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to Mr. CARVALHO, Cashier of the Treasury, to whom I am indebted for it. I would add that, in considering the subject, I have endeavoured to regard the convenience of the public as the primary consideration, to which the fiscal advantage of the Colony is secondary.

8. In the course of a year or two we shall have to raise a loan probably of $1,500,000. For this loan we shall pay at least four, perhaps five per cent. Now there would not be the smallest difficulty in circulating notes to the extent of $1,500,000. Of this sum one-third might at once be placed in reserve against the notes, and the remaining $1,000,000 utilised as a loan. It would cost perhaps per cent., and then there would be some profit from notes lost and destroyed.

9. The banks here estimate that their note circulation costs them one per cent. Of this, two thirds per cent. is a duty paid to the Government, the other one third represents working expenses.

10. The remaining $500,000 required for public works, &c., might either be raised by loan, or, if it were found that more notes were still in demand, in the same way as suggested above.

11. I am aware that there is an economic objection to raising money by means of notes. But in this case, where the primary object is to remedy a severely-felt public inconvenience, I cannot see what substantial argument can be urged against the plan.

12. It may be said, that a loan would have to be repaid. There is nothing to prevent the Colony putting aside every year precisely the sum it would have paid off, and investing that sum in England. When the sum so invested should be equal to the note circulation, it might be left as a permanent security for two thirds of such circulation, the other one third being in actual bullion in the Colony. I am sure the public here would not willingly see the notes withdrawn.

13. A loan would probably be taken up by capitalists outside the Colony, for even five per cent. is not very tempting in China, whereas, on the plan suggested above, the Colony would receive interest from outsiders instead of paying it.

Hongkong, 12th November, 1883.

(17.)

A. LISTER,

Treasurer.

The Earl of Derby to Governor Sir G. F. Bowen, G.C.M.G.

DownING STREET,

SIR,

20th March, 1884.

I have the honour to acknowledge the receipt of your despatch No. 309 of the 22nd of November last, enclosing correspondence on the subject of complaints as to the scarcity of good Silver Dollars and subsidiary coins in Hongkong, and the proposed issue of further One Dollar Notes.