PUBLIC RECORD OFFICE
Reference :-
C.O. 882
7 PUBLIC RECORD OFFICE, LONDON
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MINUTES OF ENIDENCE:
103. Now, there is a very curious crux in connection 7. Jackson, with the matter which I do not think has been answered. Bart. Suppose there was a silver country and a gold country; a fall in exchange would increase the exports and 25 Nov. 1902. increase the imports, would it not, in the silver country!
-That would be the tendency, yes.
104. And a rise in exchange would have the opposite effect! Would have the opposite effect -check exports.
105. But then, take the gold country. The fall in exchange in the case of the silver country is a rise in the case of the gold, and the imports and the exports of the one are the imports and the exports of the other! -No: I would say if you fixed a gold standard you would have no fluctuations in the exchange.
406. I am taking a silver country dealing with a gold country--the fall in exchange if you look at it from a silver point of view increases the international trade, the imports and exports, but that fall in exchange becomes a rise in exchange in the gold country; and that rise in exchange should diminish the imports and exports, the international trade. There is that difficulty, which is rather a puzzle ?— What I am speaking of at the present time is the exports to America and to Europe from the East. They will be largely stimulated by a low level of exchange, beyond doubt they have been, and they will be.
407. It is pretty evident that at the time the fall in exchange takes place there is a stimulus to exports; that I think must be admitted
408. But the question is whether in the long run that would continue! I do not see why it should not.
409. Still you are aware that it is a disputed question ? Yes, I am quite aware of that.
410. I do not know whether you read the report of the Indian Currency Committee of 1898-1899, of which Sir Henry Fowler was chairman 1---You, I did.
411. The majority of the committee reported that the fall in exchange did not give a permanent stimulus to trade - Yes, I am aware that was the finding of the committee, but certainly any experience in China was the contrary to that.
412. Now there is another argument about the stimulus given by the fall in exchange. If a fall in exchange is so very good for a silver country a further fall ought to be still batter and still further until you got to nothing?
That is reducing it to an absurdity.
413. But where is the limit; where does the fall cease to be advantageous -- I can speak very feelingly on the silver question, perhaps more so than any person sitting at this table, but at the same time I think if the fall in silver goes on the tendency would be for such a demand for it from the East-from the silver using countries - as would right the question itself.
414. As would raise the price of silver-As would raise the price, and that to my mind is the only solution that is ahead of silver.
415. Have you anything else you would wish to Bay I think it would be a very difficult thing for the Straits to maintain a gold currency by themselves.
416. Why - Well, they are surrounded by silver-using countries all round, and it would have to be a thorough measure or not at all. Gold would have to be as free in the Treasury in Singapore and Penang as it is in the Bank of England in exchange for a note, and the day they would refuse to cash a note for gold, from that day their scheme would break down.
417. From that day their currency would sink (—Yes, from that day their currency would sink. There is an erroneous opinion among some of the people about Java There is no gold in Java; Java is a case in point. comparatively speaking in Java there is no gold. They have silver but their silver is on a par with gold always. 418. They use the silver coin of Holland ?--Yes, well, at all events this last year the balance of trade went rather against Java and the banks there and some of the merchants were shipping these coins largely silver coins to Holland, and they were received as if they had been gold coins. Now that is maintaining their gold
currency.
410). That i quite understand? -- Similarly in Japan.
420. In Japan they have a large gold reserve, lave they not They have a gold reserve and they always cash notes in gold if you ask then. They maintain it there, but I think it would be difficult and a very expansive thing for the Glovernment in the Straits to establish a
gold standard. I would very much like to see exchange in the Straits anything you please. It would suit my personal book and all who have investments in the Straits. It would suit the Bank I have represented #o long; at the same time I have given you my views as they occur to me.
481. Looking to your experience in the East, we have asked for your opinion, which of course is valuable to 18-I have just this further to say: I was in Shanghai in 1867. When I went to Shanghai the only items of export one heard of were tea and silk. Now tea and silk form a very small proportion of the exports. The low exchange there has enabled them to export all sorts of other itemir
122. What do they export now ?-Hides, tallow, wax all sorts of things, in fact, in a ship of 6,000 tons burthen you will find tea and silk do not occupy 5 per cent. of the
rargn.
423. I suppose the reduced export of tea is due to the competition of India and Ceylon -Yes, but still not- withstanding that the exports from China for the ten years 1890 to 1900 were double what they were the pre- vious ten years.
