Hong Kong.
(1841)
In 1841 the island of Hong Kong, then described as a mere
barren rock sparsely inhabited by fishermen, was ceded by China
to Great Britain; by 1888 the total imports and exports
exceeded 40 millions sterling. The history of the currency of
this important colony is thus comprised within the past halfcentury.
But, though Hong Kong is thus one of the youngest
of British Colonies, its existing currency recalls the earliest
phase of currency in the 17th century ''Plantations in America.''
For, just as the old silver " Piece of Eight " was the dominant,
coin nearly three centuries ago in the ancient West Indian
Colonies, so the Mexican dollar (the lineal descendant and modern
representative of the Piece of Eight) dominates the currency
of Hong Kong at the present day. This result, which the
Imperial Government sought in vain to prevent, is due to the
silver tradition so long held and so rigidly maintained by the
Chinese ; Hong Kong, as being the chief commercial entrepot for
the foreign trade of China, has naturally and necessarily been
drawn into the Chinese " currency area.''
The silver dollar, in its earliest Spanish form, had been familiar
at such Chinese ports as Canton, Xingpo, and Amoy, since 1571,
in connection with Spanish commerce from the Philippines.
And in 1596 Linschoten, in his Intinerarie Voyage, stated that
at Goa " there are likeAvise Eialles of eight {i.e., dollars) which
are brought from Portingall, and are ' Pardawes de Reales ' worth
at their first coming out 436 Reyes of Portingall ; and after are
raised by exchange, as they are sought for when men travelt for
China" Consequently, both the Spaniards at Manila and the
Portuguese at Goa (and Malacca, see under Straits Settlements)
familiarised the Chinese with the dollar more than three centuries
ago.
At the date of cession of Hong Kong, the Chinese, who are
characteristically fastidious in the choice of coins according to
device, had come to accept the Spanish dollars of Ferdinand VII.
as the standard silver coin, but still preferred the " Carolus
Dollar," struck by Charles IV. {i.e., prior to 1808). Taking
the Ferdinand Dollar as " par," the dollars of Mexico and South
America (dating from about 1820) were regarded with suspicion as innovations, and passed at a discount of from 3 to 7 per cent.
;
whilst the superior antiquity* of the dollar of Charles IV. commanded
a premium ranging from 4 to as much as 15 per cent.
All these dollars, however, were intrinsically of equal weight
and fineness. A like preference for the Carolus Dollar existed
till recent years in Shanghai, and exists to-day in the Malay
Peninsula {see page .) where the Mexican dollar is still
unknown, and the " Pillar " dollar holds the field.
On 29th March 1842, Sir Henry Pottinger, Plenipotentiary and
Chief Superintendent of the trade of British subjects in China,
issued a Proclamation prescribing that for bazaar purchases, &c,
but not for mercantile transactions, the following coins were to
be deemed legal tender, viz. : Spanish, Mexican, and other
dollars, and their component parts, the East India Company's
rupees and their component parts, and " Cash,"f or the copper
coins current in China.
1 dollar=2| rupees. J
1 dollars 1,200 cash.
1 rupee =533 cash.
Two months later, on the 27th April 1842, Sir Henry Pottinger
issued a further Proclamation making " Mexican and
other Republican dollars " the standard in all government and
mercantile transactions at Hong Kong, &.c.
The policy adopted in these two Proclamations was sound, in
so far as it established the Mexican dollar as the standard, and
disregarded sterling ; though the wording was loose in not defining
the dollar, in view of the varying weights, e.g., of the Mexican and
United States dollars.
The authorities at home, who since 1825 had striven to introduce
British silver coins into circulation in the Colonies, viewed
the action taken in 1842 with disfavour, and insisted on applying
their uniform panacea. Accordingly by Royal Proclamation,
under Order in Council of 28th November 1844, Sir Henry Pottinger's
Proclamations were revoked, and token British silver established as the nominal standard, with the following coins
rated for concurrent circulation, viz. :
£. s. d.
East India Company's gold Mohur (coined since 1st September 1835) - - - - - 1 9 2
Rupee - - - - - - - -- 1 10
Dollar of Spain, Mexico, South America - - - - - - 4 2
288 " Cash " - - - - - - - 1 -
• When in 1871 the device of the Mexican dollar was altered from the Cap
to the " Scale," bommeree with the Chinese was dislocated by the refusal of
the latter to recognise the upstart coin. So likewise with the " Maximilian "
coinage.
f This word is derived, through the Portuguese form caixa, from the Sk.
harsha (an Indian weight of 80 ratis, or 140 grains, according to Thomas,
Ancient Indian Weights, in Num. Or., London, 1874). Linschoten, in 1596,
says that " in Sunda (or Java) there is also no other kind of money than
certain copper mynt called caixa, of the bigness of a Hollades doite, but not
half so thicke, in the middle whereof is a hole to hang it on a string, for that
commoruie they put two hundreth or a thousand upon one string." Houtman,
in 1609, says, Chinese "nionnoye est appellee cas." It is suggested by Yule
and Burnell (" Glossary of Anglo-Indian Words") that the distinct English
word caxh (=caisse or strong-box) may have affected the above corruption.
J On the basis of fine content (according to Mint standards) the rupee
contains lfio grains, and the Mexican dollar 877*18 grains. Hence, by law,
$1 = Rs. 2*2856. But, in India, the coined rupee is 2*1 per cent, more
valuable than its own silver content by reason of the Mint charge.
The limit of legal tender was fixed, (i.) at 20 s. for British
silver coins of lower denomination than the shilling, and for
Indian silver coins lower than the rupee ; and (ii.) at 1 s. for
British copper coins and Chinese " Cash."
It was anticipated in 1844 that agreements at Hong Kong to
pay dollars would be discharged by the payment of shillings at
the rate of 24 cents, and that the coins and money denominations
of the mother country would be established in the new settlement
without disturbing existing contracts, and with as little
interference as possible with the prejudices and habits of the
people.
The Home Government herein reckoned without the Chinese.
