Sessional_Paper_1908 — Page 102

A.

Report of Certain Members of the Subsidiary Coin Committee.

We the undersigned members of the Committee have the honour to report as follows:-

1. Subsidiary coinage is solely for the purpose of the internal retail trade and other small transactions within the Colony.

2. It is true that in past years the Hongkong subsidiary coinage played a considerable part in the trade with Canton but judging from the trouble that has arisen in the last two years it would appear to have been an economic mistake to have directed it from its true purpose.

3. Just what quantity may from time to time be required is a matter of experience but the chief test is the value of the coin in the open market.

4. It may however be taken that $5 per head is sufficient in a community whose standard coin is $1 and where the legal limit of tender is $2.

5. Taking roughly the population of the Colony at 400,000 it would therefore, appear that a total of $2,000,000 at any one time is sufficient and assuming that the life of a coin is 20 years (which owing to past circumstances cannot yet he verified) a supply of $100,000 a year would be ample under present circumstances.

6. The issue outstanding during the last 40 years is $40,000,000 of which about $30,000,000 were issued in the ten years prior to 1905 and the coinage has been during the past two years at a discount varying from 9 per cent. to 4 per cent.

7. From these facts it may be justly inferred that there is in existence under present circumstances a large over-issue of Hongkong subsidiary coinage.

8. For reasons unnecessary to state in detail it is obvious that it is desirable to rehabilitate the currency of the Colony and it only remains to consider the best practicable means for this purpose.

9. There is no necessity to demonetise the existing currency as any scheme for the substitution of a new coinage must necessarily prove more expensive than the rehabilitation of the present coinage unless, indeed, it is proposed to repudiate a proportion of the latter, a course which is most objectionable as tending to lower the credit and honour of the Colony.

10. One of the circumstances of the present depressed condition of the subsidiary coin is notoriously the excessive circulation in the Colony of small coins struck at the Čanton Mint.

11. These do not really constitute a subsidiary coinage as there is no legal standard in existence to which they are subsidiary, but are simply an imitation of the currency of the Colony manufactured by a local Government utterly ignorant of the first principles of political economy in regard to currency. The "par" value of these coins is therefore simply and solely their value as bullion.

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12. From a political point of view it would be desirable to exclude this alien coinage which is to a certain extent responsible for the depression in the market value of the Colony's

money.

13. Also, from the retail point of view at all events, there can be no objection to its exclusion on commercial grounds provided that a sufficient supply of Hongkong coinage is maintained, and there is no evidence to show that any loss or damage would occur to international trade on account of such exclusion.