PUBLIC RECORD OFFICE
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C.O. 882
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APPENDIX:
culty is experienced by the Singapore Municipality, whose loans, being of undoubted security, would be readily taken on favcurable terms, but for the fear of silver falling further.
It is unnecessary here to dwell further on the argu- ments for and against a gold standard in the Straite, as your Committee will, no loubt, take evidence on both sides, and arrive at their own conclusion on the cuestion, so I will now pass on to consider what courses seem open to us in the event of an alteration in
ur currency appearing advisable.
If it is considered desirable that the colony should adopt fixed currency, then there seem to be three courses open to us, either-
(a) To fall back on the rupes,
(b) To revert to the yen, or,
(c) To go in for a gold currency, taking the sove- reign as our standard of value, with, say, a 28. dollar, and notes for $1, as also for larger amounts.
In 1892, when the writer proposed the adoption of the first course, our exchange was in the neighbour. hood of 2s. 8d., and we could have slid on to the double rupee without the change being perceptible, but, personally, I should hesitate to suggest our at- tempting to do so now that our dollar has fallen to below 1 8d.
Some of the large Straits firms, who, in 1892, do- clared against any alteration in the currency, now say they would not object to fixity of value, provided the ratio was not put over 2s. per dollar.
The only advantage of the rupee or yen, as con- pared with a fixed gold standard, is that, should by any chance silver increase in value, these coins would follow it up, and the colony thus enjoy the advantage of such rise, which would not be the case were it on a gold standard.
Many people connected with the Straits have not yet given up hope of silver seeing better days; they argue that it is the coin of two-thirds of the entire population of the world; granted they are the poorest, till, in the long run, numbers must tell, and that the larger output of gold must also help the ratio in favour of silver.
Sir James Mackay is said to have some scheme for giving China a silver currency, which would, more or less, assist in maintaining the value of that article. (Personally, I cannot think China will be able to do what India could not undertake.)
These are all reasons in favour of the yen, which is almost on the 2s. basis, favoured by the colony.
The Chamber of Commerce Committee, in their 1896 report, recommended the adoption of a 2s. dollar, but as they omitted to say how they intended to fix the value, and as the Government presumably could not see their way in this respect, the matter, unfortunately, was dropped.
The yen may be objected to as a foreign coin, but the Straits have all along, until the introduction of the British dollar, made use of the Mexican dollar. and for some years of the yen, until it was put on a fixed value.
Some people may doubt the ability of the Japanese to maintain the yen at 2s., but of this there seems little fear, and the Japanese Government would pro- bably be quite willing to take our gold and give us yous.
In the Straits of late years as in other colonies, a strong Imperial feeling has sprung up, and, among other things, there seems to be a great desire to have a distinct coinage of our own, so that, probably, the yon with all its advantages, would not find favour with a large section of the English community.
While quite admitting the advantages of a distinct Straits currency, the difficulty has all along been the seeming improbability of adopting, with fair chance of success, any such half measure as is found to work with success in India. The machinery and conditions necessary for maintaining an artificial ratio seemn want- ing, and both the Singapore Chamber of Commerce and the Straits Government appear hitherto to have been unable to devise any method of so doing likely to
succeed.
The writer must confess that, failing the rupee ur yen, he is unable to suggest any half measure, and seve nothing for it but for the Straits Settlements to cat
themselves entirely clear of silver and go boldly on to a gold basis.
The only objection that he knows of, to so doing, is the off-chance of silver going to higher level, but, to the minds of most people concerned, the obtaining of fixity of value more than outweighs the advantage of a speculative interest in the future of silver.
If it be decided to take the sovereign as our coin, then the dollar, almost of necessity, will have to be of the nominal value of 2s., and so ten to the sovereign. In weight it might very well be the same as the Mexican, say, 417 grains, 900 fineness. Any silver dollar issued must be kept well above ita bullion value, or if silver rose so as to make it worth more, away would go all our dollars. The Government would, of course, exchange these dollars for gold, and retain the gold as security for the dollars as long as they were in circulation.
