111
36 -
step were adopted-Hongkong having meantime abandoned her efforts to withdraw a por- tion of the redundant coin from year to year-the sudden fall in value of the legal tender currency would no doubt prove a very serious matter indeed.
In view of the fact that Sir John Jordan in January last considered it to be a "fact that the Chinese Government are seriously considering the question of currency reform”, it will be interesting to note the attitude they may adopt with regard to Hongkong Coins circulating in China, but I confess I think it more probable that they will simply prohibit their circulation in China (with a consequential inrush of these coins into the Colony) than that they will demonetize them as anticipated in the 5th paragraph of the Treasury letter.
Your Despatch under reply is marked "Confidential" presumably because it was in reply to my Despatch which was essentially of a confidential nature, since the scheme to which it gave cover depended for its success largely upon the secrecy with which it should be inaugurated. I have the honour to request that I may be allowed to communicate the contents. of your Despatch since I must inform the Legislative Council (in reply to questions which will assuredly be asked) what are the views of His Majesty's Government with whom I have stated that I am in communication on this subject.
37-
5. It appears that it is proposed to write off the "losses" on the sales of the Sub- sidiary Coin against the vote "Redemption of Subsidiary Coin", this is contrary to Colonial Regulation No. 301, therefore if it is proposed to adopt this procedure, I must request that the sanction of the Secretary of State be obtained.
6. In accordance with Colonial Andit Regulation No. 30, I am forwarding copy of this letter to the Director of Colonial Audit.
I have, &c.,
HON. COLONIAL SECRETARY.
H. R. PHELIPS, Local Auditor.
The Right Honourable
LEWIS HARCOURT, M.P.,
$0.
$c.,
&c.
No. 55. Confidential.
I have, &c.,
F. D. LUGARD,
Governor, &c.
No. 35.
Copy of letter from the Local Auditor to Colonial Secretary.
AUDIT OFFICE, HONGKONG, 2nd June, 1911.
SIR,I have the honour to request that you will forward this letter for the information of His Excellency the Governor.
2. With reference to His Excellency's reply to my minute of 22nd May, 1911, con- tained in the Confidential C.S.O. No. 1 in 4244/06, His Excellency's reply is "No" to my Query as to whether the "losses", i.e., 7% to 10% on the sales of Subsidiary Coin by tender, has been reported to the Secretary of State. In my opinion this matter should have been reported to the Secretary of State and his sanction definitely obtained for the sale by tender of the accumulated Subsidiary Coin,
3. The sale by tender of the Subsidiary Coin at a loss of 7% to 10% is practically writing off 7% to 10% off the assets of the Colony, therefore, I am of opinion that the procedure is contrary to Colonial Regulation No. 31í.
4. The present procedure of selling the Subsidiary Coin would appear to me the adverse policy of demonetization, the policy of demonetization was apparently sanctioned by Lord Elgin in his Confidential Despatch of the 18th June, 1907, and has apparently the sanction and approval of the present Secretary of State, as he has approved a sum of $75,000 for the Redemption of Subsidiary Coin during the financial year 1911, therefore the present policy would appear to be contrary to the policy sanctioned by the Secretury of State. (See Hon. Colonial Secretary's minute of 20th April, 1911, contained in Confidential C.S.O. 1 in 4244/1906.)
No. 36.
Copy of despatch from Governor of Hongkong to Secretary of State for Colonies.
GOVERNMENT HOUSE, HONGKONG, 9th June, 1911.
SIB,-In continuation of my Despatch Confidential of 19th of last April, I have the No. 34. bonour to inform you that after careful consideration I suggested to several of the leading Merchants and Bankers of the Colony the proposal that Chinese Subsidiary Copper Coins should be prohibited from circulation in the Colony and they unanimously agreed in recommending this course. I have also consulted my Executive Council in the matter and also the Chamber of Commerce and they concur in the recommendation to effect which I have the honour to enclose a draft Bill for your consideration.
2. It is believed that there is no great quantity of Hongkong Copper Coins current in China and available for export to Hongkong, and it is also believed that the greater part if not all of the quantity available will be required to replace the excluded Chinese coins. It has in fact been deemed advisable to retain as a reserve Copper Coins to the face value of $81,737 now lying in the Bank in case the influx of Hongkong Coins from China should prove insufficient to meet the requirements of the Colony.
3. I trust that the course proposed will meet with your approval, for I am of opinion that the experiment will not only result in a rehabilitation of the Copper currency of the Colony at little or no expense but it will also afford a valuable object lesson and useful experience in case it should later be decided to extend the prohibition to Silver Subsidiary Coins.
The Right Honourable
&e...
LEWIS HARCOURT, M.P.,
&c.,
dc.
I have, &c.,
F. D. LUGARD,
Governor, dc.
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