Sessional_Paper_1908 — Page 98

HONGKONG.

REPORT OF THE SUBSIDIARY COIN COMMITTEE.

No. 1908

Laid before the Legislative Council by Command of

His Excellency the Governor.

MINUTE ON SUBSIDIARY COINAGE.

Object of Committee.

The object of appointing a Committee is not only to advise Government on the steps to be taken, but also to dispose of impracticable proposals by pointing out why they are im- practicable, and so to put an end to controversy by the weight attaching to the opinion of so representative a body of public and expert opinion.

Present Proposals.

2. Some of the courses suggested, with the arguments advanced against them, are very briefly as follows :-

(a.) That Hongkong subsidiary coinage being in excess of currency demands should be gradually withdrawn: (a.) By exporting all received by Govern- ment as Revenue within the limits of legal tender; (b.) By purchasing and exporting additional coins as Revenue permits.

Arguments ;—Assuming that Hongkong coins are thus rehabilitated will this benefit trade even though it benefits Revenue (by decreasing the discount on subsidiary coins received as Revenue) since subsidiary Chinese coins flow into the Colony and form a medium of exchange, even though not legal tender? Some maintain that withdrawal would stimulate the influx of Chinese coins and if these are debased others hold that they would oust the better coinage. Others again think that as Hongkong coins would be worth more here than in Canton they would be attracted here. If Hongkong coins were re- habilitated the economic position of Hongkong vis-à-vis Canton would be improved, and debased coin might cease to be accepted?- or be heavily discounted.

(b.) That Hongkong subsidiary coins should be made unlimited legal tender and

Government should redeem at par.

Arguments-A Government pledge would be necessary or the currency would fall to the intrinsic value of the subsidiary coins? Result would be that the dollar would be finally ousted and subsidiary coins would be sole currency? The pledge cannot be given because there are insufficient dollars to redeem with. The Government liability would be unknown and enormous, as all Hongkong coins in Canton would be collected and sent here? There is no obligation on Government to take so drastic a step as it only imported coins in accordance with the demand at the time.

(c.) That paper money should be issued in accordance with Mr. MANSFIELD'S

proposals. Enclosure 1.

Argument; That such a proposal could not be adopted until all Hongkong coins had

been redeemed?