103
No. 13.
20.
In the hope of obtaining a clearer and more unanimous expression of opinion on certain points, I addressed a number of questions to the Committee. These with their replies are printed in the volume referred to. They did not advance matters appreciably.
5. Meanwhile representations had been made to His Majesty's Minister at Peking who had continued to urge upon the Wai Wu l'u the necessity of controlling the issues of the Provincial Mints and the Wai Wu Pu in turn had sent instructions to the Viceroy at Canton, He had but these instructions lacked precision and left discretionary powers in his hands. in 1907 consented to put a stop to the issue of Subsidiary Coins from the Canton Mint for a period of 3 months, and so far as I am aware he fulfilled his promise, but at the end of that The Consul-General at my request made time a larger quantity than ever was issued. repeated representations to His Excellency, but was always met with the reply that the coinage was needed for the two Kwang Provinces under his Administration, that there was no indication that it was in excess of requirements, and that no complaints of any kind had reached him. He regretted that it should prove an inconvenience to Hongkong, but could not subordinate the needs of his own Province to suit our convenience.
6. There appeared at this time to be some prospect of an amelioration of the evils of which we complained. His Excellency Tong Shao-vi, who was reputed to be one of the ablest of Chinese Statesmen, was understood to have proceeded to Europe and America primarily in order to study this question, and that it was believed on his return he would submit à scheme of financial reform. China at the same time was pressing for the sauction. of the Powers to an increase in her Import Duties and Great Britain and the United States of America had made their assent conditional on a currency reform. It appeared to me that the ever increasing indebtedness of China to gold using countries, together with the decrease in her revenue due to the suppression of Opium, must force her to adopt financial reforms which should satisfy the Powers whose assent was necessary to the increase in the Import Duties. The pressure of this necessity appeared to be so great and imminent as to be sufficient to overcome even the inertia and procrastination of China. Finally the death of the Emperor and Dowager Empress, the ascendancy of His Excellency Yuan Shi-kai, the patron and friend of Tong Shao-vi,--and the reputation for zeal in reform which the young Regent bore, appeared to add to the possibilities of effective action.
7. In these circumstances I was myself averse to any drastic step pending the return of Tong Shao-yi, and the settlement of the proposal made by the United States of America that a Commission should sit in Peking to discuss the conditions under which the request of China to an increase in the Import Duties might be assented to, the prominent conditions being abolition of Lekin and Currency Reform. The feasibility of deferring any action regarding the redundant coin in Hongkong was increased by the fact that the discount on these subsidiary coins fell considerably in the latter half of 1908 and the earlier part of 1909, and the local complaints in consequence temporarily subsided.
of
S. The full of Yuan Shi-kai, the abortive result of Tong Shao-vi's mission, the iguoring of the Imperial Edicts relative to currency reform which had given ground for hope, the reactionary tendency of the policy in Peking, and the absence of any directing brain and of any central authority, all now tend to destroy the hopes hitherto entertained any effective action on the part of China in the near future. To these unfavourable conditions on the horizon, two local conditions added force. In the latter half of 1909 the discount on Subsidiary Coins again went up, and the new Viceroy of Canton has proved himself much less amenable and friendly than his predecessor, so that any hope of action on his part muless by peremptory orders from Poking (where there exists no authority capable of issuing them) seems hopeless.
9. It was therefore not unnatural that the "Subsidiary Coin Question" which had lain dormant for a year or so, should be revived at this juncture, and the occasion of the debate on the Annual Estimates furnished the desired opportunity. I attach for easy reference the speeches made on this occasion which refer to this subject*. The Assistant Colonial Secretary, Mr. C. Clementi, on the 9th October, 1909, submitted a proposal for my consideration. I attach it together with my comments upon it. I also attach a Memorandum by myself, dated the 22nd November, 1909.†
Bansard 1909, pp. 132-135 and 147-194.
21
10. I discussed the proposals contained in this latter Memorandum with Mr. J. R. M. Smith, Manager of the Hongkong and Shanghai Bank, confidentially and I found him fully in support of them except as regards the measure of prohibition which is fore- shadowed and which does not form a part of the scheme which would be immediately put into operation. Its advisability can be discussed later when the time arrives. My Memo- randum was circulated to the Executive Council and on the 5th of January, 1910, the Council unanimously advised the adoption of the measures in so far as rehabilitation by means of purchasing Hongkong Subsidiary Coins in the open market, in the manner suggested, is concerned, and at a cost not exceeding $1,000,000. I have therefore the honour to request Your Lordship's sanction to take immediate steps to this end.
11. The course therefore for which I ask Your Lordship's sanction is to purchase with a view to demonetization whatever subsidiary coin is obtainable up to an agreed date at the highest discount obtainable, and to meet the loss incurred, which it is hoped would not exceed 9% of the face value of the coins, up to a sum of say $300,000 from the Reserve Funds of the Colony. Since the operation must obviously be kept secret it will be necessary to legalise the expenditure later (when the transaction is completed) by vote of the Legislative Council. The Treasurer recommends that the money required should be obtained by an overdraft on the Crown Agents, on the Railway Account. I anticipate that the expendi ture of this sum will temporarily at any rate rehabilitate the Subsidiary Silver Coinage of the Colony and if it should be necessary thereafter to spend a larger sum than can be met from current Revenue, in order to maintain the local currency at par value, e.g., by under- taking further operations of the same nature when the discount had become so heavy as to minimise the loss to be incurred (as at the present moment), I will again submit pro- posals for meeting the cost either from further accumulations of the Reserve, or possibly by a small gold loan. I shall be glad if possible to have Your Lordship's concurrence by telegram in order to avail myself of the present very high rate of discount, and set at rest as soon as may be the present inconvenience.
to 21.
12. I attach copy of correspondence with His Majesty's Minister at Peking and His Nos. 1 to 12. Majesty's Consul-General at Canton on the subject of the operations of the Canton Mint 14, and 16 and I would urge that representations may continue to be made to the Chinese Government with a view to the discontinuance of the issue of Subsidiary coinage by that mint till that coinage is restored to par.
The Right Honourable,
THE EARL OF CREWE,
fc.
&c.
4c.
I have, &c..
No. 24.
F. D. LUGARD, Governor, &c.
Copy of despatch from Secretary of State for Colonies to the Treasury. No. 5116/1910.
DOWNING STREET,
8th April, 1910.
SIR,-I am directed by the Earl of Crewe to transmit to you to be laid before the Lords Commissioners of His Majesty's Treasury, the accompanying copy of a despatch with No. 23. enclosures from the Governor of Hongkong in which proposals are made for the rehabilitation of the Colonial subsidiary silver coinage.
2. Lord Crewe would be glad to receive the observations of the Lords Commissioners upon the proposals put forward in the eleventh paragraph of Sir F. Lugard's despatch, which his Lordship is disposed to think cannot be approved.
3. It appears very doubtful whether it is possible to prevent the circulation in Hong kong of Chinese subsidiary coins; and, even if it were possible, the dislocation of the trade with the Chinese provinces which would follow renders it undesirable to make the attempt.
† Not printed.
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