints for some years to come. advantage to us, but rather an inconvenience, to continue coining dollars for the Banks, and we see no reason to do so at a lower charge than we consider to be fair and reasonable, viz., 2 per cent. We are quite unable to entertain the sugges- tion of the Banks that we should coin dollars at a cheap rate in the interests of the trade of the East, and thus indirectly subsidise that trade.

3. The Banks bave not referred to the fact that we have recently agreed to coin the initial issue of new dollars for the Straits Settlements at a seigniorage of 1 per cent. Possibly they are unaware of the arrangement. Eut if they should base any argument upon it, we consider that it would be sufficient to answer that the fact that we have conceded in special circumstances the most favourable rate possible to the Government of a British Colony is no reason why we should extend the concession to private institutions like the Exchange Banks.

4. Our stipulation that the coinage of rupees must take precedence over the coinage of dollars seems to us hardly to require explanation or defence. It is obviously right that the Indian Mints should give priority to Indian over extrane. ous coinage.

5. The proposal to allow priority to the new Straits coinage was made at the suggestion of the Colonial Office, which was communicated to us in Your Lord- It is a matter with which we are not ship's telegram of the 11th of May last. really concerned, and we are content to leave it in the hands of His Majesty's Government.

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