In China fine, or Hai-Kwan, Sycee, silver had always been
reckoned not by tale but by weight, the standard measure being
the " Tael " weighing some 580 grains, subdivided decimally
into 10 mace* or 100 candareens. Of the only Chinese coins
(copper " Cash"), one thousand ^each weighing one mace) were
originally equivalent to one tael of fine or Sycee silver. But
owing to adulteration (with sand, &c), and to illicit coinage, as
many as 1,400 cash sometimes passed for a tael.
Now, as for all but petty transactions the Chinese used silver
and measured that silver by its fine weight and not by tale,f the
introduction of token British silver coins which represent fractions
of a gold sovereign, proceeded on a fundamental misconception ;
and the Royal Proclamation of 1844 remained a dead letter. All
accounts (except those of the Government) were kept in dollars,
and the sole instrument and medium of exchange, both at Hong
Kong and at all the open ports (except Shanghai) continued to
be the silver dollar, weighed in Hong Kong at 1,000 dollars to
717 taels, i.e., nearly 416 grains per dollar.
° Mace=Sk. mdsha (the bean of the Phaseolus), apparently through the
Malay. The Malay taeL-weight was divided into 10 Mace each of 20 candareens
(called cumduryns by Nunez in 1554) ; and it was hence that the names which
were familiar tor centuries at Malacca, came to be applied later to the decimal
subdivisions of the Chinese tael- weight.
Like " mace " the word " tael" ia of Indian origin, being the representative
of the Hindu tola, which comes from the Sk. tula, a balance.
f Cf. VHistoria del Gran Regno delta China (a translation published at
Venice in 1587 of Mendozza's Spanish work) : " La moneta, che corre nel regno,
. . . none coniata, pero si spende a peso, et ognuno porta i pesi seco, et alcuni
piccioli pezzetti d'oro et d'argento per coprar quello, che gli bisogna.".
As a result of the gold discoveries in Australia in 1851, the legal tender of British silver was limited in 1852 to 40 s. for
Australasia by the Royal Proclamation* of 16th October 1852.
This measure also applied to Hong Kong, Ceylon, and Mauritius,
as it was anticipated at that time that India and the East
generally would adopt a gold standard. The Royal Proclamation
was brought into operation in Hong Kong, as from 1st October
1853, by Government notification of 27th April 1853. Henceforth,
therefore, Hong Kong in theory enjoyed a gold currency
with silver and copper tokens in subsidiary circulation ; and the
Imperial Government conceived that sterling was as much the
actual currency of Hong Kong as of the United Kingdom.
As a matter of fact, however, except for unfortunate officials,
the Royal Proclamation of 1844 was from the outset inoperative.
In 1854 it was practically repealed, by a decision of the Colonial
Chief Justice, that " when contracts were made in dollars, payment
must be made in such coins and not in those specified in the
Queen's Proclamation of 1844." The Colonial Government
readily accepting this decision, the dollar was established, by a
legal decision, if not by law, as the local standard of value both
for the official and the mercantile communities. And as the
stock of old Spanish dollars decreased pari passu with the increase
of trade, and as time matured the Mexican dollar in the
eyes of the Chinese, the latter coin became established about
1853 as the standard coin of the colony.
In 1861, when Peru dollars were depreciated and Spanish
dollars rare, negociations were opened by Sir Hercules Robinson,
then Governor of this Colony, to place the currency of Hong
Kong on a sounder legislative footing, and to introduce a subsidiary
coinage. By Royal Proclamation, under Order in Council
of 9th January 1863, all existing Proclamations were repealed ;
and " the dollar of Mexico, or other silver dollar of equivalent
value," as authorized from time to time, was made the only
unlimited legal tender. Provision was made for striking at the
Royal Mint in London: (i) copper cents and mils (or cash),
respectively representing one hundredth and one thousandth of
a dollar, and (ii) silver tokens representing multiples of the cent.
This Proclamation was published in the Hong Kong Gazette of
2nd May 1863,f and embodied in a Local Ordinance No. 1 of
1864. The limit of legal tender for token subsidiary coins was
fixed by the Proclamation at 2 dollars for silver, and 1 dollar for
copper or bronze.
Thus, Hong Kong was finally and formally recognized as
being outside the currency area of Great Britain.
But, though Hong Kong essentially forms part of the currency
area of China, and recognises this by adopting silver as its
standard of value, the actual units or measures of value are not
those of China. China having no silver coins but only weights,
the simplest course would have been to adopt Chinese weights
for the colonial standard, and so to compute (as at Shanghai)
by the tael of fine silver, using stamped weights of silver on the Chinese system.
• See page 28 and 435.
f Bringing the Royal Proclamation into force as from 10th February 18G4,
But this course has not been taken. Instead,
a coin has been used with equal economy, the Mexican dollar
passing current as a weight of fine silver ; precisely as in
England, with a standard weight of fine gold known as a
sovereign, the gold coins of France, the United States, and
other countries pass at their bullion value according to the
number of grains of fine gold they contain.
European adherence to the dollar, instead of the Haikwan
tael of fine silver, has resulted in the coinage of dollars by the
Chinese themselves. In 1890 the Mint at Canton struck silver
dollars, half-dollars, and pieces of 20, 10, and 5 cents, the
millesimal fineness of which (i.) was nominally 900 for the dollar,
860 for the half-dollar, and 820 for the smaller coins, but (ii.)
was actuallv found on assay by the Royal Mint* to be respectively
884-2' for the dollar, 848'2 for the half-dollar, 807 '3 for
the 20-cents, 808 for the 10-cents, and 81 1/1 for the 5-cents.
The weights of the coins were fairly correct, though the dollars
were fully half a grain lighter than the nominal standard of
'72 taels per dollar. It seems very doubtful whether these unreliable
coins will ever succeed in supplanting the Mexican dollar
in China, though small silver coins are now gladly taken by the
Chinese in lieu of the debased " cash."
The latter observations have anticipated the order of time, and
it is necessary to go back to the important further step taken by
the Colonv in 1864, after establishing the silver dollar as the
local standard.
