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non-recognition of foreign coins in China under the scheme of
currency reform, it appears to me that some action is advisable lest this Colony should suddenly find itself swamped with coins, of its own issue, returned from China under the operation of such a scheme as anticipated by the Lords Commissioners of the Treasury in their letter of 21st. December, 1910.
3.
It has occurred to me that the objection
(if it can be considered to be one) to a Government purchasing its own coinage at less than its full value, can be overcome by entrusting the operation to a Bank of high standing such as the Hongkong and Shanghai Banking Corporation. I venture, however, to suggest to you another method of dealing with this problem.
When the Chinese Government puts its new
4.
scheme into operation it will commence minting of the new currency in large quantities. In order to have an adequate quantity of the new coins in hand, China will no doubt for a short time be a buyer of bar silver, the mint supply of coins being kept up later by the melting down of existing currency.
The new Chinese subsidiary coinage is to be 800 fine, and I suggest that this Government should buy (either directly or as suggested in paragraph 3) a large quantity of its own superfluous subsidiary coinage, melt it into bar silver (being 800 fine) and offer it for sale to China. The Chinese mints could immediately re-coin it for their new issue. This would save the cost of shipping, insurance, Crow Agents, and brokerage expenses &c., and reduce the loss to something very small indeed if the coins are bought in as I have suggested, at
the discount of the day.
5.
So soon as China prohibited the circulation of foreign coins in China, this Colony would enact a similar prohibition of Chinese coins here. This would displace the enormous quantities of Chinese coins now in circulation, and afford room for a corresponding quantity of the Hongkong coins which would pour into the Colony. With this large absorption, and the scheme of demonetization by melting down on the spot
which
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