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COLONIAL CURRENCY COMMITTER:
No. 18.
SIR W. ROBINSON to the MARQUESS OF HIPON.
(Received October 31, 1893). TELEGRAPHIC.
Referring to your telegram of October 27th, British dollar iles abandoned. Nothing additional since my Despatch No. 181, September 5th.
No. 19.
ACTING GOVERNOR MAXWELL to the MARQUESS OF RIPON.
(Received October 31, 1893.)
(Straits Settlements, No. 328.)
MY LORD,
Government House, Singapore, October 4, 1893.
I HAVE the honour, in continuation of my Despatch No. 318, of the 26th September last, to inform your Lordship that on the 2nd instant I laid the report of the Local Currency Committee before my Executite Council and invited their opinions upon the unbject, especially on the question whether the policy of the Government should be to adopt a gold standard or to adhere to free silver.
2. The Colonial Engineer (Major McCallum, R.E., C.M.(.) expressed himself in favour of a gold standard and a Government note issue. The Acting Auditor- Gonora (Mr. H. A. O'Brien) naked permission to offer no opinion, being inantficiently acquainted with the wubject. The Colonial Treasurer advised the adoption of a gold standard and the coinage of a British silver dollar having a fixed value of 3. 4d. in relation to the English sovereign. He requested that a memorandum which he has prepared on this subject may be laid before your Lordship, and it is meoordingly enclosed.
The Acting Attorney-General (Mr. D. Logan) voted for free silver and so did the Acting Colonial Secretary (Mr. A. P. Talbot). The General Offloer Commanding the Troops was not present. My own opinion is con- veyed in the Committee's report. The Conncil were unanimously in favour of a Government note issue.
3. I am unable to add materially to the information which has been collected by the Committee, mud I cannot claim any special value or importance for my own opinion on this difficult subject. I embarked on the inquiry with the hope of finding it possible to recommend that a silver dollar currency on a gold hneis should be provided for the Straits Settlements on sume principle analogous to that followed in India. But as the work of the Committee continued I became convinced of the futility of fixing an artificial value for nailver coin unless there were some authority prepared to give gold for it. To suppose that the Imperial Clovernment would accept this position seemed to be beyond the bounds of practical discussion, and it apperrel to be equally unlikely that the consent of the Home Government would be given to any proposal by the Colony to embark in wit one of the witnesses called "a speculation in silver." The ony practical way of creating a gold standard in this colony Buems to ho in establish the Indian currency here, and in favour of this we have the experience of Netherlands India.
4. The position of the Chinese who are the strangest supporters of free silver is readily intelligible. They do not thoroughly understand exchange questions, but they are that the tendency of exchange at present is elisadvantageous to the European importer in the colopy And in favour of th Chinese exporter. Chinese capitalists, wh › were well represented on the Committee, have money out at interrat in the Colony, and are averse tany change which might raise complicated question n to the rate at which repayment 'would have to bo made. And Chinese traders will generally desire to adhere to the Chinese Standard and to require European merchants who trade with them to conforin to it. An exceptim to this only occurs when the exchange is ags nit the Chinese trader, as in the instance of the Pang rice trade with Rangoon.
3. It is not nece«mry for me to make any remarks pom the Colanis] Trenñuror's minute. It does not, in my opinion, take sofleiently into consideration the dmenli remarked on in paragraph 3 of this despatch. I was unt included by the Curency Committee in their proceedings, broin e it was held that if Mr.
Iremonger wished to offer a special expression of his views he should have done so either orally as a witness or else in the report.
I have, &c. (Signed) WILLIAM MAXWELL. The Most Hon. the Marquess of Ripon, K.G.,
&c,
&c. Colonial Office.
&c.
Enclosure in No. 19.
MINUTE by the Honourable the COLONIAL TREASURER.
We are called upon to inquire into the state of the currency of this Colony-as to its uncertainty; the injury caused to Government; and its effect on trade generally-with a view to offering any practical sug- gestions for its amelioration if it is considered necessary. 2. I think it can soaroely be doubted that depreciation of silver has, on the whole, worked prejudicially to the interests of our Colony.
3. The financial position of Government, which was already seriously affected by the decline in exchange, has become one of actual difficulty, since the action of the Indian Government in closing its mints. Hitherto we, like India, have experienced the effects of a steady and gradual decline in the price of silver, and the result of the course adopted in India has been to force the dollar suddenly down to a mach lower value and thus to make our position relatively worse.
