CO129-409 - Governor Sir May - 1914 [1-3] — Page 553

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this realisation, with its consequent restoration of confidence, is undoubtedly a most valuable asset.

6.

It is however the case that there is in existence an amount of subsidiary coin, or at least of ten cent pieces, which is far in excess of the ordinary requirements of the Colony. It is reported that speculators in Hongkong are holding coin of the face value of between five and six million dollars, which they hope to place on the market at par or nearly so, and there must still be a very considerable quantity circulating in Southern China. It would seem therefore that there will be no finality in the matter until a very substantial reduction is made in the total amount available.

7.

A most important factor in the question is the revenue of the Opium Monopoly, which is received almost wholly in ten cent pieces the selling price of prepared opium being adjusted to cover a discount calculated at 6 per centum. The very brief period which has elapsed since the commencement of the Monopoly is not sufficient to enable an accurate estimate to be made, but on the basis of present receipts it would seem very possible that as much as $2,500,000 in subsidiary coin will be received during the current year. The loss on demonetization amounts to between 16 and 17 per centum, and taking the higher figure, the melting down of $2,000,000 during 1914 would involve an expenditure of $340,000. I am of the opinion that it would be advisable for the present to demonetize all the ten cent pieces received, and I consider it probaule that, without taking into account any increase of revenue from the Konopoly over the original estimate, owing to larger sales than were anticipated, it will be possible to obtain

this sum of $340,000 by increasing the price of opium, and that

accordingly it will not be necessary to make other special pro-

-vision to meet this expenditure.

8.

Apart from the Opium Monopoly the Government receives by way of revenue some $100,000 a month in 10 cent pieces, and its present policy is to send $200,000 to England at regular

three monthly periods for demonetization. In the Estimtes for

1914

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