Sessional_Paper_1908 — Page 113

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II.-Prohibition.-Import, Export, and Circulation.

The Majority report recommends prohibition, and I assume from para. 14 that the Draft. Bill submitted (which I have not seen before) is the approximate form which they desire that the Legislature should take. Mr. OSBORNE agrees with them but would defer action for six months. Mr. ARMSTRONG agrees to prohibit import (but says nothing about export or circulation-does he agree regarding these?) except under permit which is provided in sec. 6 (3) of the Draft Bill.

He suggests a course, viz., licences to be granted on application without restriction with a view to proving that the import is not solely or chiefly from Canton, and that it is done by Money Changers and Money Lenders who do not affect trade. In the latter view Mr. OSBORNE concurred, Mr. ARMSTRONG'S remedy apparently is that Government should fix a rate of exchange and establish a Bureau. This in effect is that he is opposed to Prohibition and sides with the Minority, which appears clear from his remarks on page 9 of Meeting 3. His licence system really amounts only to registration of imports as in Opium, &c. The votes on this subject are therefore 5 for and 4 against.

There is therefore a Majority in favour of Prohibition. (This was opposed emphatically in the Minority report on the grounds that trade would suffer, and that Hongkong is too intimately associated with South China to render it possible for us to exclude Chinese coin, which ought rather to be brought to par simultaneously with our own. They oppose action which would depreciate Chinese coins.)

Note. The practical difficulties in enforcing such legislation were hardly sufficiently debated. The proposal may be divided into 4 heads.-are all equally practicable and equally useful? If not, which should be tried first, and with what inital modifications?

:

(a.) Import of Chinese subsidiary coins. In what way do those Members who

described the provisions of sec. 6 as too drastic suggest that the restriction should bear less hardly, otherwise than by reduction of penalties? Since the Majority recommend this course what modifications or tentative measures would the signatories of the Minority report suggest? To what extent do the Majority consider that Permits should at first be issued? Should there be a licence fee ? If it is true that Chinese subsidiary coins are largely imported by Lenders or Changers for discount profit would not a very heavy licence fee for import in bulk be justified and useful? Would such a fee be sufficient in itself to check over large imports without resorting to prohibition at first ?

(b.) Import of coins which are legal tender.

Refusal to admit our own coins. would seem to amount to repudiation, against which the Committee is unanimous (see note of Minority on para. 9 of Majority report). Some Members suggested a five years period of grace after which there should be repudiation. I understand this proposal was abandoned by all? It must be remembered that we have made a profit of two millions on putting these coins into circulation. In view of these remarks are the Committee prepared to withdraw these words from the Draft Bill? Of course, re- strictions on import of Hongkong coins could be temporarily withdrawn if more such coins were required in order to replace the Chinese coins ousted from circulation : as Messrs. SHEWAN and ARMSTRONG point out, it is the principle contained in the words which give power to prohibit import of legal tender to which I refer. Since it appears to be at variance with the unanimous view regarding Repudiation recorded by the Committee.

(c.) Export of legal tender coins. Are the Majority unanimous in thinking pro- hibition of such coins to be expedient or necessary? except as a measure of reciprocity in case the Two Kwang provinces undertook to prohibit export of their coinage-which would be impossible and chimerical? The object being to rehabilitate our coinage, decrease by exportation would be advan- tageous, and it is highly improbable that export to any large extent would take place, as in former years, now that China is flooded with a subsidiary coinage of her own? It is in fact admitted that the danger lies the other