As local feeling, especially among bankers, was strongly in
favour of the policy of having a British dollar, and as the establishment
of Branch Mints in the colonies had already been
agreed to by the Imperial Government in the case of New South
Wales, the Colony of Hong Kong decided to establish a local
Mint to coin a British dollar, which was to extend the sphere of
British influence in the far East, and to provide a " clean " currency
which would defeat the exactions of compradors. Ordinance
No. 2 of 1864, was passed, providing for the new Mint ;
machinery was bought by the colony in London at a cost of
about $ 71,500 ; and the Mint opened on 7th May 1866. Under
the Treasury Regulations of 20th October 1866, the standard
From its opening (for silver coinage) on 22nd May 1890 to 31st December
1891, the total output at the Canton Mint was as follows :
Nos.
Dollars 43,933
50-cent pieces - 17,8-17
20-cent pieces - - 5,667,381
10-cent pieces - - 16,098,579
5-cent pieces ----- 1,158,945
And from 1st January to 14th May 1892 the further output has been :
Nos.
20-cent pieces 2,250,000
10-cent pieces ----- 4,450,000
5-cent pieces ----- 100,000
In addition, about half-a-million '"cash " are struck per diem.
coin (modelled on the familiar Mexican dollar) was the dollar
weighing 410 grains * of 900 millesimal fineness. A half-dollar
Avas subsequently added of like fineness and of half the above
weight. Subsidiary silver coins were to be struck, of 800
millesimal fineness, and of weights "in proportion to their
nominal value, referred to the dollar." Such token coins struck
were the 5 cent, piece, and the 20 cent, piece, the latter being
substituted for a standard quarter-dollar originally proposed by
the colony. Copper cents and mils (or "cash") were also
sanctioned, but not actually struck.
Great things were hoped from the new Mint ; but low exchanges
and a mint charge of 2 per cent, resulted in its failure.
The Chinese on the mainland could not be got to take the new
dollar (though in intrinsic value it was identical with the current
Mexican dollars) unless at a discount of 1 per cent. Daunted
by the first reception of the new coin by the Chinese, and unwilling
to pay for the privilege of striking a British dollar, and
of educating China into the use of coin instead of bullion, the
Colonial authorities decided to close the Mint. Accordingly,
after just two years from its opening, the Mint was closed, and
the machinery sold at the end of the year to Japan. The experiment
did not extend over a time commensurate with the prejudices
of the Chinese. In two or three years from the closing of the
Mint the new dollar was accepted at par with the Mexican ; and
the subsidiary coins, which were at first only accepted at 35 per
cent, discount, first reached par by virtue cf their convenience,
and soon were eagerly sought after at a substantial premium on
their nominal value.
In concluding this episode of the local Mint, it remains to state
that its total output of coins was as follows :
—
Dollars 2,108,054
Half dollars ------ 58,587
20-cent pieces ------ 445,429
10 „ 2,479,216
5 „„----- 1,313,303
Of all these 6^ million coins, representing over 2.| million
dollars, none now remain in circulation in the colony.
Under the Royal Proclamation and Order in Council of 9th
January 1863, and the local Ordinance No. 1 of 1864, provision
was made for the Governor to admit " other silver dollars of
equivalent value " to legal tender. That power Avas acted upon
on 14th September 1866, Avhen the Governor proclaimed the
dollar and half-dollar of the Hong Kong Mint a legal tender,
equally with the Mexican dollar. On 1st April 1873 the United
States struck " trade dollars," Aveighing 420 grains,f of 900 millesimal fineness, or 378 grains fine, for the purpose of trade with the East.
* Before these regulations came into force there had been tin issue of dollars
of 419*052 grains, and of halt-dollars of 20i)o grains. (/See Part 2 of first
Schedule to the Straits Order in Council of 21st October I8i)0, printed in
the 21st Annual Report of the Deputy-Master of the Mint.)
| Apparently this weight was arrived at by taking (from Tate's Cambist}
the treaty weight of tlie tael at 588-3 grains, and by multiplying this figure by
72>\ the Canton equivalent of 1,000 dollars in Canton taels.
And Japan had established a Mint at Osaka
(with the Hong Kong plant), from which were issued silver yens,
which were the counterparts of the Hong Kong Mint dollar,
weighing 416 grains of 900 millesimal fineness,* or 374*4 grains
fine. At meetings of the Hong Kong Chamber of Commerce in
January and February 1874 it was proposed that both the trade
dollar and the yen should be admitted to tender ; but the proposal
was set aside in favour of the old policy of a " British dollar. "f
This the Home Government declined to sanction, on the score of
cost.J On 30th June 1878 the United States ceased to strike
the ambitious, but ill-advised trade dollar ; and no action was
taken in Hong Kong to legalise the yen. Further action was
taken, however, in 1890 under the Order in Council of 1863, and
Local Ordinance, No. 1 of 1864, by authorising a token halfdollar,
or 50-c'ent piece, of 800 millesimal fineness.
The coins in leg;il circulation in the colony are therefore as
follows (omitting the rare Hong Koni»' coinage) :
Silver.
- Unlimited legal tender.
- Legal tender to $2.
5' >> »
>> » J>
"> )> >>
Bronze.
- Legal tender to $1.
It is difficult to state with any precision the average number
nf Mexican dollars poured annually into Hong Kong.§ But
vast numbers of subsidiary coins have hitherto been poured
annually into the island, and thence into China, where these
tokens are supplanting the debased, copper "Cash" of the
Chinese, particularly in connection with douceurs at the new
year, &c. From the Twenty-second Annual Beport of the
Deputy Master of the Mint it appears that up to the end of 1891
no less than .^7,336,800 in subsidiary coins had been struck in
England for the colony, $1,125,400 being in 10 cent pieces, and
$2,088,000 in 5-cent pieces. But the beginning of 1892 was
marked net only by the cessation of all outside demand, but by the wholesale introduction of Canton tokens into Hong Kong
itself by compradors, native bankers, &c, all stimulated by the
fact that the Chinese authorities at Canton were supplying the
Canton subsidiary coins at a discount of from 10 to 20 per cent.
