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would drag the value of the latter down with them. The Hong- kong coins with a value intermediate between that of the dollar and the Chinese coins would tend partly to disappear from circula- tion in China by being melted down to form the new issue as dollars are now being melted down to form the present issues, and partly to constitute a third standard of value for commodities in the same way as commodities are now beginning to have two prices according to whether payments for them are made in dollars or subsidiary coins. It would be as impossible then to prevent the new issue from being generally current in Hongkong as it is now to prevent the present issues being used in the majority of private transactions, and even greater confusion and paralyzation of trade- than exist at the present time would ensue.

12. I regret that I can suggest no useful action that can be taken by the Hong- kong Government in this matter beyond laying down the principle that they will not again engage in the trade of supplying China with token coins at their face va- lue and beyond doing their utmost to persuade the Cantonese authorities to restrict their production of such coins.

器

14. I shall keep Your Lordship informed of further developments in the matter of Chinese Subsidiary Currency.

The Right Honourable

THE EARL OF Elgin, K.G.,

Sen

&c., &c.

I have, etc.,

M. NATHAN.

Enclosure 2.

LETTER FROM STAR FERRY COMPANY.

30th April, 1906.

SIR,-I have the honour to draw the Chamber's attention to the recent fall in the value of British subsidiary coins by which this Company and others whose business lies on a cash basis, are losing heavily.

2. And apart from loss to individuals the matter is, I submit, of sufficient importance to the Colony at large to warrant the consideration of your Committee.

;

3. For many years and until recently, Chinese subsidiary silver coins were at a discount of about 5%; British subsidiary silver coins maintained a parity of value with the dollar whilst British copper coins as measured in Chinese silver coins were at a premium varying from 2 to 4 per cent. British subsidiary silver coins are now quoted about 5% discount and copper 9%.

The former disparity between British and Chinese coins was I understand due to a difference in fineness.

4. Recently the Canton silver coin has shewn a tendency to further depreciate and, what is of more importance to Hongkong, has apparently dragged the British coin with it, the reason assigned being that the debtor, finding he can discharge his liabilities in the baser coinage, has no further use for the higher.