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there should be no issue of One Dollar Notes beyond those now in circulation. It might be well to postpone any attempt to state any further limit until information shall have been obtained of the amount of the whole note circulation of the Bank and of the proportion which One Dollar Notes bear to the whole issue. It should be further clearly understood that the permission given in this case is not to be made a precedent.

My Lords continue to lay great stress upon the opinion expressed in the last paragraph but one of their letter of 6th October, 1873, viz.: that where such serious powers as those of interfering with the monetary circulation of a Colony, are reserved to Governors, they should not exercise them without first obtaining the approval of the Secretary of State.

Without going so far as to say that a paper currency of low denomination can never be justifiable or expedient, it is certain that such a currency involves incon- venience and danger of its own, the degree of which, in comparison with the advantage offered, is a question of the utmost importance, and may be one of extreme difficulty.

R. G. W. HERBERT, Esq.,

Colonial Office.

I am, &c.,

WILLIAM LAW.

The Colonial Office to the Treasury.

DOWNING STREET,

21st December, 1874.

SIR,

I am directed by the EARL OF CARNARVON, to acknowledge the receipt of your letter of the 28th of November, relative to the issue of One Dollar Notes by the Hongkong and Shanghai Banking Corporation.

2. With respect to the further information required by the Lords of the Treasury, I am to state that in the memorial enclosed in Sir A. E. KENNEDY'S despatch of the 1st of April, it is stated that the amount of these notes in circulation was about $175,000, the total circulation of the Bank according to the Hongkong Blue Book averaged in 1870, $1,324,664; in 1871, $1,456,870; in 1872, $1,243,803; in 1873, $1,529,170.

3. Lord CARNARVON has not before him the letter in which permission was given by the Governor for the issue of these notes, but he presumes from Sir A. E. KENNEDY's despatch, No. 46, of the 2nd of July 1872, that no special terms were imposed with reference to this issue, the Corporation being of course bound by the limitation of issue prescribed by the 13th Clause of the Ordinance incorporating it.