CO129-378 - Governor Sir Lugard - 1911 [6-7] — Page 178

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you intended me to give effect to these views end to put an

end to withdrawal for purposes of demonetization was made

amply clear in your Despatch of lat. March, 1911, in which

while approving of the expenditure of 8114,000 already spent

on redeuption you referred me to your Despatch of January

13th. "as regards the policy to be followed in future in con-

-nection with the subsidiary coinage of Hongkong". In these

circumstances the Local Auditor appears to be in error in

assuming that my action in refusing to demonetize the Sub-

-sidiary Coins now in possess of this Government is in con-

-travention of the policy laid down by you.

4.

The second point at issue is whether it

was necessary for me to obtain your specific sanction for the

instructions I had issued to the Treasurer in order to give

effect to the policy you had laid down. These instructions were

to the effect that he should dispose of this coin a lakh at a

time so as not to flood the market and increase the discount

suddenly to the detriment both of Government and of trade. In

this connection I may explain that it has long been the custom

for the Treasury to write down the face value of Subsidiary

Coin received by Government by 7 per centum in view of the

fact that its actual value is depreciated to that extent. To

this