See Second Report of the Deputy Master of the Mint, paxje 72
f See also the speech of Mr. Samuel Montagu, m.p., in the House of
Commons on Oth November 1888.
X On the general subject of the supply of Mexican dollars, and of the
establishment of a local Mint, see the Fifth Annual Report of the Deputy
Master of the Mini.
§ From 1880 to 1890 (both inclusive) ahout 45 millions of dollars would
appear to have been shipped from London to Hong Kong, Shanghai, and
Japan. The proportion for Hong Kong csinnot be distinguished, and it is
impossible to say what was shipped from San Francisco and elsewhere.
On the other hand, "cents" are becoming much sought after on
the mainland (as being more convenient than the Canton " cash "),
though in Hong Kong itself they are at a discount when tendered
in bulk, as compared with the more portable dollar or dollarnote
; for small transactions they command their full nominal
value.
In conclusion, a word is required as to the practice of " chopping
" dollars. This practice appears to be peculiar to the
province of Canton, and to be unknown in the north. Native
Chinese merchants stamp or sign ('chop'*) every coin as it
comes into their possession. No Chinaman will take back
a dollar on which his stamp cannot be pointed out, though
by the multitude of successive stamps a chopped dollar
not only loses its "ring," but gradually becoms so obliterated
that any individual stamp cannot be distinguished in one
case out of a hundred. The state of a dollar long in circulation
in Hong Kong is deplorable, but it seems impossible
to overcome the Cantonese practice. On the contrary, " chopping
" has been legally recognised in Hong Kong by the
Governor's Proclamation, published in the " Gazette " of
21st October 1865, under the Local Ordinance No. 10 of that
year. In 1890, when the Canton coinage was being introduced,
the Chinese authorities were urged to prohibit the practice, but
they expressed themselves powerless in I he matter. The consequence
is that "clean " (i.e., unchopped) dollais for the northern
ports command a premium of 1 per cent, or more, according to
demand and supply at the time being.
It was estimated that the amount of coin in the colony on
31st December 1891 was $10,600,000, of which $10,000,000
was held by the European banks, and $200,000 by the Chinese
banks. | Taking the population at 220,000 in round numbers,
and the " active " circulation of coin at the net total of $400,000
(as deduced from the above estimate), the average metallic
circulation works out at $1*8 per head, irrespective of nearly $27
per head in the form of bank notes, as shown subsequently.
• The word "chop" comes from the Hindi chhap, a seal-impression, and
can be traced back in European languages as far as 1 53", when a Portuguese
treaty states that a Nizam " sealed an agreement with his chop " (" eo cliapo
de sua chapa"). The origin of the "pigeon-English" name chop-house for
Customs-station is explained by John Fryer in his "New Account of East
India anaI Persia " (London, 1698), as follows : — " The Custom-house has a
good Front, where the chief customer appears at certain hours to chop, that
is to mark, goods outward bound."
Hence "first chop" is analogous in origin to "A 1."
f The smallness of this sum is explained by the fact that Chinese have no
safe places in which to keep dollars in large quantities. Consequently they pay
their money into the European banks, or exchange coin for notes, at the
earliest opportunity,
Notes.
There has never been a Government issue in Hong Kong,* but
notes issued by banks are in circulation. Of the three banks of
issue on 31 December 1891, two (the Chartered Bank and the Mercantile
Bankf ) are governed by Royal Charters, whilst the third
( the Hong Kong and Shanghai Bank was constituted by Local Ordinance
No. 5 of 1866. The total issues of all the three banks are
limited to the amount of their paid-up capital, which stands at
800,000/. for the Chartered Bank}, at 750,000/. for the Mercantile
Bank, and at $10,000,000 for the Hong Kong and Shanghai Bank.
These total issues have reference to the circulation not in any one
colony alone, but in all places where the banks are empowered
to carry on business.
The security of the issue of the Hong Kong and Shanghai
Bank stands on a peculiar footing. Section XII. of the
Ordinance of 1866 provides that,
—
" It shall be lawful for the company to make, issue and circulate
notes or bills payable to bearer on demand in coin lawfully
current in the colony and to re-issue the same, provided that no
such notes shall be issued for any other sums than the sum of
5 dollars, or some multiple of such sum, or other equivalent
amount, unless the issuing of notes of other amounts shall be
sanctioned by the governor ; provided also that nothing herein
contained shall exempt the company from the operation of any
existing or future laws of the colony or of any port, city, town,
or place beyond the limits of the colony where they may establish
banks or branch banks, restricting or regulating the issue of
such notes, by banks established therein ; and provided also that
the shareholders of the company shall be subject to unlimited
liability in respect of all or any such issues or issue of notes,
and, if necessary, the assets of the company shall be marshalled
for the benefit of the general creditors of the company and the
shareholders shall be liable for the whole amount of such issue,
in addition to the sum for which they are liable under the other
and general provisions of this Ordinance."
As a reserve against notes issued, each of the three banks is
required to keep specie to the extent of one-third at least of the
circulation. But, whilst the Chartered and the Mercantile Banks
are required by their Charters to keep this proportion of specie
in each colony in Avhich they issue notes, the Hong Kong and
Shanghai Bank is only required to keep in Hong Kong the total
reserve against the total of its issues, wheiher in Hong Kong or
elsewhere.
The lowest denomination of note allowed by Royal Charter to
the Chartered and the Meicantile Banks is $5.
The issue of $1 notes by the Hong Kong and Shanghai
Bank was sanctioned by the Colonial Government in 1872 under
the 12th Section of the Bank's Ordinance of 1866. These small
notes are highly popular as a substitute for " clean " dollars, and
as a means of escaping the impositions of compradors, &c.
The following table gives the local note circulation on 31st
December of 1881 and of 1891 :
~ Some few years back a proposal was considered, but subsequentlydropped,
for the issue of $ 1 notes by the Colonial Government.
•j- This latter Bank is stated to be under reconstruction as a limited liability
company, a reconstruction which, if carried out, would forfeit the chartered
Issue.
| Each dollar of issue is calculated at 4 «,, making the maximum issue
$4,000,000.
