Sessional_Paper_1884 — Page 521

14

2. I must inform Your Lordship that in accordance with instructions received from Your Lordship in despatch No. 21 of the 31st March, 1875, a notice was sent to the Hongkong and Shanghai Bank to the effect that the then circulation of $226,000 in One Dollar Notes was not to be exceeded.

3. For these Notes, owing to their portability as compared with the heavy and unwieldy dollar, there has been a special demand, which has not been confined to Hongkong, and in consequence the local circulation has been so much reduced that the Bank has recently been unable to supply the Government Departments even with the $5,000 of small notes required on the 1st day of each month, added to which the inconvenience entailed by this circumstance has been yet further increased by the exhaustion of the £10,000 of subsidiary coinage imported in May,

1875.

4. The remedy which Mr. GREIG, the Manager of the Hongkong and Shanghai Bank, suggests for this state of things is a further issue of Dollar Notes to the extent of $74,000 and an early importation of subsidiary coins.

5. With regard to the issue of Dollar Notes no action can be taken without Your Lordship's sanction, but so far as the subsidiary coinage is concerned, pecuniary provision for a fresh importation has already been made by the transmission of £10,000 to the Crown Agents, and, so long as the price of Silver at home and the exchange here continue at their present rates, this importation can from time to time be effected without loss, and the demand for this coinage can be satisfied as well in Canton and the Southern Ports of China as in

Hongkong.

6. I fear, however, that no dependence can be placed upon the hope that the even balance of the price of Silver and the course of exchange will be maintained with sufficient stdiness to reduce future operations to a certainty, and the Government may at any time have to face a possible loss in the importation of subsidiary coinage.

7. If any step, therefore, could be devised by which the Government could make itself independent of such a contingency in providing for the subsidiary coinage required in the Colony, it would be a matter for congratulation.

8. I must confess that at present, I do not clearly see how this is to be done; but I may take the opportunity afforded by Mr. GREIG'S application for an increase of One Dollar Notes issue to express my concurrence in the opinion entertained by Mr. AUSTIN, in his despatch of the 10th June, 1875, that such application should not be granted, and that in lieu thereof the Government should issue a sufficient number of notes as would meet the requirements of the place and as would ensure a sufficient profit to meet the possible loss that may at any time be incurred by the importation of subsidiary coinage.