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requirements of the rupee currency have in the past been placed before the demand for British dollars, and in this respect it is only proposed under the new Agreement to provide expressly for the continuance of the past practice. As regards the priority of the new Straits Settle- ments dollars, it is not expected that the demands for this coinage will be very large except during the initial period, and, as pointed out by the Managers of the Banks in the letter which accompanies your despatch, the proposed demonetization of the British dollar in the Straits is likely to prevent any large demand for the coinage of British dollars for some time tocome. Moreover, there appears to have been a considerable over-demand for British dollars at the Indian mint (see last paragraph of the letter from the Government of India referred to above), and I may also point out that the Straits Currency Committee in their Report, paragraph 58, anticipate a considerable drain of British and Mexican dollars from the Straits Settlements and the Federated Malay States. I see therefore little
reason to anticipate any inconvenience from a deficiency of dollars at Hong Kong in the near future, and, as far as I am aware, there is no special reason to expect any change in Mexico affecting the supply of Mexican dollars at an early date, while the demonetization of that dollar in the Philippines will no doubt set free a large additional supply.
3. After the initial supply of the new Straits Settlements dollar has been completed, the demand will probably not be large-only for what will be sufficient to meet the expansion of business in the area in which it will circulate,--and of course these future demands will cause a pro tanto decrease in the demand for British or Mexican dollars. It
appears, therefore, that the supply of dollars in Hong Kong will not be affected in the future by the coinage of the Straits Settlements dollar.
4. The priority of the Straits Settlements dollar during the initial period is practically a necessity, having regard to the measures required for a change of currency, and in the future it does not seem likely that the demands will be so large as as to cause inconvenience to the Banks, whilst it seems reasonable that orders executed for Government account should have priority over the uncertain requirements of the Banks.
5. I am forwarding a copy of your despatch and its enclosure with a copy of this reply to the India Office, and am requesting that a reference may be made to the Government of India with a view to obtaining a report on the probable capacity of the Mints to cope with demands for British dollars in the future, having regard to the requirements for rupees and Straits Settlements dollars. I will inform you of the result of this reference. I am disposed to think that the question of re- establishing a mint at Hong Kong should not be re-considered until it has been found by experience that the Indian Mints cannot turn out a sufficient supply of British dollars.
5. As regards the rate of seigniorage which it is proposed to charge, it appears to me that a charge of two per cent. is fair and reasonable (see paragraph 3, of the letter from the Government of India quoted above), and I do not feel able to make any representation to the India Office on this head.
Governor Sir H. A. Blake, G.C.M.G.,
&c.,
&c.
&c..
I am, &c.,
J. CHAMBERLAIN.
F. 6475.
Enclosure No. 2.
India Office to Colonial Office.
India Office, 5th September 1903.
Sir,
I am directed to acknowledge the receipt of your letter of the 28th ultimo, No. 30,709, on the subject of the proposed new agree- ment for the coinage of British dollars in India, and in reply to forward, for the information of Mr. Secretary Chamberlain, a copy of a telegram* which has been sent to the Viceroy asking for information
* Dated 2nd September 1903.
as to the capacity of the Indian Mints to cope with demands for British dollars in the future.
I am, &c.,
The Under Secretary of State, Colonial Office.
F. 6874.
F. W. NEWMARCH, Assistant Financial Secretary.
Enclosure No. 3.
India Office to Colonial Office.
India Office, Sir,
24th September 1903. With reference to the letter from this Office, No. F. 6175, dated 5th instant, and previous correspondence, I am directed to forward, for the information of Mr. Secretary Chamberlain, a copy of a telegram† from the Viceroy, regarding the † Dated 12th September 1903.
capacity of the Indian Mints to cope with demands for British dollars in the future, having regard to the requirements of the rupee coinage, and also to the requirements of the new Straits dollar.
It will be seen that the Government of India estimate that they will probably be able in the future to meet the demand for the coinage of British dollars, notwithstanding the priority to be given to Straits dollars and Indian rupees, but they decline to give a definite undertaking to this effect.
I am to add that the substance of the Viceroy's telegram is being communicated to the Banks by this Office.
1 have, &c.,
The Under Secretary of State, Colonial Office.
F. 6874.
Sir,
HORACE WALPOLE.
Enclosure No. 4.
India Office to Banks.
India Office, 24th September 1903. With reference to the letter addressed to you from this Office on the 2nd July last, No. F. 4129, and previous correspondence, I am directed to inform you that the Secretary of State for India in Council has now received from the Government of India a report on the subject of the representations contained in your letter of the 15th June last, but that after considering those representations, and the remarks of the Government of India upon them, Lord George Hamilton is unable
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