18-
No. 22.
Copy of despatch from Governor of Hongkong to Secretary of State for Colonies.
No. 19. HONGKONG.
GOVERNMENT HOUSE, HONGKONG, 14th January, 1910.
MY LORD,--With reference to the Order in Council regulating the Currency of this have the Colony enclosed in Lord Kipon's Despatch No. 43 of the 19th February, 1895, honour to enquire what should be the attitude of this Government with regard to subsidiary coins tendered which are worn below the limits specified in column 6 of the Third Schedule to the Order.
2. The Colonial Treasurer is of opinion that such coins should be accepted and that the Government should bear the loss on scale as bullion or reconversion into new coinage. Though the coins of course cease to be legal tender and could be refused acceptance at the Treasury I concur in the view that they should be received provided that the decrease in weight is not due to mutilation.
The Right Honourable,
THE EARL OF CREWE,
40.,
&c.
I have, &c.,
F. D. LUGARD,
Governor, &c.
19 ...
1907 it was re-shipped to England and demonetise 1. In the same year it was decided that all Hongkong Subsidiary Coins received by the Government in payment of taxes should be withdrawn from circulation and demonetised. The quantities thus withdrawn (of both Silver and Copper) including the unissued shipment of 1906, with the loss incurred are as follows:--
Face value.
Loss by de- monetization,
1906-07. 1907-08. 1908-09. 1909-10..
$ 3,468,000 (
Loss of interest,(3) $
Total loss.
310,793 120,149
430,942
819,000
126,496
15.187
141,683
360,991
60,290
6,581
66,871
469,368
70,359
8,794
79.153
Total,....................... $5,098,359
$567,938 $150.711
$718,649
(1.) These were new unissued coins, the actual cost of which was $3,198,707. Only the actual difference between cost of purchase and amount realised by resale has been calculated, and not the loss on the face value.
(2.) Precise loss not yet known. Calculated at 15% on face value.
(3.) Interest on Stocks lying idle has been assumed at 3% only and no interest on overdrafts is included.
The coins actually shipped to England were as follows:---
No. 15.
No. 23.
Copy of despatch from Governor of Hongkong to Secretary of State for Colonies.
HONGKONG. Confidential.
GOVERNMENT HOUSE, HONGKONG, 20th January, 1910.
Mr Lonn, I have the honour to acknowledge receipt of your Confidential Despatch of October 22nd, 1909, enclosing correspondence with the Right Honourable Sir C. C. Smith, and directing me to submit a report on the present position in regard to Subsidiary Coinage in this Colony.
2. It may be of use to recall to Your Lordship's memory the origin and nature of the problem which has arisen in Hongkong in reference to the Subsidiary Silver Coinage, before reviewing the present position, and submitting as I propose to do, certain recom- mendations in the matter. For 33 years prior to 1906 there had been a large import into Hongkong of Subsidiary Coins (I deal in this Despatch with Silver only) from which a con- siderable profit accrued aggregating in the 10 years prior to 1906 to the sum of $1,324,970. This profit was absorbed in the expenditure of the Colony instead of being placed us I submit it should have been to the credit of a Reserve Fund. As fast as the coins were imported they were absorbed into the mainland of China where they spread throughout the whole country. This export to China was in no way whatever prompted or encouraged by this Government, which was compelled to replace the coins by fresh importations. The last importation of coin to Hongkong took place in 1906, but in that year the Chinese Au- thorities had already become alive to the profit derivable from the minting of small coins, and the Canton Mint had begun to pour out an enormous quantity of denominations identical with ours, and of the same appearance and approximate weight and fineness. These coins in their turn began to invade this Colony, and as an excessive quantity were issued they soon fell to a discount. The Hongkong Coins being also in consequence redundant also fell to a discount, but have always maintained a slightly higher value than the Chinese Coins. The shipment of 1906 was therefore never put into circulation and in
Denomination.
Number.
Face value.
$
50 cents...................
64,000
32,000.00
20 cents...
1,599,043
319,808.60
10 cents.......
44,114,628
4,411,462.80
5 cents......
3,888,817
194,440.85
Silver coins
49,666.488
4,957,712.25
Copper.
14,064,679
140,6-16.79
Total Number,........... 63,731,167
$5,098,359.04
From this it will be seen that during the last 4 years a total of nearly 50 million silver coins have been demonetised, their face value being close on $5.600,000 and the loss incurred being $718,649. This has of course been a very heavy strain upon the finances of the Colony which not only lost a source of Revenue which it had hitherto however illegitimately enjoyed but has incurred during a period of great financial depression, an average annual loss of $179,662.
3. I transmit herewith a volume of printed papers on this subject up to October, 1908. Your Lordship will have seen from the later documents included in this volume, and from my Despatches on this subject, that soon after my arrival in the Colony I appointed a Committee of the most representative Merchants and Bankers under the presidency of the Colonial Treasurer to enquire into this question.
4. A majority favoured the prohibition of the circulation of Chinese coins in Hong- kong, but among the members who constituted this majority there were several who expressed only conditional adherence, or who modified their concurrence by special limita- tions.
The minority consisted of Mr. J. R. M. Smith, Manager of the Hongkong and Shanghai Banking Corporation, whose anthority on such questions from a Banking point of view is admittedly unrivalled, Mr. D. R. Law, head of Messrs. Butterfield and Swire, probably the largest Merchants and Shipping Firm in the Far East, and Mr. A. G. Wood a very old resident whose views commanded great respect. Their view was endorsed by the Chamber of Commerce and I understand by the Local China Association also. Their opinion was very clear and definite, and they were absolutely opposed to any form of prohibition.
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