(1841)
In 1841 the island of Hong Kong, then described as a mere
barren rock sparsely inhabited by fishermen, was ceded by China
to Great Britain; by 1888 the total imports and exports
exceeded 40 millions sterling. The history of the currency of
this important colony is thus comprised within the past halfcentury.
But, though Hong Kong is thus one of the youngest
of British Colonies, its existing currency recalls the earliest
phase of currency in the 17th century ''Plantations in America.''
For, just as the old silver " Piece of Eight " was the dominant,
coin nearly three centuries ago in the ancient West Indian
Colonies, so the Mexican dollar (the lineal descendant and modern
representative of the Piece of Eight) dominates the currency
of Hong Kong at the present day. This result, which the
Imperial Government sought in vain to prevent, is due to the
silver tradition so long held and so rigidly maintained by the
Chinese ; Hong Kong, as being the chief commercial entrepot for
the foreign trade of China, has naturally and necessarily been
drawn into the Chinese " currency area.''
The silver dollar, in its earliest Spanish form, had been familiar
at such Chinese ports as Canton, Xingpo, and Amoy, since 1571,
in connection with Spanish commerce from the Philippines.
And in 1596 Linschoten, in his Intinerarie Voyage, stated that
at Goa " there are likeAvise Eialles of eight {i.e., dollars) which
are brought from Portingall, and are ' Pardawes de Reales ' worth
at their first coming out 436 Reyes of Portingall ; and after are
raised by exchange, as they are sought for when men travelt for
China" Consequently, both the Spaniards at Manila and the
Portuguese at Goa (and Malacca, see under Straits Settlements)
familiarised the Chinese with the dollar more than three centuries
ago.
At the date of cession of Hong Kong, the Chinese, who are
characteristically fastidious in the choice of coins according to
device, had come to accept the Spanish dollars of Ferdinand VII.
as the standard silver coin, but still preferred the " Carolus
Dollar," struck by Charles IV. {i.e., prior to 1808). Taking
the Ferdinand Dollar as " par," the dollars of Mexico and South
America (dating from about 1820) were regarded with suspicion as innovations, and passed at a discount of from 3 to 7 per cent.
;
whilst the superior antiquity* of the dollar of Charles IV. commanded
a premium ranging from 4 to as much as 15 per cent.
All these dollars, however, were intrinsically of equal weight
and fineness. A like preference for the Carolus Dollar existed
till recent years in Shanghai, and exists to-day in the Malay
Peninsula {see page .) where the Mexican dollar is still
unknown, and the " Pillar " dollar holds the field.
On 29th March 1842, Sir Henry Pottinger, Plenipotentiary and
Chief Superintendent of the trade of British subjects in China,
issued a Proclamation prescribing that for bazaar purchases, &c,
but not for mercantile transactions, the following coins were to
be deemed legal tender, viz. : Spanish, Mexican, and other
dollars, and their component parts, the East India Company's
rupees and their component parts, and " Cash,"f or the copper
coins current in China.
1 dollar=2| rupees. J
1 dollars 1,200 cash.
1 rupee =533 cash.
Two months later, on the 27th April 1842, Sir Henry Pottinger
issued a further Proclamation making " Mexican and
other Republican dollars " the standard in all government and
mercantile transactions at Hong Kong, &.c.
The policy adopted in these two Proclamations was sound, in
so far as it established the Mexican dollar as the standard, and
disregarded sterling ; though the wording was loose in not defining
the dollar, in view of the varying weights, e.g., of the Mexican and
United States dollars.
The authorities at home, who since 1825 had striven to introduce
British silver coins into circulation in the Colonies, viewed
the action taken in 1842 with disfavour, and insisted on applying
their uniform panacea. Accordingly by Royal Proclamation,
under Order in Council of 28th November 1844, Sir Henry Pottinger's
Proclamations were revoked, and token British silver established as the nominal standard, with the following coins
rated for concurrent circulation, viz. :
£. s. d.
East India Company's gold Mohur (coined since 1st September 1835) - - - - - 1 9 2
Rupee - - - - - - - -- 1 10
Dollar of Spain, Mexico, South America - - - - - - 4 2
288 " Cash " - - - - - - - 1 -
• When in 1871 the device of the Mexican dollar was altered from the Cap
to the " Scale," bommeree with the Chinese was dislocated by the refusal of
the latter to recognise the upstart coin. So likewise with the " Maximilian "
coinage.
f This word is derived, through the Portuguese form caixa, from the Sk.
harsha (an Indian weight of 80 ratis, or 140 grains, according to Thomas,
Ancient Indian Weights, in Num. Or., London, 1874). Linschoten, in 1596,
says that " in Sunda (or Java) there is also no other kind of money than
certain copper mynt called caixa, of the bigness of a Hollades doite, but not
half so thicke, in the middle whereof is a hole to hang it on a string, for that
commoruie they put two hundreth or a thousand upon one string." Houtman,
in 1609, says, Chinese "nionnoye est appellee cas." It is suggested by Yule
and Burnell (" Glossary of Anglo-Indian Words") that the distinct English
word caxh (=caisse or strong-box) may have affected the above corruption.
J On the basis of fine content (according to Mint standards) the rupee
contains lfio grains, and the Mexican dollar 877*18 grains. Hence, by law,
$1 = Rs. 2*2856. But, in India, the coined rupee is 2*1 per cent, more
valuable than its own silver content by reason of the Mint charge.
The limit of legal tender was fixed, (i.) at 20 s. for British
silver coins of lower denomination than the shilling, and for
Indian silver coins lower than the rupee ; and (ii.) at 1 s. for
British copper coins and Chinese " Cash."
It was anticipated in 1844 that agreements at Hong Kong to
pay dollars would be discharged by the payment of shillings at
the rate of 24 cents, and that the coins and money denominations
of the mother country would be established in the new settlement
without disturbing existing contracts, and with as little
interference as possible with the prejudices and habits of the
people.
The Home Government herein reckoned without the Chinese.
