CO129-376 - Governor Sir Lugard - 1911 [3-4] — Page 430

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140.4 116/10.

Mr. Cox's letter of 8th. April, 1910,

paragraph 3. The whole basis of the scheme proposed is that it;

is alternative to prohibition of the circulation of Chinese

coins in Hongkong by any except a natural process of reducing

them to a discount which would automatically operate to

exclude them. The assumption, however, that the trade of

Hongkong with China would be dislocated by the exclusion of

Chinese coins is one with which (though I personally consider

that it deserves a limited consideration) an influential

and experienced group of merchants entirely dissent,

urging

that trade with China is conducted by means of bills of ex-

-change and notes, and not by subsidiary coinage. It can

hardly therefore be postulated as an axiom.

3.

Ibidem paragraph 4. I venture to

submit that the application of "Gresham's law" to the

circumstances of this Colony overlooks the vital fact that

the higher value coins are legal tender while the others

are not and that as soon as the difference in value between

the two sets of currency became applicable, the Chinese coins

would be refused only too gladly by the large firms whose

receipts are chiefly in Subsidiary Coins, e.g. the Tramway

and Star Ferry Companies.

A.