4. A low price in silver hus, so far, given an advan- tage to those trading in native products, but I think that this advantage has reached its maximum, and that it will before long be found to b3 counterbalanced by the natural, if, slow, action of adjustment of pricea and the consequent reduction in the purchasing power of silver.
5. All classes must feel the increased cost of articles of European importation. Local reaction has already been felt with regard to wages, which have risen. Indian labour must now bec me dearer, to adjust the different measure of value between dollar and rupoe. The increased price of opium, from the same cause, must be met in some way, and the Chinese coolje, being the principal consumer, will bare to make this good.
6. The effect of the depreciation of the dollar on British trade, and on investments in this Colony and the adjacent States has been disastrous, and uncertainty in the valns of silver must act as a deterrent to further investments and enterprise.
7. We have to recognise the position that in our Colony the dollar can scarcely be treated as a coin; that it is simply a marketable commodity like tin or tapioca is forcibly brought to our notice by its fall to below half a crown in value. Silver appears to be soffering from an ordinary effect of over-production; the output has become greater than can be forced on the market, or circulated se coin.
8. If the price of silver continues to fall, and nothing is done to estabish a fixed currency, this Colony will probably be placed in the position of being unable to meet its li bilities without recourse to direct taxation, and for all interests it has become a mattor of urgent necessity to ondeavour by some means to obtain a fixed value to our ourrency.
9. Our share in seeking to establish a fixed value between gold and silver is, of course, but a small one in the question of nations, and it is hardly to be belioved that any completely satisfactory or permanent setile- ment can be obtained without some international agreement, but although this is the case, it should not. I submit, prevent this Colony from acting in the
inatter.
10. That a system of bimetallism is the best probable solution is now the opinion of the majority of authorities on the subject. In this I quite believe, hat I venture to doubt if free coinage would bring about the desired result. Looking at the returns of silver production during the last few years, with its enormous increase, it would appear that had all silver been convertei into coin there would now be more silver coin in existence than could be circulated in silver currency countries; and this same position might, at any time, occur with regard to gold, should any enormous increase of its production arise.
11. In attempting to adjust our currency, it must bo remembered that the finances of the Colony are at a very low ebb, and that it can only be carried out by
APPENDIX II.
some means that will not involve expense. If in doing this there should be an eventual profit, it must also le remembered that such profit will be an evenly distributed befit to the general community.
12. One point which gives the hope of possible arrangement is the fact that any action taken by this Government with regard to silver will not affect the outside value of the Mexican dollar; and this latter could easily be disposed of in the course of business,
13. It seems to be the universal opinion in the Colony that a "dollar" of some kind is a necessity, and if this is corrout, I would advocato a British dollar to be fixed at a value of 3. 4d., in preference to the introduction of a double rupee.
14. I name this value as I think it would be wiser not to fix it too low; but rather at a rate which obtained prior to the last swift depreciation. The action of America may also at any time considerably raise the price of silver.
15. The value of this coin would scoord with other coinages; it would be one-six:h of 12. sterling, it would be the equivalent of 21 rupoes at 14. 4.=U. 4d., the single rupee would be 40 ̊ conta of our coin, and the dollar would be the same sa four francs French, or two guilders Dutch.
16. The circulation of this silver dollar would b considerable, and we have a subsidiary coinage for it already in use.
17. For the general use of the Colony and as regards Natives-Indian and Chinese-it would suffice, and no gold coin would be necessary to back it.
18. The Native States would of course have to be induced to join in this and to accept our system of currency.
19. If any objection should be raised against making a token coin, the example of other countries should be horno in mind, where this system goes on to large amounts without hitch or trouble. No doubt it would be a desirable thing, were it possible, to find some sub- stance which, when made into coin, would be of the intrinsic value it purported to be, and would maintain annnchangeable relative value to gold and commodities; but is this possible, or is it necessary, so long as the coin gires an unchanged means of obtaining commodities, and the country of isine has a fair credit?
20. To obtain the required amount of coin it would be necessary to have a note issue, to be redeemable in silver after some given time, and steps would have to be taken to protect our copper coinage and to relieve the Colouy from the present improper burthen pat upon it by the introduction of foreign copper.
