109
32
7. The Case for and against Redemption.-The Government having undertaken subsidiary coinage and having been a party to over-production is bound if necessary to redeem up to the extent of the coiunge issued in excess of the requirements of the internal retail trade of the Colony but it is not called upon to undertake gratuitous redemption which it will certainly do it it continues at the same time to permit Chinese coins to usurp the legitimate functions of its own coins. Compare the following from the Majority Report of the Subsidiary Coin Committee:—
415. It is understood that at present Government is now withdrawing from circulation all sudsidiary coin received as revenue and that the Secretary of State has been recoin- mended to permit the redemption at market value of a sum not to exceed $1,000,000- yearly.
16. We approve of this course (which however will be a failure unless prohibition is enforced)."
* * ***
No doubt the majority had in mind the inevitable operation of "Gresham's law" "Reduced to scientific terms, it is a result of the that "bad rooney drives ont good".
Under such conditions the law of marginal utility will law of marginal utility. lead the holder of money to substitute the cheaper for the more costly instrument which will perform the same service" (Conant). "Many well-intentioned efforts to reform a
have thus been frustrated to the great cost of states" (Jevons).
currency
There is another aspect of the question. "The great mass of the population who hold coins have no theories or general information whatever, upon the subject of money. They are guided entirely by popular report and tradition. The sole question with them on 21 But receiving a coin is whether similar coins have been readily accepted by other people,' "though the public generally do not discriminate between coins and coins, provided there is an apparent similarity, a small class of money changers, bullion-dealers, bankers, or goldsmiths make it their business to be acquainted with such differences, and know how to derive a profit from them" (Jevons). Compare Mr. Armstrong above quoted :-
"It is proved without doubt that the bulk of the Chinese subsidiary coin now circulating in the Colony has not been brought here for the purpose of buying goods, but by speculators who buy the coin in Cauton at a discount with money they remit from here which they also get at a discount and are able to circulate the coin here at a profit.”
8. The Case against Substitution.-In the latest scheme for the rehabilitation of the subsidiary coinage it has been suggested that a new and wholly different coinage should be substituted, such coinage to be of nickel or some similar metal. Although this scheme has not been approved it may perhaps be worth placing on record the objections to it.
(6
People in general accept coin simply on the ground of its familiar appearance. So entirely is this the case among very ignorant populations, that it has often been found desirable to maintain unchanged the impress on successive issues of coins. In many cases coins bave been struck for this purpose with the date of a long past year, or even the effigy of a dead sovereign" (Jevons). It then the Chinese population were to be deprived, us it should be, of the Chinese coins with which it is perhaps more familiar and at the same time of the Hongkong coins with which it is perhaps less familiar, its faith in subsidiary currency might be shaken. Morever any reduction in the metallic value of coins increases the "temptation to the false coiner". Finally it would appear to be inadvisable in a disorganised state of currency such as at present exists to make any such radical change.
6th March, 1911.
R. CROFTON.
Year.
To 1894,
Approximate amount of Hongkong silver and copper subsidiary coins put into circulation
to 31st December.
», 1895, 1896,
11,918,125.00 18.750,125.00
15.985,125.00
1897.
18,435,125.00
It
1898,
21,778,125.00
26,333.125.00
» 1900,
29,985,125,00
"
1901,
» 1899,
" 1902,
" 1903,
11
1904,
**
1905,
"2
1906,
» 1907,
1908.
23
"}
1909,
» 1910,
Total,..
33 271,125.00
up
33
Withdrawn.
Profit.
Loss.
$ 811,345.55
$
152,600.88
110,196.20
115.015.91
148,044,49
168,553.25
191.533.40
183 515.90
126.536.87 76,446.18
NII.
164,674.72
36.493,125,00 39,783.125.00 42,518,245 00 43,604,205.00
100,572.03 41,880.00
43,999,830.00
3,468,000.00 Nil.
387,937.35
$10,000,00
820.359.04 429,100.00
5,527,459,04
2,220,254.66 795,757.91
795,757,91
1,430,476.75
43,999,830.00 5,527,459.04
Nett,
38,472,370,96*
No. 32.
76,803.17 166,282.67
Copy of despatch from the Treasury to the Secretary of State for Colonies.
TREASURY CHAMBERS,
29th March, 1911.
SIR-The Lords Commissioners of His Majesty's Treasury have had before them Mr. Fiddes' letter of the 14th January lust (39040/1910)† relative to the acceptance by the Hongkong Government of subsidiary silver coins, rendered to the Colonial Treasury, which have been reduced by wear below the least current weight prescribed by the Hongkong Coiunge Order 1895 (Clause 4 (1) Third Schedule) and which in consequence have ceasel to be legal tender.
In reply My Lords direct me to state, for the information of Mr. Secretary Harcourt, that in the present circumstances of the Hongkong subsidiary coinage any extensive with- drawal of subsidiary coins, either worn or unworn, at prices above their bullion value is in Their Lordships' opinion to be deprecated as unlikely to produce any advantage at all commensurate with the expense involved.
It is, however, clearly impossible for the Colonial Government to re-issue coin worn below the least current weight which may be received by them in ordinary course.
The alternative courses therefore are to decline to accept such coins or to dispose of it as bullion and My Lords recognise that the former is a very undesirable one and should be avoided unless the quantities of worn coin tendered to the Government are, or become, so large as to necessitate withdrawal upon a large scale.
* Approximate.
† Not printel.
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