Sessional_Paper_1908 — Page 111

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SUBSIDIARY COIN COMMITTEE.

Copy of Chairman's Report.

15. It is understood that at present Govern- ment is now withdrawing from circulation all subsidiary coin received as revenue and that the Secretary of State has been recommended to permit the redemption at market value of a sum not to exceed $1,000,000 yearly.

16. There is no objection to this course, which however will be a failure unless pro- hibition is enforced, provided that, when the coinage reaches par value, redemption should be stopped and a reserve of coin be kept in the Colony so as to prevent a shortage in the supply and avoid the possibility of the coinage being at a premium. As an additional pre- caution the export of Hongkong coin might be prohibited. Application for coin from such reserve should be strictly kept down to a maximum for each application.

17. It is recommended that, whatever course of action be adopted by Government, due notice be given to all parties concerned except perhaps in the case of the import of alien coins. If any hardship arose in particular instances due consideration would be given to

such.

18. It does not appear that there would be any advantage to the Colony to attempt to come to agreements on this question with the Authorities either at Canton or l'eking.

19. Until China has properly initiated a currency in accordance with economic princi- ples, no proper agreement is even possible and it is always probable that if one were entered into it would be evaded or abrogated according as profit therefrom might accrue to the authorities concerned.

20. The regulation of its subsidiary coinage is purely an internal affair of the Colony and it would appear to be, at least, undignified for this Government to rely on assistance from a Foreign Power to ensure its rehabilitation even if such assistance were practicable and forth- coming.

21. Whatever the Government can do, how- ever, to urge the inception of a proper currency in China should be done.

Annotations by the Undersigned.

Under satisfactory arrangements with the Chinese Government regarding the output of Chinese sub. coin this course would be unnecessary and the Colony would be saved the loss which it entails. Even without such an arrangement it would not necessarily be a failure only it would take a long time to prove effective. By prohibiting the export of Hongkong sub. coin further impedi- ments are placed on trade.

Government purchase is redemption pure and simple and holders would not accept a heavy discount: they would wait for par. Hongkong coins at present circu- lating in China would be attracted to Hongkong to be exchanged for standard dollars and Canton coins would be attracted for purposes of circulation.

Agreed.

China has faithfully fulfilled monetary agreements in the past and the sugges- tion of bad faith is hardly justified.

It is an essential factor in our commercial prosperity. Surely there is nothing undignified in letting the Chinese Government see that joint action in the matter will benefit their own people. They imitated us in issuing and over- issuing why should they not follow us now in restricting the issue?

Agreed.

Hongkong, 5th November 1907.

D. R. LAW.

A. G. WOOD.

J. R. M. SMITH.