424. Measured in silver or in gold 7-Measured in silver.
425. Part of that would be due to the fall in silver — Yes, largely I should think, making the additional export possible, bearing out, to my mind, what I have just heen saying to you.
426. Are you not arguing post hoc ergo, propter lux. There may have been other things that affect the trade besides the fall in silver.
(Mr. Adamson.) I think, with Sir Thomas, that t explanation of this as regards China and Singapore, the great increase in produce has been the low exchange.
427. (Chairman.) I have put questions to you whi may appear to be in opposition to your views, but they are not done with the object of opposing. 1 do not say that I hold a different opinion, I merely wish to get the arguments pro and con on the evidence I came here. to give you my opinion as well as I could, and I have done so.
428. (Mr. Adamson.) You have great experience of banking matters in the East, and you know the conditions of trade in Singapore and the Archipelago, although you have not lived there. Do you think that if we had a gold currency with a token dollar, which would of course mean the restriction of the supply of dollars, that it would not be necessary outside of that to have the Mexican flowing in and out for the conduct of the trade?-1 have just mentioned that to Sir David Barbour.
429. I wanted to bring that out quite clearly, because it really is an important point.
430. (Chairman.) Sir Thomas said that. (Mr.Adamson.) I wanted to bring that out again 1-1 do not think that any action the Straits Government could take would influence the surrounding markets or the millions that use silver. It is the money of the people, without doubt, and no magician's wand can change it."
431. (Mr. Johnson.) You used the expression "gold a little while ago, two or three times; would currency you expect, supposing we had a gold standard established in the Straits, that there would be much gold in circu- lation or require to be in circulation ?-Oh, I think so, at the start, undoubtedly.
432. In actual circulation I mean -No, just to give it to people who wanted it there. Certainly the gold shops would get the notes and go to Treasury, day by day, to get them changed.
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When 433. (Chairman) When they wanted gold? -- they wanted gold, yes, day by day.
434. (Mr. Johnson.) But what I wanted to know was would it be necessary to make gold legal tender, be cause for a time in India, 1 think I am right, Sir David, after the rupee had been put practically on a gold standard at la. l, the gold was not at first made legal tender!- Currency notes were.
435. Currency notes and rupees. The scarcity of rupees brought their value up to 18. id-Yes, that certainly would not apply to the Straits. We do not want any scarcity of money in the Straits, we want an abundance of it.
436. But what meant was, you also said that if you had a guld standard it would be necessary for people to understand that at any moment they could go to the
COMMITTEE ON STRAITS SETTLEMENTS CURRENCY.
Government and get gold in exchange for the token coin, or in exchange for Government notes? -Yes,
437. But as far as I understand they cannot do it in India; the Currency Commissioners in India have the option to give either gold or silver, whatever they think best?
(Chairman.) I think they will give you gold for the rupees if you go to the Treasury.
(Mr. Johnson.) As a matter of practice they may do it, but they are not bound by law to do it.
(Chairman.) They may not be bound by law, and believe are not, but it comes to the same thing if they will do it. The gold backing, of course, is not beyond the possibility of exhaustion, but it is there, and they wil give you gold for the rupee at present.
(Mr. Julinson,) They will give you gold as long as they have got it, but there is no breach of faith with the public if they do not do it.
438. (Chairman.) If they do not do it, there would be no breach of faith in India.
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Sir
439, (Mr. Johnson.) They are not bound by law to do it --India is not a parallel case at all; if you did not T. Jackson, give it in the Straits the gold standard would go.
Bart.
440. (Chairman.) If you did not give gold in India 23 Nov. 1902 for the rupee the gold standard would disappear 1-They did not always give it.
441. They were not able to do so but they do now? Yes, I am very glad to hear it. It is an unsound position. India was in such desperate straits, it had to take desperate measures, but that does not apply to the Straits Settle- ments, for there there is nothing but prosperity. The Straits rather belie their name; it is rather a good place
to be in.
442. (Mr. Adamson.) I do not know about that when you are going to put all this upon us?-Do you not remember the Coronation number of the Straits Times that came out; why it showed there was no place this side of Paradise so good to live in as the Strait.
443. (Chairman.) Would you like to add anything to what you have already said 1-Not at all, I think you have all ny views about it.