21. I think there are many objections to the rupee. It is a coarsely moulded coin rendering its fraudulent imitation difficult to detros. Ao adjustment with Indiv as to the profits on coinago might not be oncy. A double rupes would involve the making of a new doin and its weight would either not coincide with the present dollar, or it would clash with the Indian rupee (the weight of rupees being about 30 cents less than 1 dollar). It might also require a further special nabai. diary coinage. Against those objections, Mr. Edelman in his evidence has ably set out the advantages which the rupes would give.
22. The issue of a local dollar on a gold bsøis, it bas been said, would for a time crmte so ne confusion: no doubt this is mo, but it would probably soon adjust self, and the temporary inconvenience would be more than counterbalanced by the advantages. told invest. ronts would become possible. It would at ones give a fixed ratio with India, and so stop the disturbance in wages of Indian labour, which must extend to our Bikh Police, and it would be of great importance in the opium trade.
23. The Chinese coolie would soon learn the enhanced value of a local dollar, by its increased purchasing power in opium and European staffe, and by enabling him to obtain with thom a larger number of Mexican dollars for transmission to China.
24. The most serious doubt in my mind is the possible reful by gold-basis onuntries to socept the value set by this Colony on its silver coin, as in the case of India lately in trying to sell its bills.
25. The introduction of a local coinage would not alloos the market value of the Mexican dollar, or Japorton yon, therefore the holders of these ecina would not be injured.
20. All contracts or agreements have so far been made in the above coins; all such contracts should for this reason stand to be completed on the terms malo, And this should be provided for by enact nent.
45
27. For the purposes of outside trade it would be nocessary to have in the Colony a stook of the present dollars, and as the annual shipments of such dollars to China is very large, the holders could, without loss, exchange at the Banks the coin held by them Lt ita market value, obtaining in lien thereof the Colonial coin.
29. The present coin in the Colony would be dealt with as bullion, it would continue to be merely a com-
modity or a means of barter; but this silver would not by our motion be deteriorated in its market value in tho world.
29. It seems to be a disputed point whether by special agreement in the future contracta should be permitted to be entered into in Mexican dollars, or whether such contracts should be declared by enactment to be illegal. For myself I so far see no objection to such special agreements being made. A similar state of things existe under the Dutch Government in Sumatra.
E. E. ImmoNGER,
August, 1893.
No. 20.
Oolonial Treasurer, 8.8.
BIB W. ROBINSON to the MARQUESS OF RIPON. (Received January 19, 1804) TELEGRAPHIC.
Referring to my telegram of 81st October, Special Committee unanimously of opinion that coinage and legalization of British dollar of equal value with Mexican essentially necessary, suggests that Indian mints should coin at 1 per cent, seignorage. Strongly recommend.
No. 21.
The MARQUESS OF RIPON to Sm W. ROBINSON. (Sant 6 p.m. January 24, 1894.) TELEGRAPHIC.
In view of great difficulties involved, I will await arrival of report of committee referred to in your telegram of 19th January. Despatch follows by minil. Is abandonment of proposed legalization of yen re. commended by committee P
No. 22.
SIR W. ROBINSON to the MARQUESS OF RIPON. (Received January 27, 1894.) TELEGRAPHIC.
Committee recommend abandonment of proposed legalization of yen.
81,
No. 23.
COLONIAL OFFICE to INDIA OFFICE. {Answered by Na. 27.]
Downing Street,
January 30, 1804. I AM directed by the Marquem of Ripon to transmit to you, to be laid before the Barl of Kimberley, the enclosed copy of a telegram* from the Governor of Hong Kong regarding a proposal to sak the Indian Government to allow the Indian Mints to coin British dollars of equal value with Mexican dollars ie., of a millesimal fineness of 902′′7 and weight 417-74 grains.
Before taking into consideration the question whether such a British dollar should be adopted for circulation In Hong Kong and the Straits Settlements, Lord Ripon would be glad to learn whether the Indian Miota could undertake to coin these dollars, and, if so, whas would be the inclusive charge-his Lordship's object being to ascertain whether such a soin could be laid down in Hong Kong and the Straits Settle. ments as cheaply as Kezioan dollars, or sa the Japanese yen, the charge at the Baku Mint being one per cent.
Lord Bipon believes that a slight amendment of tho Indian Coinage Act would be required, but he prora mes that there would be no difficulty on this point if, after further consideration, it should soom desirable to resort
• No. 20.
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