In China fine, or Hai-Kwan, Sycee, silver had always been
reckoned not by tale but by weight, the standard measure being
the " Tael " weighing some 580 grains, subdivided decimally
into 10 mace* or 100 candareens. Of the only Chinese coins
(copper " Cash"), one thousand ^each weighing one mace) were
originally equivalent to one tael of fine or Sycee silver. But
owing to adulteration (with sand, &c), and to illicit coinage, as
many as 1,400 cash sometimes passed for a tael.
Now, as for all but petty transactions the Chinese used silver
and measured that silver by its fine weight and not by tale,f the
introduction of token British silver coins which represent fractions
of a gold sovereign, proceeded on a fundamental misconception ;
and the Royal Proclamation of 1844 remained a dead letter. All
accounts (except those of the Government) were kept in dollars,
and the sole instrument and medium of exchange, both at Hong
Kong and at all the open ports (except Shanghai) continued to
be the silver dollar, weighed in Hong Kong at 1,000 dollars to
717 taels, i.e., nearly 416 grains per dollar.
° Mace=Sk. mdsha (the bean of the Phaseolus), apparently through the
Malay. The Malay taeL-weight was divided into 10 Mace each of 20 candareens
(called cumduryns by Nunez in 1554) ; and it was hence that the names which
were familiar tor centuries at Malacca, came to be applied later to the decimal
subdivisions of the Chinese tael- weight.
Like " mace " the word " tael" ia of Indian origin, being the representative
of the Hindu tola, which comes from the Sk. tula, a balance.
f Cf. VHistoria del Gran Regno delta China (a translation published at
Venice in 1587 of Mendozza's Spanish work) : " La moneta, che corre nel regno,
. . . none coniata, pero si spende a peso, et ognuno porta i pesi seco, et alcuni
piccioli pezzetti d'oro et d'argento per coprar quello, che gli bisogna.".
As a result of the gold discoveries in Australia in 1851, the legal tender of British silver was limited in 1852 to 40 s. for
Australasia by the Royal Proclamation* of 16th October 1852.
This measure also applied to Hong Kong, Ceylon, and Mauritius,
as it was anticipated at that time that India and the East
generally would adopt a gold standard. The Royal Proclamation
was brought into operation in Hong Kong, as from 1st October
1853, by Government notification of 27th April 1853. Henceforth,
therefore, Hong Kong in theory enjoyed a gold currency
with silver and copper tokens in subsidiary circulation ; and the
Imperial Government conceived that sterling was as much the
actual currency of Hong Kong as of the United Kingdom.
As a matter of fact, however, except for unfortunate officials,
the Royal Proclamation of 1844 was from the outset inoperative.
In 1854 it was practically repealed, by a decision of the Colonial
Chief Justice, that " when contracts were made in dollars, payment
must be made in such coins and not in those specified in the
Queen's Proclamation of 1844." The Colonial Government
readily accepting this decision, the dollar was established, by a
legal decision, if not by law, as the local standard of value both
for the official and the mercantile communities. And as the
stock of old Spanish dollars decreased pari passu with the increase
of trade, and as time matured the Mexican dollar in the
eyes of the Chinese, the latter coin became established about
1853 as the standard coin of the colony.
In 1861, when Peru dollars were depreciated and Spanish
dollars rare, negociations were opened by Sir Hercules Robinson,
then Governor of this Colony, to place the currency of Hong
Kong on a sounder legislative footing, and to introduce a subsidiary
coinage. By Royal Proclamation, under Order in Council
of 9th January 1863, all existing Proclamations were repealed ;
and " the dollar of Mexico, or other silver dollar of equivalent
value," as authorized from time to time, was made the only
unlimited legal tender. Provision was made for striking at the
Royal Mint in London: (i) copper cents and mils (or cash),
respectively representing one hundredth and one thousandth of
a dollar, and (ii) silver tokens representing multiples of the cent.
This Proclamation was published in the Hong Kong Gazette of
2nd May 1863,f and embodied in a Local Ordinance No. 1 of
1864. The limit of legal tender for token subsidiary coins was
fixed by the Proclamation at 2 dollars for silver, and 1 dollar for
copper or bronze.
Thus, Hong Kong was finally and formally recognized as
being outside the currency area of Great Britain.
But, though Hong Kong essentially forms part of the currency
area of China, and recognises this by adopting silver as its
standard of value, the actual units or measures of value are not
those of China. China having no silver coins but only weights,
the simplest course would have been to adopt Chinese weights
for the colonial standard, and so to compute (as at Shanghai)
by the tael of fine silver, using stamped weights of silver on the Chinese system.
• See page 28 and 435.
f Bringing the Royal Proclamation into force as from 10th February 18G4,
But this course has not been taken. Instead,
a coin has been used with equal economy, the Mexican dollar
passing current as a weight of fine silver ; precisely as in
England, with a standard weight of fine gold known as a
sovereign, the gold coins of France, the United States, and
other countries pass at their bullion value according to the
number of grains of fine gold they contain.
European adherence to the dollar, instead of the Haikwan
tael of fine silver, has resulted in the coinage of dollars by the
Chinese themselves. In 1890 the Mint at Canton struck silver
dollars, half-dollars, and pieces of 20, 10, and 5 cents, the
millesimal fineness of which (i.) was nominally 900 for the dollar,
860 for the half-dollar, and 820 for the smaller coins, but (ii.)
was actuallv found on assay by the Royal Mint* to be respectively
884-2' for the dollar, 848'2 for the half-dollar, 807 '3 for
the 20-cents, 808 for the 10-cents, and 81 1/1 for the 5-cents.
The weights of the coins were fairly correct, though the dollars
were fully half a grain lighter than the nominal standard of
'72 taels per dollar. It seems very doubtful whether these unreliable
coins will ever succeed in supplanting the Mexican dollar
in China, though small silver coins are now gladly taken by the
Chinese in lieu of the debased " cash."
The latter observations have anticipated the order of time, and
it is necessary to go back to the important further step taken by
the Colonv in 1864, after establishing the silver dollar as the
local standard.
