No. 22.
No. $2.
No. 23.
No. 28.
Dagantuk ka, mida vam down in mention and
110
34
They think therefore that for the time being at any rate the Colonial Government, while avoiding any special steps calculated to encourage the tender of such coin to the Treasury, will be well advised to accept that which comes in ordinary course and dispose of it as
bullion.
The amount so withdrawn should however be carefully watched and if they become large enough to give rise to serious loss the policy may have to be reconsidered.
If, as seems probable, a further depreciation in the exchange value of the subsidiary coinage generally should take place in the near future, the cost of withdrawing worn coins will of course be protanto diminished and this consideration suggests that the operation of the Government in that direction should for the present be restricted as far as possible.
THE UNDER SECRETARY OF STATE,
COLONIAL OFFIOR.
I have, &c.,
No. 33.
G. H. MURRAY.
Copy of despatch from Secretary of State for Colonies to Governor of Hongkong.
HONGKONG.
No. 97.
DOWNING STREET,
6th April, 1911.
SIR, -With reference to your despatch No. 19 of the 14th of January 1910 I have the honour to transmit to you the accompanying copy of a letter from the Treasury with regard to the acceptance of coins which have been reduced by wear below the least current weight prescribed by the Hongkong Coinage Order-in-Council 1895 and to request that act in accordance with their Lordship's suggestions.
Governor
Sir F. D. LUGARD, K.C.M.G., C.B., D.§.0.,
&c.,
&c.,
&ce.
you
I have, &c.,
L. HARCOURT,
No. 34.
Copy of despatch from Governor of Hongkong to Secretary of State for Colonies.
GOVERNMENT HOUSE, HONGKONG, 19th April, 1911.
will
SIR,I learnt with regret from your telegram of January 10th* that after consulta- tion with the Lords Commissioners of the Treasury you were nuable to accept the scheme for the rehabilitation of the Hongkong Subsidiary Currency forwarded under cover of my Confidential Despatch of January 20th, 1910, the more so that, as stated in paragraph 10 of ny Despatch, the scheme is the only one which has commanded assent from both the parties who held conflicting views in regard to the solution of this problem. I have now the honour to acknowledge your Despatch of January 13th, enclosing copies of the correspond- ence with the Treasury explanatory of the views of His Majesty's Government.
* Not printed.
36
2. I venture to submit a few comments on the enclosures to your Despatch.
Mr. Cow's letter of 8th April, 1910, paragraph 3.--The whole basis of the scheme No. 24. proposed is that it is alternative to prohibition of the circulation of Chinese coins in Hongkong by any except a natural process of reducing them to a discount which would automatically operate to exclude them. The assumption, however, that the tra le of Hongkong with China would be dislocated by the exclusion of Chinese coins is one with which (though I personally consider that it deserves a limited consideration) an influential and experienced group of merchants entirely dissent,arging that tra la with China is conducted by means of bills of exchange and notes, and not by subsidiary coinage. It can hardly therefore be postulated as an axiom.
"
3. Ibidem paragraph 4.-1 venture to submit that the application of "Gresham's law to the circumstances of this Colony overlooks the vital fact that the higher value coins are legal tender while the others are not and that as soon as the difference in value between the two sets of currency became applicable, the Chinese coins would be refused-only too gladly -by the large firms whose receipts are chiefly in Subsidiary Coins, e.g., the Tramway and Star Ferry Companies.
4. If, however, "no effective action can be taken to rehabilitate Hongkong Coinage until Chinese coin is excluded ", and if moreover no process of natural or automatic exclusión is deemed feasible, the conclusion is either that the Chinese coins must be excluded by force, or that the coinage of Hongkong must remain indefinitely at a discount. I understand that the latter is the conclusion at which Lord Crewe arrived, since Mr. Cox states that exclusion of Chinese coins "would attract enormous masses of Hongkong coin from China" and their importation would either sweep away the increase of value or would oblige the Government to continue these operations at a cost which is quite beyond the present means of the Colony". This assumes that there exist 6
enormous masses of ilongkong coin in China which would be free to be imported into Hongkong. It is very doubtful if this is the case, and if it proved to be so, the operation I have advocated would not be prejudiced, nor would the Government be compelled to repeat it until it was in a financial position to do So, Meanwhile at the proposed cost of $500,000 a mass of redundant coin approximately of $3,800,000 worth or some 55 millions of coins would have been got rid of, and in withdrawing them this Government would have benefited to the full rate of the discount at which they are circulating. This was the whole objet and purpose of my proposal. Hitherto this Government has been withdrawing from circulation all the subsidiary coins received as Revenue and Lord Elgin (Desparch Confidential of 18th June 1907) stated that this measure" will obviously give no immediate relief as, on the figures supplied by you, it would have to be in operation for fifty years before the whole of the excess coins were thereby withdrawn from circulation; but it is a step in the right direction, and I, "therefore, approve of your proceeding as you suggest, pending a consideration of the question "whether it will be necessary to take further measures on a larger scale". In the Despatch under reply however, Lord Crowe expresses the opinion that "the continuance of the system of withdrawal of subsidiary coins pail into the Treasury is a useless expense". system of withdrawal was as I have said undertaken with the approval or at the instance of the Secretary of State; it has since it was inaugurated in 1907 (before my own arrival) cost the Colony a sum of $793.293. By its means coins to the value of $5,527,500 have so far been withdrawn from circulation, approximately 78 millions coins. It was in my opinion a sound and indeed a necessary step for the Government of a British Colony to take, ris, that it should make a steady and progressive effort to place its legal tender currency at par but it was at the same time in my view a wasteful method to receive that coin at par value and demonetize it at a very high discount. It seems manifestly better to buy it at the discount value and save an equivalent loss to the Treasury.
This
The alternative course proposal in paragraph 5 is to proceed by co-operation with the Chinese Government" [the impossibility of which has been more than abundantly proved in our negotiations on this subject for as Sir John Jordan points out in his Despatch of December 15th, 1910, (enclosure in yours of 26th January 1911)* the interests of China are quite different from those of Hongkong in this matter] "Chinese coins being allowed to circulate in Hongkong aud Hongkong Subsidiary Coins continuing to enjoy the currency they now possess" in China. The Chinese Government would never agree to this proposal, and would be amply justified in refusing in fact I have lately seen in the local Press that the Viceroy of Canton has under consideration the exclusion-of all foreign coins. If that *Not printed.
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