CO129-334 - Governor Nathan - 1906 [5-7] — Page 591

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Enclosure 4.

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Government House,

Hongkong,26th. June, 1906.

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•VONSTIO

Sir,

In connection with the question of the provision

by China of a uniform national coinage in accordance with Article II of the British Commercial freaty signed at Shanghai on the 5th. Septenk per,1902, which question has I am aware been at various times under

the consideration of His Majesty's Minister at Peking. I have the honour to bring to your notice that the trade of this colony as well as that of Canton is becoming seriously affected by the over-issue of

subsidiary coins that has been going on for some time from the provin-

cial mint at the latter place.

2.

I am informed that there were issued in the year

1905 no less than 71,010,000 20-cent pieces and that the issue is proceeding this year, dollars being melted down to furnish the silver

required. The result of this is that the small coins are tending to become not a subsidiary coinage at all but the main cainage of the

Kwang Provinces, a fact evidenced by the $1.00 notes of the Provincial Bank bearing a special stamp to the affect that they are redeemable in

20 cent pieces and further by the acceptance of these pieces in pay-

ment of shames in the recently issued loan for the Canton-Hankow

Railway. If the unrestricted issue of subsidiary coins continues the

dollar will tend to disappear in Canton and South China to be replaced

by a debased currency of which the value in relation to commodities

will vary from time to time according to the amount of silver put into

it.

3.

Prominence has recently been given to the questian

here by the over-production and consequent depreciation of Chinese

subsidiary coins having naturally caused depreciation in the dollar

value