Sessional_Paper_1884 — Page 588

Report of the Finance Committee of the Legislative Council on the Correspondence presented to the Council by command of H. E. the Governor on the subject of the

issue of One Dollar Notes.

The Finance Committee have carefully considered the whole question of the

issue of One Dollar Notes in Hongkong, and have read all the correspondence..

connected therewith. The Committee have also endeavoured to elicit all the inform-

ation to be gathered upon the subject, and beg to report as follows.

2. A more extended issue of One Dollar Notes is most desirable for the conve-

nience of the community, if not absolutely necessary. The Committee consider

that the circulation would never exceed $400,000 to $500,000, and that it would

be confined to Hongkong, Canton, and Macao. The Committee understand that

notes command no extensive circulation at the Coast ports.

3. The Committee consider the issue of One Dollar Notes by the Government- unadvisable under the conditions laid down by the Imperial Treasury, as the local.. Government could not recoup any portion of the considerable expense of initiating and carrying on a note circulation, and, in view of the serious demands on the

Revenue of the Colony caused by the extensive public works in progress, the

Committee think it undesirable that any permanent addition to expenditure should

at present be made. Under these circumstances it may be found practicable to

substitute for the plan of a Government issue a scheme submitted by the Directors of the Hongkong and Shanghai Banking Corporation.

4. It would never be possible, in case of a Government issue of notes, to invest

any considerable portion of the funds representing such notes, as in the event of pressure on the Government for silver, the Banks would also be pressed, and would probably be unable to purchase Government drafts, even at more than ordinarily

remunerative rates. And that times of such pressure might be apprehended is

certain. The Committee learn that the Banks here have to be constantly prepared

for a drain of silver to Canton and other Chinese ports setting in with great rapidity. A sudden drain of this kind last year is said to have amounted to $5,500,000 in four months. It would seem to be undoubted that combinations to

bring about a monetary crisis are not unusual amongst native capitalists.