105
24
My Lords are of opinion, therefore, that for the present at any rate the Colony has no alternative to submitting to the inconvenience of a depreciated subsidiary currency.
If the new policy of the Chinese Government is successful the Hongkong coins will probably fall almost immediately to slightly below bullion value and then rapidly disappear from circulation both on the mainland and in the Colony, until the problem is reduced to manageable dimensions.
If on the other hand it is unsuccessful, the measures to be taken will be dependent upon the course of events in China and cannot with advantage be determined until this becomes apparent.
In the meantime, my Lords do not think that any useful purpose would be served by offering advice to the Chinese Government as to the adrainistration of their scheme of currency reform nor indeed are they in agreement with Sir F. May's view that the restoration to face value of the existing Chinese subsidiary currency must be effected before the new coins can be successfully brought into circulation.
The law that base coin drives out good would of course operate in the manner he suggests if by law or usage the two varieties of subsidiary coin were to be admitted to concurrent circulation at the same rating. As however the scheine provides for the reduction of the rating of the old currency from face value in the first instance to present exchange value, and ultimately to bare bullion value, it is clear that (unless the operation of the edict is defeated by popular sentiment) Gresham's law will operate in the opposite direction, i.e., to encourage the substitution of the new (overvalued) coins for the old coins which will be rated at their intrinsic value only.
Indeed in their Lordships' opinion the scheme is a sound one and well calculated, if firmly administered by the Central Government, to achieve success.
Nor do Lords think it desirable that representations should be made to the Chinese
my Government with respect to the coins, whether standard or subsidiary, issued by the Colony which are now circulating in China.
The Wai Wu Pu have informed His Majesty's Chargé d'Affaires at Pekin that such coins will, when the new coinage is in circulation, be treated in accordance with the established practice of all nations".
My Lords understand this statement to mean that the circulation of such coins will be prohibited, and inasmuch as the adoption of a national system of currency discharges a treaty obligation which His Majesty's Government have pressed upon the Chinese Govern- ment they see no ground on which representations could be urged for the exceptional treatment of Hongkong coins in the Empire.
The displacement of foreign coins circulating within its territories is in their Lordships' opinion an operation which any Government is entitled to undertake, only such regard being paid to the convenience of the issuing Government as circumstances, will permit.
It appears to this Board that the Government of Hongkong could not reasonably ask more than that the displacement should be spread over a series of year, and, as such a concession would in the circumstances be at best of doubtful advantage, My Lords are satisfied that the better policy will be to leave the Government of China to take its own
course.
Much, however, will necessarily depend on the degree of success attending the efforts of the Chinese Government to carry out the provisions of the Edict and my Lords will therefore be glad if Mr. Secretary Harcourt will cause them to be informed from time to time of the progress of events both in the Colony and on the mainland.
I am, &c.,
G. H. MURRAY.
No. 21.
----23
No. 27.
Copy of despatch from Governor of Hongkong to Secretary of State for Colonies.
GOVERNMENT HOUSE, HONGKONG, 11th January, 1911.
SIR, have the honour to forward for your approval the enclosed Financial Minute No. 108 in aid of the vote, Miscellaneous Services, Redemption of Subsidiary Coins, which was recommended by the Finance Committee and approved by Legislative Council on the 29th ultimo. In explanation 1 enclose the Hansard report of iny speech to the Legislative Council recommending this vote.*
The Right Honourable
LEWIS HARCOURT, M.P.,
je..
&c.,
&c.
F. D. LUGARD.
I have, &c.,
F. D. LUGARD, Governor, &e.
ENCLOSURE IN No. 27.
Financial Minute.-No. 108.
1908,
The Governor recommends the Council to vote a sum of One hundred and fourteen No. 7414 of thousand Dollars ($114,000) in aid of the vote, Miscellaneous Services, Redemption of Subsidiary Coins.
Government House, Hongkong, 3rd December, 1910.
No. 28.
Copy of despatch from Secretary of State for Colonies to Governor of Hongkong.
HONGKONG. Confidential.
DOWNING STREET,
13th January, 1911.
STR-I have the honour to acknowlege the receipt of your confidential despatch of the No. 23. 20th of January last dealing with the question of the Hongkong Subsidiary Coinage. I regret that it has not been possible to answer your despatch at an earlier date.
and 26.
2. I now transmit to you a copy of correspondence with the Lords Commissioners of Nos, 24, 25 the Treasury, from which you will gather the views of His Majesty's Government on the marter and the reasons which led to the decision conveyed to you in my telegram of the 10th instant that I could not approve the scheme which you proposed.
3. You will no doubt report further on the situation from time to time in accordance with the desire of the Lords Commissioners of the Treasury.
THE UNDER SECRETARY OF STATE,
COLONIAL OFFICE.
* Hansard 1910, pages 131-132.
† Sot printed.
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