[This Document is the Property of His Britannic Majesty's Government.]
AFFAIRS OF CHINA.
CONFIDENTIAL
[1821]
No. 1.
[January 16.]
347 CO 5712
SECTION 4.
#21 TFB !!
Sir,
Colonial Office to Foreign Office.-(Received January 16.)
Downing Street, January 14, 1911. WITH reference to the letter from this department of the 12th December and previous correspondence, I am directed by Mr. Secretary Harcourt to transmit to you, to be laid before Secretary Sir E. Grey, copies of a letter from the Treasury and of a despatch to Hong Kong on the questions arising out of the present condition of the Hong Kong subsidiary coinage.
2. I am to invite attention to the desire expressed by the Lords Commissioners of the Treasury that they may be furnished from time to time with reports as to the progress of events arising out of the new currency scheme for China.
I am, &c.
G. V. FIDDES.
Enclosure 1 in No. 1.
Sir,
Treasury to Colonial Office.
Treasury Chambers, December 21, 1910. THE Lords Commissioners of His Majesty's Treasury have given their careful consideration to the questions arising out of the condition of the subsidiary coinage of Hong Kong, which were brought to their notice by Mr. Cox's letter of the 8th April and to the further representations on this subject made in Mr. Fiddes's letter of the 13th September last, together with the various documents which accompanied these letters, and they now direct me to request you to submit to Mr. Secretary Harcourt the following reply:---
My Lords recognise, with the Secretary of State, that the situation, as described in the despatches from the officer administering the Government of the colony written earlier in the year, has been considerably changed by the promulgation by the Chinese Government of the scheme of currency reform for the whole Empire set forth in the decree of the 24th May last and the explanatory mentorandum.
Before the promulgation of that decree the difficulty facing the Government of Hong Kong was caused by the issue since the beginning of the year 1906 from the provincial mint of Canton of vast quantities of subsidiary coin, which fell to a heavy discount, and caused the Hong Kong coins to fall to a discount almost equally marked, both on the mainland and in the colony.
If diplomatic representations could have succeeded in causing a check to be placed on the operations of this mint, it is conceivable that, in course of time, the subsidiary coins of both Governments might, under prudent control, have recovered to par.
Now, however, the Chinese Government has expressed its intention of creating a uniform currency for the whole Empire, based on the standard dollar, and of demonetising all the coins, both Chinese and foreign, at present current.
Whether this policy proves successful or not, it appears to my Lords to be in the highest degree improbable that the future currency arrangements of China will be such as to permit of the continued circulation of the enormous quantities of Hong Kong coinage at present in the country at rates in excess of its bullion value.
If this anticipation is realised, such coins will necessarily flow back into the colony until their value there falls to, or below, bullion value, and any measures calculated to retard such fall would, so far from producing any permanent remedial effects, merely involve the colony in fruitless expenditure upon the redemption of coins imported for that purpose, which, if ordinary economic forces are left to their operation, will disappear from circulation by being melted down as soon as their exchange value tends to fall below their value as bullion.
My Lords are of opinion, therefore, that, for the present, at any rate, the colony
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