As local feeling, especially among bankers, was strongly in
favour of the policy of having a British dollar, and as the establishment
of Branch Mints in the colonies had already been
agreed to by the Imperial Government in the case of New South
Wales, the Colony of Hong Kong decided to establish a local
Mint to coin a British dollar, which was to extend the sphere of
British influence in the far East, and to provide a " clean " currency
which would defeat the exactions of compradors. Ordinance
No. 2 of 1864, was passed, providing for the new Mint ;
machinery was bought by the colony in London at a cost of
about $ 71,500 ; and the Mint opened on 7th May 1866. Under
the Treasury Regulations of 20th October 1866, the standard
From its opening (for silver coinage) on 22nd May 1890 to 31st December
1891, the total output at the Canton Mint was as follows :
Nos.
Dollars 43,933
50-cent pieces - 17,8-17
20-cent pieces - - 5,667,381
10-cent pieces - - 16,098,579
5-cent pieces ----- 1,158,945
And from 1st January to 14th May 1892 the further output has been :
Nos.
20-cent pieces 2,250,000
10-cent pieces ----- 4,450,000
5-cent pieces ----- 100,000
In addition, about half-a-million '"cash " are struck per diem.
coin (modelled on the familiar Mexican dollar) was the dollar
weighing 410 grains * of 900 millesimal fineness. A half-dollar
Avas subsequently added of like fineness and of half the above
weight. Subsidiary silver coins were to be struck, of 800
millesimal fineness, and of weights "in proportion to their
nominal value, referred to the dollar." Such token coins struck
were the 5 cent, piece, and the 20 cent, piece, the latter being
substituted for a standard quarter-dollar originally proposed by
the colony. Copper cents and mils (or "cash") were also
sanctioned, but not actually struck.
Great things were hoped from the new Mint ; but low exchanges
and a mint charge of 2 per cent, resulted in its failure.
The Chinese on the mainland could not be got to take the new
dollar (though in intrinsic value it was identical with the current
Mexican dollars) unless at a discount of 1 per cent. Daunted
by the first reception of the new coin by the Chinese, and unwilling
to pay for the privilege of striking a British dollar, and
of educating China into the use of coin instead of bullion, the
Colonial authorities decided to close the Mint. Accordingly,
after just two years from its opening, the Mint was closed, and
the machinery sold at the end of the year to Japan. The experiment
did not extend over a time commensurate with the prejudices
of the Chinese. In two or three years from the closing of the
Mint the new dollar was accepted at par with the Mexican ; and
the subsidiary coins, which were at first only accepted at 35 per
cent, discount, first reached par by virtue cf their convenience,
and soon were eagerly sought after at a substantial premium on
their nominal value.
In concluding this episode of the local Mint, it remains to state
that its total output of coins was as follows :
—
Dollars 2,108,054
Half dollars ------ 58,587
20-cent pieces ------ 445,429
10 „ 2,479,216
5 „„----- 1,313,303
Of all these 6^ million coins, representing over 2.| million
dollars, none now remain in circulation in the colony.
Under the Royal Proclamation and Order in Council of 9th
January 1863, and the local Ordinance No. 1 of 1864, provision
was made for the Governor to admit " other silver dollars of
equivalent value " to legal tender. That power Avas acted upon
on 14th September 1866, Avhen the Governor proclaimed the
dollar and half-dollar of the Hong Kong Mint a legal tender,
equally with the Mexican dollar. On 1st April 1873 the United
States struck " trade dollars," Aveighing 420 grains,f of 900 millesimal fineness, or 378 grains fine, for the purpose of trade with the East.
* Before these regulations came into force there had been tin issue of dollars
of 419*052 grains, and of halt-dollars of 20i)o grains. (/See Part 2 of first
Schedule to the Straits Order in Council of 21st October I8i)0, printed in
the 21st Annual Report of the Deputy-Master of the Mint.)
| Apparently this weight was arrived at by taking (from Tate's Cambist}
the treaty weight of tlie tael at 588-3 grains, and by multiplying this figure by
72>\ the Canton equivalent of 1,000 dollars in Canton taels.
And Japan had established a Mint at Osaka
(with the Hong Kong plant), from which were issued silver yens,
which were the counterparts of the Hong Kong Mint dollar,
weighing 416 grains of 900 millesimal fineness,* or 374*4 grains
fine. At meetings of the Hong Kong Chamber of Commerce in
January and February 1874 it was proposed that both the trade
dollar and the yen should be admitted to tender ; but the proposal
was set aside in favour of the old policy of a " British dollar. "f
This the Home Government declined to sanction, on the score of
cost.J On 30th June 1878 the United States ceased to strike
the ambitious, but ill-advised trade dollar ; and no action was
taken in Hong Kong to legalise the yen. Further action was
taken, however, in 1890 under the Order in Council of 1863, and
Local Ordinance, No. 1 of 1864, by authorising a token halfdollar,
or 50-c'ent piece, of 800 millesimal fineness.
The coins in leg;il circulation in the colony are therefore as
follows (omitting the rare Hong Koni»' coinage) :
Silver.
- Unlimited legal tender.
- Legal tender to $2.
5' >> »
>> » J>
"> )> >>
Bronze.
- Legal tender to $1.
It is difficult to state with any precision the average number
nf Mexican dollars poured annually into Hong Kong.§ But
vast numbers of subsidiary coins have hitherto been poured
annually into the island, and thence into China, where these
tokens are supplanting the debased, copper "Cash" of the
Chinese, particularly in connection with douceurs at the new
year, &c. From the Twenty-second Annual Beport of the
Deputy Master of the Mint it appears that up to the end of 1891
no less than .^7,336,800 in subsidiary coins had been struck in
England for the colony, $1,125,400 being in 10 cent pieces, and
$2,088,000 in 5-cent pieces. But the beginning of 1892 was
marked net only by the cessation of all outside demand, but by the wholesale introduction of Canton tokens into Hong Kong
itself by compradors, native bankers, &c, all stimulated by the
fact that the Chinese authorities at Canton were supplying the
Canton subsidiary coins at a discount of from 10 to 20 per cent.
