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way, viz., of an influx of Hongkong coins from China when their value approaches par here? If the Hongkong coins should rise above par they can be reduced in value by issues from the reserve. Prohibition of export would be difficult to enforce? The proposal to prohibit export is
presume meant to apply only after Hongkong coins reached par?
I
(d.) Circulation of prohibited coins. l'ara. 14 of the Majority report as amplified by section 3 (3) and section 6 (5) of the Draft Bill, appears to require some further explanation. Persons (under section 6) may legally import specified quantities of "prohibited" coins, and presumably under the licences referred to in section 6 (8) further quantities might be authorised. How then can the Police discriminate between the coins circulated after legal import, and those circulated after illegal import? Clearly the only re- source available to a person who has legally imported "prohibited " "coins (viz., in quantities less than those prescribed or under licence) is to change it at once for legal tender, the object being to create a large demand for legal tender and so to rehabilitate the Hongkong coinage. Will not this mean a large profit to the Money Changer class? and (as above suggested) should not this be simultaneously met by a heavy tax on this class? Would the Committee agree that the prohibition of circulation should be tempora- rily deferred in order to prevent (a) dislocation of trade, () hardship to ignorant and poor persons and undue interference with the individual aud (e) influx of Hongkong coin from hina which even if prohibited would in such circumstances be largely smuggled in.
N.B.-It is clear that such a Bill as proposed could only be introduced simultaneously with Regulations which would indicate the extent to which the powers conferred by the Bill were to be exercised. It is therefore necessary in considering the proposals, to consider at the same time the nature of the Regulations which would give practical effect to it, and it is with this object that I have indicated what further and more precise information is required on this head.
III.—Withdrawal of Hongkong coins from circulation by Government.
It was stated by the Chairman that I had urged this course, but reference to my Memo. will show that I expressed no view on the subject. It was on the other hand the accepted policy of the Government before my arrival, and it received the approval of the Secretary of State. It involves of course an annual outlay of Revenue. The Majority report approves this course, with however the very important proviso that "it will be a failure unless prohi- bition is enforced ". What does "prohibition
prohibition" here connote-does it mean prohibition of import only and of both Chinese and Hongkong coins, or the former only? In so important a proviso absolute clearness is essential. The Minority apparently consider withdrawal by Government unnecessary? and consider that it would simply cause Hongkong coin to be replaced by Chinese,-in which view I understand the Majority to concur in view of the proviso referred to. Is the Committee then unanimously opposed to the present policy of Government unless prohibition is enforced? It is most important for the Government to be quite clear on this point.
In writing this Memo., as also in the case of my former Memo., I have carefully avoided the expression of my private views. My object in the former Memo. was to lay before the Committee as concisely as possible, a few of the theories advanced, in order that they might record their view on each. My object in the present Memo, is to make it quite clear what the recommendations of the Committee are, and to ask for a fuller expression of their views where they require amplification and precision. I desire therefore that the Committee should meet once again and formulate replies to the questions I have asked and I hope that those who dissent from the Majority report will nevertheless be so good as to give their views on the points raised. Later when the matter is discussed in Executive and debated in Legislative Council it will be time enough for me to express my personal views.
10th November, 1907.
F. D. LUGARD.
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