Sessional_Paper_1884 — Page 514

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These Charters limited the notes which might be issued in virtue of them to a minimum of £1 or its equivalent in Colonial Currency, but empowered the Treasury, if it thought fit, to reduce that minimum.

While the questions involved were still unsettled, my Lords preferred to reserve their answer to your letter of the 6th September, 1872, and not to give an opinion upon the act of the Governor of Hongkong authorizing, in the exercise of the discretion conferred upon him by Ordinance No. 5 of 1866, the Hongkong and Shanghai Banking Corporation to issue notes of the value of One Dollar.

The Charters above mentioned have now been renewed, and the Treasury has deliberately resigned the power of reducing the minimum denomination of the note.

The issues of the Banks therefore are henceforth limited to notes of £1 and upwards. The Secretary of State will see that by this decision my Lords maintain in full force the principle laid down by their predecessors, and embodied in the Regulations issued for the guidance of Colonial Governments when granting privileges of incorporation to Banking Companies, viz.: that it is not desirable to put into circulation notes representing very small monetary values. Nor is the reason far to seek. It is generally accepted that such notes must be held by the classes least educated, and therefore most liable to panic, and that in the commercial interests of the community, and of the Banks themselves, it is better not to incur the risk which small notes might entail. If it be thought worth while to guard against such risk in the United Kingdom, it is presumably more so in a settlement in which the mass of population is alien, and ignorant at all events of European

usages.

On this general principle my Lords would have hesitated to advise the adoption of a measure of doubtful expediency, which if successful must tend to diminish the supply of coin, an important consideration in a settlement the existence of which depends upon foreign trade.

My Lords observe that the deterioration of the dollars current is the only ground upon which the Governor advocates the issue of dollar notes, and that he consulted the non-official members of the Council upon it. He was doubtless further satisfied that the measure was generally desired by the persons in the settlement best fitted to form a sound and impartial opinion upon the subject, but he has forwarded no proof of such general desire; as far indeed as can be gathered from the papers sent home, he had only before him a petition from the Bank, itself an interested party. My Lords may add that the information which they receive does not support the apprehension of the Governor that the coinage of dollars in Mexico has stopped, or is likely to stop.

A reform of the coinage is the proper remedy for evils resulting from deterio- ration of coin, and my Lords think that attention should have been directed to that point in the first instance rather than to the adoption of a palliative of doubtful efficiency.