MR. J. BURKINSHAW, called in, and examined.
444. (Chairman) You have resided in the Straits Settlements - Yes, sir.
445. For many years 7--twenty-eight years. During 10 or 12 years of the period I have been a member of the Legislative Council of the colony.
446. Have you resided in any other part of the East -No.
147. In what year did you first go to the Straits Settle- ments 1-1874.
448. What was your business there -An advocate and solicitor of the Supreme Court.
449. And while there you have given attention to the Currency question ?—I cannot say that I have especially I have taken the general interest which every resident having property there takes.
450. But you have given us a paper setting forth a method by which a gold standard could be introduced into the Straits Settlements 7-Yes, as soon as I had a auggestion that I might be asked to come here 1 put into writing what my ideas are one method by which it can be carried out, and naturally, as I have property in the Straits, I am highly interested.
451. Do you think it is expedient to adopt a gold standard for the Straits Settlements 7-1 do, and have thought so for a long time.
452. On what grounds do you think so, and what would be the advantages of a gold standard to the Straits Settlements 1---It would take a very long titue to give an answer.
453. Will you give the chief advantages that you think of -- Well I think the advantages of a fixed currency are so great that it is desirable to attain a fixed currency even at a great sacrifice.
454. What do you mean by a fixed currency; do you mean a currency which would have a gold value is fixed as the gold currency.
455. The same as the gold standard ?—Yes. 456. Then what is the advantage - You see I do not like going into the commercial aspect.
457. Give what occur to you. One advantage of course is that fluctuations in exchange between gold and silver countries would not be so great - Yes.
458. That is an advantage undoubtedly Yes. The carrying on of all commercial business becomes a speculative business on the rise and fall of exchange at present.
459. Yos-And that clemen would be reduced I think by a fixed gold standard.
400. And persons who send capital there in money and keep it in money would not suffer by a fall in exchange when they wished to take their capital away }-- I think in the ductuation of the value the sender of capital to the Straits runs a serious risk of great deprecia- tion in that capital when he wants to remove it, "and I think that danger and that risk checks the importation into the colony of moneys that would otherwise come there.
481. Then we have got two difficulties which would be
Mr. J.
removed or allevintel- that is, fluctuation in exchange and depreciation in the value of capital sent to the Straits Burkinshaw. Settlements; are there any other difficulties that occur to you may mention in connection with the sending of capital that one kind of banking institution ceased its operations there because of these difficulties. I believe that was the Trust and Loan Company of China, the Straits and Japan, afterwards re-named the Bank of China.
402. Was its capital in silver or in gold-It was an English company its capital would be in gold.
463. Would be in gold And their losses I believe were so great un account of the fall in exchange that they closed; they liquidated.
464. Now banks that had their capital in silver did not experience that difficulty, or at any rate it did not come before them so prominently No, the Hong Kong and Shanghai Bank, I believe; it has not affected them."
465. The former manager of the Hong Kong and Shanghai Bank has just given evidence: he was manager I think for 25 years at Hong Kong, and he is in favour of maintaining the silver standard in the Straits Settlements 1-Yes; I believe it has not affected them prejudicially.
(Mr. Adumsm.) I think the explanation is to be found in the fact that the Bank of which Mr. Burkinshaw speaks was more founded with the object of lending money permanently.
(Chairman.) On mortgage i
(Mr. Adamson.) On permanent security. (Chairman) On mortgage?
(Mr. Adamson.) On mortgages, yes, and the money was not in a liquid state and could not be called up. The other banks of course keep the money in a different position.
(Chairman.) If that was the case, if it was merely that they could not call up their money, it was not the value of exchange that affected them?"
(Mr. Adamson) Well it did, because they had to adjust their gold account constantly with reference to the reduced value of silver periodically 1-And when their money was paid up it was less in value than when they lent it.
468. (Chairman.) They kept their accounts in gold and their receipts came in in depreciated ailver; depreciated as compared with gold, so they had to show a loss - Their assets had to be valued in gold.
407. But the banks that kept their accounts in silver and lent their money in silver, received silver in repay. ment, and they had not to write off any loss 1-Well, they gained probably in the meantime in their specula tions in silver.
468. But their capital was after all less; measured in gold was worth less 7-Yes.
469. But they were not forced to write off a loss in their books, because they had all their accounts in silver? -Yes, that is no.
470. Well, do you think there would be any disadvan