The primary motivation for creating the overprints had to do with the fact that the Chinese dollar and the Hong Kong dollar were completely separate and the exchange rates between the two meant that the Chinese dollar was only worth 0.8 of the Hong Kong dollar, so the British were receiving less money from the agencies. For instance; mail from Hong Kong was sent at the one cent rate, which translated to four Hong Kong cents, so the repayment to the British was one penny, but in the agencies, the same rate was being paid at four Chinese cents, so in that case the British only received the equivalent of 0.8 cents. Because the British postal agencies were already being run at a loss absorbed by taxpayers and there was already financial strain in Britain as a result of World War 1, separating the Hong Kong issues and the Treaty Port issues was a way to lower some of the expense of the Treaty Ports. Some people also realized that they could generate profit by purchasing Hong Kong stamps in the Treaty Ports with Chinese money and re-selling them to businesses in Hong Kong1.
Britain was the only country maintaining Treaty Ports in China that elected to overprint a colonial issue rather than using stamps from their home country.
The possibility of creating overprinted stamps for use in the Treaty Ports was discussed as early as 1911 but wasn’t considered seriously until 1915 when the Postmaster General of Hong Kong, Edward D. C. Wolfe, took a tour of the agencies and prepared a detailed report to the Post Office in London (GPO) dated 23 November 1915 that laid out his justifications for needing a separate issue for the Treaty Ports. Wolfe’s recommendation was that the British stamps be surcharged to create the new Treaty Port issue. The Postmaster General of Shanghai, James Russel, suggested that the stamps be overprinted to encourage philatelists, but Wolfe distanced himself from this particular justification.
On 15 March 1916, the GPO sent a letter to the Crown Agents stating that the Postmaster General wished “to make arrangements for the issue of specially overprinted Hong Kong postage stamps for use by the British Post Office agencies in China.” In another letter dated 10 June 1916, the GPO wrote to the Board of Inland Revenue at Somerset House that “the P.M.G. would be glad to know whether the necessary overprinting could be done by the Board's Stamping Department. Each stamp would be overprinted with the single word CHINA. The stamps will be purchased by this Department from the Crown Agents at cost price and the revenue derived from their sale will accrue to the Imperial and not to the Colonial Post Office.”
On 3 July 1916, Somerset House relayed that the work could be undertaken in about three weeks and on 18 July 1916, the GPO sent a progress report to Mr. Wolfe stating that arrangements were being made to overprint stamps for use by the Agencies. They also stated that a date would be selected when regular Hong Kong stamps would no longer be valid for postage and at that point unused stock would be returned to Hong Kong.
On 19 July 1916, , De La Rue noted the request for the quantities to be printed for the Nil requisition. From the quantities listed, we can assume that 2 sheets of each stamp and 382 of the stationary were intended to be used for Specimen overprinting.
On 24 July 1916, the Crown Agents wrote to the GPO confirming that instructions had been given to the printers, De La Rue, to execute the order. They promised to deliver the stamps in about 10 weeks time.
At some point before September, Somerset House sent to the GPO specimens of two types of overprint from an original choice of five: the one which was finally adopted, and a second with smaller and wider-spaced lettering. It appears that some examples of this latter type must have been printed, since on 25th July, 1916 the G.P.O. wrote to the Stamping Department of Somerset House: “We should be glad if you could let us have specimen overprints in each of the two types which you enclosed.”2
Consequently, in September, Somerset House sent to the Royal Mint a black proof sheet of adhesives with a request for two 240-set plates, and “2 or 3 separate electros of the word CHINA mounted on wood. The electros are for overprinting wrappers, postcards, etc.”
Meanwhile, there was discussion in the GPO as to the color of the overprint. At least one sheet of 50 cent stamps was overprinted CHINA in differing colors and, after examinations of the proofs in September 1916, it was decided that black would be acceptable as the color. An extraordinary recent discovery at the British Library turned up this sheet, folded and tucked away in an envelope that shows these color trials of the overprints.
On 1 August 1916, the Crown Agents informed the Consular Office that Requisition 70/16 had been accepted but noted that, unless Hong Kong itself could use the overage, the 4c embossed envelopes would not be printed.
On 3rd August 1916, De La Rue responded that they could not prepare less than a quantity of 5,000 and so no 4c envelopes were ever printed. This was confirmed by the Crown Agents on 9th August 1916.
And finally on 17th August 1916, De La Rue confirmed the final quantities to be printed under the requisition, which were as listed on this table.