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coinage of the British dollar to be carried on between your Department and the Banks, but with reference to the last paragraph of the letter from the Government of India of the 16th of April, I am to say that the proposed action in the Straits Settlements and the Malay States will not necessitate any restriction on the coinage of the British dollar for circulation in the East, though it is proposed temporarily to prohibit the importation of that dollar into the Straits Settlements and the Malay States, and at a future date to demonetize it there. There has no doubt been recently a large speculative importation of British dollars into Singapore, in excess of the requirements of the community, but the nature of the proposals of the Straits Settlements Currency Committee will, it is hoped, prevent any inconvenience on this score, beyond some delay in the establishment of a gold standard.
With regard to the second of your letters under acknowledgment, Mr. Chamberlain wishes to express his thanks to the Government of India for consenting to undertake the coinage of the proposed Straits Settlements dollar, but he would be glad if the terms could be reconsidered in some respects.
It is proposed in your letter that the seigniorage should be ordinarily 2 per cent, on the sterling value of the coins. Mr. Chamberlain trusts that the word "ordinarily" may be intended to refer to the future annual requirements of the Straits Settlements Government, after the initial coinage contemplated in the Committee's Report has been concluded. It will be necessary if the Committee's proposals are finally adopted, to coin some 30,000,000 of the new dollars with all possible expedition, and Mr. Chamberlain hopes that it will be practicable to undertake this initial coinage on the same terms as are at present accorded for the coinage of the British dollar, pending the expiration of the agreement six months hence; viz. 1 per cent.
For future supplies of dollars to the Government of the Straits Settlements, the amount of which cannot be estimated at present, though it will probably not amount to more than a few millions of dollars annually, Mr. Chamberlain would, if necessary, be prepared to agree to the same rate of seigniorage as may be fixed in the new agreement to be negotiated for the coinage of the British dollar, but he trusts that as the Straits dollars will be for Government account, the charge will be made as low as possible, consistently with a fair remuneration for work done. An arrangement on this point might, however, be left for future settlement.
It is hoped that no difficulty will be found in giving priority to the coinage of the initial supply of the new Straits Settlements dollar over the coinage of the British dollar, and I am to suggest that in the case of future issues the priority of the Straits Settlements dollar should be expressly reserved in the new agreement as proposed in the case of rupees.
It may perhaps be added that, in view of the action proposed to be taken with regard to the currency of the Straits Settlements, and of the speculative over-demand for British dollars in advance of a change, there is little reason to anticipate any great activity in the demand for British dollars during the next six months or so.
I am to ask that you will move his Lordship to communicate by telegraph with the Government of India with regard to the repro- sentations in this letter as to the terms for coining a new Straits Settlements dollar.
The Under Secretary of State
for India.
I am, &c.,
C. P. LUCAS.
Enclosure No. 5.
India Office to Colonial Office.
F. 3113. (Confidential.)
India Office,
16th May 1903.
Sir,
I am directed by the Secretary of State for India in Council to inform you that he has been in correspondence by telegram with the Government of India on the subject of your letter of the 9th instant, No. 16,723.
The Government of India point out that the coinage of Straits dollars will cause some pressure and inconvenience and probably some expense, especially for the initial issue. They therefore hesitate to accept a lower rate of payment than two per cent., but are willing, in the special circumstances, to accept 13 per cent. for the initial issue. This latter rate will accordingly be charged.
The Government of India are also willing to give priority at their mints to the coinage of the Straits dollar over the coinage of the Hong Kong dollar.
With reference to this arrangement I am to observe that it will be necessary, when giving notice to the Hong Kong and Shanghai Bank and to the Chartered Bank of the termination of the existing agreement for the coinage of British dollars, to inform them that rupees will not be the only coins which will have priority over British dollars at the Indian Mints. It would be more satisfactory if it could be stated, in writing to them, that priority will also be given to the proposed Straits dollars, if it should be decided to issue such a coin, but, if Mr. Chamberlain prefers that the proposal to coin Straits dollars should not be mentioned in the correspondence, the Banks will merely be informed in general terms that priority over British dollars will be given to rupees and certain other coins. I am to request that Mr. Chamberlain's views on this point may be communicated to this Office as soon as possible.
I am, &c.,
The Under Secretary of State, Colonial Office.
Sír,
Enclosure No. 6.
Colonial Office to India Office.
HORACE WALPOLE,
No. 18,377. (Confidential.) Colonial Office, Downing Street,
19th May 1903.
I am directed by Mr. Secretary Chamberlain to acknowledge the receipt of your confidential letter (F. 3113), of the 16th instant, on the subject of the coinage of the proposed Straits Settlements dollar in India.
2. Mr. Chamberlain desires that his thanks may be conveyed to Lord George Hamilton and to the Government of India for the reduction of the seigniorage to be charged on the coinage of the initial supply of the dollars to 14 per cent. on the sterling value.
3. With reference to the last paragraph of your letter, I am to say that Mr. Chamberlain has no objection to its being explicitly stated in the communication to be made to the Banks as to the termination of the agreement for coining British dollars that priority will be given to the coinage of the proposed Straits Settlements dollar, if it should be decided to issue such a coin.
4. I am to add, with reference to the last paragraph of the letter from this Department of the 23rd ultimo, that the Report of the Straits