Sessional_Paper_1907 — Page 1015

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7. I further took the opportunity of the presence here of the Imperial Chinese High Commissioners from Europe in Hongkong on the 9th inst. on their way to Peking to present my view of the matter to Mr. Tso PuNG HUNG, First Secretary to the Commissioners.

8. I also suggested to Mr. H. HUNTER, who had taken the place of Mr. J. R. M. SMITH as Chief Manager of the Hongkong and Shanghai Bank, the advisability of sending a gentleman from the Bank to Canton to put before the Viceroy's Secretaries for communication to the Viceroy the difficulties that the large issue of subsidiary coins had already created and the danger to the commerce and finances of the Kwang Provinces which must attend any further issue. Mr. HUNTER agreed and the Consul General at Canton was good enough to arrange for Mr. J. C. PETER of the Bank meeting on the 13th inst. Taotai WEN, the Viceroy's Secretary, two Chinese officials from the Mint and one from the Board of Reorganization. The result of this meeting is set forth in the annexed copy of a memorandum by by Mr. PETER. Mr. HUNTER in forwarding this memorandum to me stated that he thought it too probable that the Viceroy would prefer to go on turning out subsidiary coins until it was plainly more expensive immediately than shutting down the mint. I have not yet however received from Mr. MANSFIELD the promised ex- pression of the Viceroy's views in the matter.

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10. I may here mention that the millesimal fineness of the Chinese coins is practically the same as ours, the mean result of analyses of 23 of these coins made by two different analysts being to show the presence of 800-08 parts of silver in 1,000 parts of metal, the fineness of Hongkong coins as laid down by proclamation being 800. The millesimal fineness of the dollar being 900 there seems no reason why both the Hongkong and Chinese subsidiary coins should not fall to a discount -of 10 per cent. At present the discount on the former is 61 to 6 per cent. and

on the latter 73 to 7 per cent.

11. On the assumptions that there is no further production of Hongkong subsidiary coinage and that the provision by China of a uniform national coinage in accordance with Article II of the British Commercial Treaty signed at Shanghai on the 5th September, 1902, is indefinitely postponed, three things may happen in the future:

(i.) The Canton mint may continue issuing new subsidiary coins of the present millesimal fineness. In this case they will fall to and remain at a 10 per cent. discount to the impoverishment of the peoplein the Kwang Provinces whose hoardings consisting of, and earnings paid in, these coins will have lost a tenth of their value. The decrease in buying power of these people will continue injuriously to affect the trade of Hongkong.. The Hongkong sub- sidiary coins will remain at a slightly less discount in Hong- kong, where the non acceptance of the Chinese coins by the Government and banks make these of slightly less value in the Colony. This difference will increase, if mercantile firms follow the example that has been set by the Government and some of themselves in declining to receive the Chinese coins. There will also be a tendency for the Hongkong coins to return to the Colony.

(ii) The Canton mints may cease issuing subsidiary coins. Those they have already issued and with them the Hongkong coins would tend gradually to recover their former dollar value as absorption took place and they became a subsidiary rather than a main cur- rency.

(iii.) The Canton mint may issue subsidiary coins of lower millesimal fineness than the present ones. This would result in a further im- poverishment of the Kwang Provinces for the temporary advant- age of the Canton Treasury. The new coins, which, to secure their acceptance, would have the same appearance as the old,

* Not printed.