See Second Report of the Deputy Master of the Mint, paxje 72
f See also the speech of Mr. Samuel Montagu, m.p., in the House of
Commons on Oth November 1888.
X On the general subject of the supply of Mexican dollars, and of the
establishment of a local Mint, see the Fifth Annual Report of the Deputy
Master of the Mini.
§ From 1880 to 1890 (both inclusive) ahout 45 millions of dollars would
appear to have been shipped from London to Hong Kong, Shanghai, and
Japan. The proportion for Hong Kong csinnot be distinguished, and it is
impossible to say what was shipped from San Francisco and elsewhere.
On the other hand, "cents" are becoming much sought after on
the mainland (as being more convenient than the Canton " cash "),
though in Hong Kong itself they are at a discount when tendered
in bulk, as compared with the more portable dollar or dollarnote
; for small transactions they command their full nominal
value.
In conclusion, a word is required as to the practice of " chopping
" dollars. This practice appears to be peculiar to the
province of Canton, and to be unknown in the north. Native
Chinese merchants stamp or sign ('chop'*) every coin as it
comes into their possession. No Chinaman will take back
a dollar on which his stamp cannot be pointed out, though
by the multitude of successive stamps a chopped dollar
not only loses its "ring," but gradually becoms so obliterated
that any individual stamp cannot be distinguished in one
case out of a hundred. The state of a dollar long in circulation
in Hong Kong is deplorable, but it seems impossible
to overcome the Cantonese practice. On the contrary, " chopping
" has been legally recognised in Hong Kong by the
Governor's Proclamation, published in the " Gazette " of
21st October 1865, under the Local Ordinance No. 10 of that
year. In 1890, when the Canton coinage was being introduced,
the Chinese authorities were urged to prohibit the practice, but
they expressed themselves powerless in I he matter. The consequence
is that "clean " (i.e., unchopped) dollais for the northern
ports command a premium of 1 per cent, or more, according to
demand and supply at the time being.
It was estimated that the amount of coin in the colony on
31st December 1891 was $10,600,000, of which $10,000,000
was held by the European banks, and $200,000 by the Chinese
banks. | Taking the population at 220,000 in round numbers,
and the " active " circulation of coin at the net total of $400,000
(as deduced from the above estimate), the average metallic
circulation works out at $1*8 per head, irrespective of nearly $27
per head in the form of bank notes, as shown subsequently.
• The word "chop" comes from the Hindi chhap, a seal-impression, and
can be traced back in European languages as far as 1 53", when a Portuguese
treaty states that a Nizam " sealed an agreement with his chop " (" eo cliapo
de sua chapa"). The origin of the "pigeon-English" name chop-house for
Customs-station is explained by John Fryer in his "New Account of East
India anaI Persia " (London, 1698), as follows : — " The Custom-house has a
good Front, where the chief customer appears at certain hours to chop, that
is to mark, goods outward bound."
Hence "first chop" is analogous in origin to "A 1."
f The smallness of this sum is explained by the fact that Chinese have no
safe places in which to keep dollars in large quantities. Consequently they pay
their money into the European banks, or exchange coin for notes, at the
earliest opportunity,
Notes.
There has never been a Government issue in Hong Kong,* but
notes issued by banks are in circulation. Of the three banks of
issue on 31 December 1891, two (the Chartered Bank and the Mercantile
Bankf ) are governed by Royal Charters, whilst the third
( the Hong Kong and Shanghai Bank was constituted by Local Ordinance
No. 5 of 1866. The total issues of all the three banks are
limited to the amount of their paid-up capital, which stands at
800,000/. for the Chartered Bank}, at 750,000/. for the Mercantile
Bank, and at $10,000,000 for the Hong Kong and Shanghai Bank.
These total issues have reference to the circulation not in any one
colony alone, but in all places where the banks are empowered
to carry on business.
The security of the issue of the Hong Kong and Shanghai
Bank stands on a peculiar footing. Section XII. of the
Ordinance of 1866 provides that,
—
" It shall be lawful for the company to make, issue and circulate
notes or bills payable to bearer on demand in coin lawfully
current in the colony and to re-issue the same, provided that no
such notes shall be issued for any other sums than the sum of
5 dollars, or some multiple of such sum, or other equivalent
amount, unless the issuing of notes of other amounts shall be
sanctioned by the governor ; provided also that nothing herein
contained shall exempt the company from the operation of any
existing or future laws of the colony or of any port, city, town,
or place beyond the limits of the colony where they may establish
banks or branch banks, restricting or regulating the issue of
such notes, by banks established therein ; and provided also that
the shareholders of the company shall be subject to unlimited
liability in respect of all or any such issues or issue of notes,
and, if necessary, the assets of the company shall be marshalled
for the benefit of the general creditors of the company and the
shareholders shall be liable for the whole amount of such issue,
in addition to the sum for which they are liable under the other
and general provisions of this Ordinance."
As a reserve against notes issued, each of the three banks is
required to keep specie to the extent of one-third at least of the
circulation. But, whilst the Chartered and the Mercantile Banks
are required by their Charters to keep this proportion of specie
in each colony in Avhich they issue notes, the Hong Kong and
Shanghai Bank is only required to keep in Hong Kong the total
reserve against the total of its issues, wheiher in Hong Kong or
elsewhere.
The lowest denomination of note allowed by Royal Charter to
the Chartered and the Meicantile Banks is $5.
The issue of $1 notes by the Hong Kong and Shanghai
Bank was sanctioned by the Colonial Government in 1872 under
the 12th Section of the Bank's Ordinance of 1866. These small
notes are highly popular as a substitute for " clean " dollars, and
as a means of escaping the impositions of compradors, &c.
The following table gives the local note circulation on 31st
December of 1881 and of 1891 :
~ Some few years back a proposal was considered, but subsequentlydropped,
for the issue of $ 1 notes by the Colonial Government.
•j- This latter Bank is stated to be under reconstruction as a limited liability
company, a reconstruction which, if carried out, would forfeit the chartered
Issue.
| Each dollar of issue is calculated at 4 «,, making the maximum issue
$4,000,000.