One point in favour of any scheme, is that notes are very largely used in the towns, and all through the Federated Malay States, on account of their taking up so much less room, being easier to carry, as also to hide away.
Referring to the 1900 Blue-Book, we find the note circulation given as follows:--
Government
Chartered Bank Hong Kong Bank
5,500,250
3,943,701
2,769,432
12,213,383
The amount of subsidiary coinage in circulation, it
is stated, cannot be ascertained.
British dollars imported during 1900, $21,571,448. This seems out of all proportion to their circulation in the colony, but the explanation that, in addition to being sent on to China, they are taken largely by Siam, and other native countries as bullion, and no doubt they will continue to be imported by the banks, whatever the currency the Straits may adopt. The volume of the import shows the hopelessness of ever attempting, as has been proposed in some quarters, to give them a gold backing.
The Blue-Book does not seem to state the exact amount held by the Government against the notes, but the bulk of their funds appear to be in silver. The Chartered Bank seems to have to keep one-third of their circulation with the Crown Agents partly in coin, partly in securities. The Hong Kong Bank has to keep specie to the extent of one-third their issue.
How the banks would meet any change in the cur rency is so fully stated in Mr. Gwyther's evidence before Lord Herschell's Committee, that it is un- necessary to say anything on the point here.
A much more difficult matter to decide is, how the repayment of current obligations, such as mortgages, debentures, etc., should be made. The writer believes that in Currency Acts there is generally a saving clause making such payable in the coin they were contracted under. In the Straits, such a provision would probably result, where possible, in the whole- sale calling in of all outstanding indebtedness, and in most cases rather than pay up the borrower would have to agree to the deed being altered to the new currency. There seems no hardship in asking a man, who borrowed in dollars when exchange was over 2s. to repay the amount when due in gold, at the rate of 28. per dollar, and, perhaps, the fairest way would be to make all engagethets entered into before a certain date repayable in the new coin, and those subsequent, that is after exchange dropped below 2., in the dollar specified in the deed or the equivalent
thereof.
The Straits Government seem to think that any alteration in the currency would have to be made in conjunction with Siam, Cochin China, and the Philip pines, but however desirable such joint action might be, there does not seem to be anything in the trade conditions existing between the colony and these countries to prevent the Straits taking separate action in the matter.
While aplegising for the length of this memo, I would beg to add that, although it will be impossible to please everyone, still. I feel sure that all concerned in the Straits Settlements will loyally accept the decision of your Committee, whatever it may be, should the Government decide to give force thereto.
COMMITTEE ON STRAITS BETTLEMENTS CURRENCY.
APPENDIX No. 2.
Further MEMORANDUM by Mr. W. G. GULLAND,
Looking at the position of silver, would it not be well, without further delay, to stop the importation of Mexican and British dollars into the Straits Settlements, except for transhipment to other countries?
If a contraction of the currency is necessary before a gold basis can be established, had not the process better commence at once?
Although it may be difficult to prevent these dollars being smuggled in to some extent, still it is quite possible to shut off the main supply, which is regulated by the European banks.
So doing should at least have a steadying effect upon exchange, while any legitimate demand could be met from the Government stock of silver, and by the issue of further notes.
Neither notes nor silver dollars would be sold by the Government, except against gold, which could be paid in London.
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This would enable the Government, not only to work up the exchange on London, but also to some extent to replace their stock of silver with gold, which would be better security for the present Government note issue.
Of course, there will be a loss on the silver; that, how- ever, seems to be a secondary consideration compared with the general welfare of the Colony,
This is merely proposed as a temporary measure while the whole subject of the Straits Currency is under consideration by the Colonial Office Committee and the Government.
The stopping of the importation of Mexican and British dollars would not effect the trade in guilders, rupees, or other silver coins, not legal tender in the Straits.
15th November, 1902.
W. G. G.
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