Sessional_Paper_1908 — Page 100

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Enclosure 1.

Suggestion by Mr. Mansfield for Remedy of Subsidiary Coinage Question.

1. That either the Government or the Banks issue fractional notes of different sizes for 50, 20, 10, and 5 cents in sufficient quantity for the requirements of the Colony. Such notes to be legal tender for any amount.

2. That a Proclamation be made that from a certain fixed date no subsidiary coins of any kind can be accepted in the Government offices, all foreign enterprises issuing similar

notices.

3. That the Government when that date expires undertake to repurchase for melting Hongkong subsidiary coinage at such premium over its intrinsic value as the Colony estim- ates it can afford. It is believed that this will have the effect of gradually drawing back to the Colony much of the Colonial coin on the nearer mainland and will have a tendency to further depreciate the Canton coins which, suffering under so many disabilities, will be likely to leave the Colony. Once the Trams, Ferries, Sampans, Chairs, Rickshas and the large shops generally insist on all payments being in notes, the debased Canton currency will be at once relegated to the small Chinese shops and even from them would probably in time disappear.

The inconvenience of the very small notes is acknowledged, but Japan has or had them to as low a value as 10 sen. To obviate this in some degree the 5 cent notes might be made very thin and be bound in little books of 20 like the ricksha tickets in Shanghai. After being torn out, however, the loose ones should be redeemable at once at some special office. Arrangements should also be made that all dirty and ragged fractional notes passing through the Government offices and Banks should be destroyed and new ones issued in their stead.

To

The argument that the Government is to blame for the excessive issue of subsidiary coinage and cannot therefore in justice demonetize its issue except by calling it in at par will not hold water. It implies that the Government knowingly and for the sake of profit flooded Hongkong and the mainland with subsidiary coinage, but this was not the case. the writer's own knowledge, and the fact will be borne out by the Treasury archives, before the opening of the Chinese mints it was found impossible to keep in Hongkong sufficient subsidiary coinage for local use, and the Home Government grudgingly supplied perhaps a quarter of the amounts indented for, so that the Colony was always on short commons, which the public greatly resented. The ports of Shanghai, Foochow, Amoy, Swatow and many others would have taken enormous quantities of the coinage if the Banks could have obtained them from the Treasury. They met a very obvious want in China, which should have been supplied long ago by that country. It is estimated that some 43 million dollars worth of coins were issued, but it must be remembered that those are scattered over many thousands of square miles, and the writer does not believe that one-tenth of that amount will ever return to Hongkong even though a good premium were offered for them.

Enclosure 2.

Extract from Memo. by Sir F. Lugard. (June, 1907.)

It is clearly of importance as regards the future, that continual efforts should be made by H.B.M.'s Minister at Peking to urge the Chinese Government to give effect to Article II of the Mackay Cavention. In this connection it seems to me that a suggestion might be made that when ref ming the currency China should undertake to make all Subsidiary Coinage minted of th ame Millesimnal fineness as the dollar and of equal proportional weight, eg., 10 ten-ceut p must equal one dollar in weight, in order to abolish the disparity in bullion or intrinsic value between the two. This would do away with the existing discount, which naturally tends to approximate to the difference between the intrinsic and the face value. In order to encourage the Chinese Government to do this it might be worth while to give an undertaking that if, and when China adopted this proposal, any Subsidary British Coinage issued in future should also be of the same fineness and proportionate weight as the dollar. If China could go further, and agree to re-mint the Subsidary Coinage already circulated by her Mints, we might undertake to do the same. The advantage thus made would be great, and assuming that not more than 20 million dollars worth of Hongkong Subsidiary Coinage is still in circulation, the cost of redeeming and replacing it would not be an excessive price to pay for the benefit.