Sessional_Paper_1908 — Page 99

(d.) That importation and circulation of Chinese coins should be made illegal-

vide Straits Ordinance.

Arguments;--That this would dislocate trade with China which is essential to Hongkong. That the Chinese might retaliate; that it would cause great discontent among the Chinese here; would lead to an excessive number of prosecutions; that it would constitute an arbitrary interference with the rights of the individual to part with his goods for whatever consideration he likes; that though importation may be prohibited possession or circulation cannot be unless it is fraudulently tendered (e.g., debased or spurious coins) and that it would amount to confiscation of private property which is admissible only if the article is deleterious to morals or dangerous (e.g., liquor, arms, opium, &c.). Prohibition of importation is impracticable in a free port and without special and costly preventive services?

(e.) That the remedy lies in hands of individuals, who should refuse Chinese coins

or accept only at heavy discount.

Argument-That a complete boycott is not feasible and if partial the firm refusing

drives custom to its rivals. In any case custom is lost.

(f) That nothing should be done, and that subsidiary coins will then depreciate to the extent of their difference in bullion value from the dollar and remain stationary? It will then no longer pay the Canton mint to coin them.

Argument ;—That depreciation is largely due to temporary causes which will right them-

selves?

Action of China.

3. As the action of China is the originating cause of this difficulty, it would be well for the Committee to record their view as to what course of action it is desirable and prac- ticable to urge on Peking,-not being contrary to the interests of that Government-vide Minute attached. The argument there set out is I believe endorsed by Sir T. JACKSON. If a new coinage is issued it must of course be of intrinsically less value than har silver to avoid melting, and subsidiary coins should not be more than 2% less than dollars? a new Viceroy is expected shortly it is advisable that this Government should decide exactly what it considers that it is practicable to urge. Enclosure 2.

As

Arguments ;--That subsidiary coin is only a token and if made of the same proportionate weight and fineness as the Standard it might be melted down at any time according as value of bullion fluctuated and thus involve great loss to Government. Per contra.

It is urged that both the Standard and Subsidiary Silver Coins should have sufficient alloy to prevent their rising above bullion value.

The proportionate weight and fineness in India of Silver Coins less in value than the rupee is the same as the rupee, -but on the other hand it is argued that the rupee itself is no longer the Standard and is now itself a subsidiary coin.

Proceedings.

4. The proceedings of the Committee need not I think be private,—but their recommend- ations should obviously be confidential until Government has decided upon the course of action it proposes to adopt.

It will be for the Committee to decide how far they can make their meetings open to the public without endangering free discussion and interchange of opinion. The object may perhaps be attained by a précis of the discussion of each day being communicated to the Press. Care will be taken to keep down contingent expenses (reporting, typewriting, etc.) to the lowest practicable limit.

20th August, 1907.

F. D. LUGARD.