Hong Kong Trade Dollars

Hong Kong in 1840 had no standard currency.

The local Chinese currency was "cash" copper coins — 1000 Wen of 3-4 grams placed on a string — equal to one silver Tael ingot. The brass alloys that were used in the 19th century were however more brittle due to the high amount of cheap zinc and lead that had been added, perhaps 54% copper 43% zinc and 3% lead, and their weight in higher Wen denominations was not consistent. The silver Tael ingot could also vary in weight between 34-40 grams of silver.

Foreign currencies were Indian rupees, and Spanish and Mexican Trade Dollars (Pesos). The Trade Dollars were definitely more popular, and the British sterling coinage could not really get its "foot in the door".

So in 1863, the Royal Mint in London began issuing special subsidiary coinage for use in Hong Kong that corresponded to the dollar system.

At the same time banknotes of the new British colonial banks, the Hong Kong and Shanghai Banking Corporation and the Chartered Bank of India, Australia and China, denominated in dollars, also began to circulate in both Hong Kong and the wider region.

In 1866, a local mint was established at Cleveland Street in Causeway Bay on Hong Kong Island for the purpose of minting Hong Kong silver dollar and half dollar coins of the same value and similar likeness to their Mexican counterparts. The Chinese were slow to accept unfamiliar coinage and preferred the familiar Mexican dollars, and so the Hong Kong government ceased minting these coins in 1868, with a loss of $440,000, and sold the mint machinery to Japan to make the first Yen coins in July 1871.

From 1873-1885 the US Trade Dollar (mainly minted in San Francisco) was issued to purchase goods in Southern China.

In 1889, the Chinese Yuan was first issued at Guangdong mint, followed by other regions, then by the Chinese central government in 1903.

In 1895, there was a growing demand for silver dollars in Hong Kong. In this year the Mexican trade dollar, British pound sterling and British trade dollars became the legal currencies in Hong Kong. And people continued to use currencies of Spanish dollars, Chinese yuan and Japanese yen.

From 1895 - 1935, British trade dollars were coined at the mints in Calcutta and Bombay, for use in both Hong Kong and the Straits Settlements. However the Straits Settlements decided not to accept them, from 1903 issuing their own silver dollar coin, using mints in London and Bombay, then from 1918 - 1935 just the Bombay mint. In 1906, the dollar value was fixed using the gold standard at 2s 4d.

In 1935 in Hong Kong, a central currency board was established in response to China's introduction of a national currency, with chartered banks authorized to issue banknotes in denominations of five dollars and above. It abandoned the silver standard, introducing a floating peg of HK$15.36 to 16.45 to the pound.
On August 1, 1937, the Hong Kong dollar became legal tender, all other currencies were to cease.
In 1939, the Hong Kong dollar was put on a fixed peg of HK$16 = 1 pound or HK$1 = 1s 3d.

During the Japanese occupation, the Japanese military yen were the only means of everyday exchange in Hong Kong. When the yen was first introduced on 26 December 1941, the exchange rate was 1 yen = HK$2. However, in August 1942, the rate was changed to 1 yen = HK$4. The yen became the only legal tender on 1 June 1943. Still, the people of Hong Kong hoarded their Hong Kong dollars. After the war in August 1945, the issue of local currency was resumed by the Hong Kong government and the authorised local banks, with the pre-war rate of HK$16 = 1 pound. For a short period of time citizens could exchange their left over Military Yen for Hong Kong Dollars at a rate of 100 Yen to 1 Dollar. On 6 September 1945, all military yen notes used in Japanese colonies were declared void by the Japanese Ministry of Finance.

In 2019 the HK dollar was valued at 13 cents US.

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