COMMITTEE ON STRAITS SETTLEMENTS CURRENCY.
83
APPENDIX No. 12.
ساسانيا
PUBLIC RECORD OFFICE
Reference :-
C.O. 882
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-
COPYRIGHT PHOTOGRAPH-NOT TO
PUBLIC RECORD OFFICE, LONDON
•
PROPOSED SCHEME FOR PLACING THE STRAITS CURRENCY ON A GOLD BASIS.
Memorandum by Mr. ROBERT CRAIG,
1. A loan of £500,000 to bo raised on the credit of the Straite and Federated Malay States, and the proceeds shipped to Singapore to provide a gold reserve against the note and silver dollar issue, and to form the nucleus of a gold currency.
2. Immediate steps to be taken for the coinage of a Straits dollar and for the issue of $1 Government notes.
3. The importation of dollars into the Straits to be stopped by Government proclamation.
4. The stock of British dollars now held by the Straits Government to be recoined into Straits dollars, and this process to be repeated as soon as a sufficient quantity of British dollars has again accumulated in the Treasury. As soon as the Government considers that a sufficient number of Straits dollars have been coined the British and Mexican dollars to be demone- tised and sovereigns and Straite dollars to be declared to be the only legal currency,
5. The value of the dollar to be fixed at 28.
The advance to that value to be made gradually through the contraction of the currency, otherwise the sudden jump from the rate to-day to 28. would probably lead to a panic in the bazaar and to the bankruptcy of a large number of Chinese piece gooda dealers.
(a) Two shillings is fixed as the value of a dollar, as that sum is 1-10th of a sovereign, which, it is to be hoped, will in the near future be the standard. Two shillings is almost the equivalent of the Japanese yen, and the value of the Siamese tickal, at the ratio of 17 tickala to £1, as recently fixed by the Siamese Govern- ment, would make the dollar worth nearly 2a. at the old exchange of three dollars to five tickals. Two shillings is also equal to Rs.1, so that the value of dollars aa compared with rupees can be easily reckoned. It may further be stated that the American Government will most probably introduce shortly a gold standard in the
Philippines with the value of the dollar at or about
28.
(b) Fixing the value of the dollar at 28. leaves a considerable margin for rise in the value of silver from its present price, so that the danger of its intrinsic value rising above 2s. is minimised. By adopting a 28, dollar the Government would be able to make a hand- some profit from coining dollars, which would go towards the cost of minting and interest on the gold loau.
6. The banks to be allowed to continue their note issue, keeping the required reserve of dollars in Straits dollars or in gold-a sovereign to be calculated as equal to $10.
7. The coining of dollars to be in the hands of the Government, who will issue them to the banks or to the publio in exchange for gold or Government notes. The Government to have the option of paying their notes in gold or in silver, but they are not to be compelled to exchange sovereigns for dollars unless it suits them to do so. As it is difficult to foretell exactly what the effects of the change in the currency will be (Japan it is said was almost denuded of gold when silver was discarded there, and it is said that there is now a constant drain of gold from the Philippines to China) it will be advisable to give the Government the option of paying their notes in gold or in silver, and at the same time of not compelling them to pay out goid in exchange for silver. After a time it is to be expected that, as the balance of trade is in favour of the Straits, a steady flow of gold from Europe to Singapore (to re- place the silver now exported from this side) wal sut in, and the above stipulations will then not bo neces-
sary.
8. As the lion is the symbol of British power, and as Singapore is the City of the Lion, it would be singularly appropriate to have a lion represented on the proposed Straits dollar.
Mr. R. CRAIG to THE CURRENCY COMMITEKE.
3, Lloyd's Avenue, London, E.C.
January 16th, 1903.
Dear Sir, I am in receipt of your favour of the 12th inst, and I return as requested the corrected proof of my evidence before the Straits Settlements Currency Committee.
I also enclose copy of a letter I addressed to the Editor of the "Economist" on the Currency question on the 2nd December, which I omitted to forward with the memorandum I sent you on the 19th December.
I should like to add to my evidence, though probably that will not be allowed now, that in my opinion the only persons resident in or connected with the Straits who have benefited by the fall in exchange are the mineowners. Their large profits in recent years, how. ever, are owing in a great measure to the rise in the value of tin in Europe and America, though, of course, they have benefited by cheap labour, the coolie, owing to the rise in the price of rice and opium, being little better off than he was ten years ago. That the mine- owners have amassed large sums of money is beyond question, as it is well known that they now own large blocks of landed property both in Singapore and Penang.
I am, etc.,
A. E. Collins, Esq.
ENCLOSURE in No.
ROBT. CRAIG.
THE STRAITS CURRENCY.
To the Editor of the "Economist." Sir,-You are, of course, aware that the air is full of rumours regarding the demonetisation of silver in Far Eastern countries-the Straits Settlements, the Philippines, and Sam. Should the three countries named discard silver, as it is not improbable, the effect on the value of that metal will be very considerable, and, as a consequence, on the financial position of China, in which Europe and America are largely interested,
With that, however, I have nothing at present to do, but wish to direct the attention of your readers to the position of the Straite Settlements.
Since the closing of the Indian Mint to the free coin. age of silver, in 1893, that colony and Hong Kong (whose standard of currency is silver) have been amongst the largest, if not the largest, buyers of that now de preciated metal, and the value of the dollar, which in June, 1890, was 3a., is now la. 6d. and a fraction.
Naturally such a fall in the value of the standard of value has crested a widespread feeling of distrust, to say nothing of the louses sustained by Europeans reai
dent in the Straits and in receipt of fixed incornes, and of the steady depreciation of European capital invested there in business or otherwise.
The Straits Government seems at last to have realised the fact that, the value of silver is a diminishing quan- tity, and has applied to the Colonial Office to appoint a Commission to inquire me to whether it would not be advisable to adopt a gold standard. That Commission has now been sitting for some little time, and has been taking evidence; but, as far as is known, it has not obtained much light or encouragement from the wit- nesses examined.
*The fact is that the majority of the Straits merchants now resident in London left the East at a time when exchange, though declining, was yet comparatively steady, and do not realise how difficult it is to do busi- ness when it is fluctuating, as it is at present, or as it was when the Indian Mint was closed, or when Japan adopted a gold standard, else they would pray for stability. Another point is, that they cannot forget that in their time the Straits, it may be said, was sur. rounded by a silver ses, but now that is changed. India, Burmah, and Java are practicaly on a gold basis, Japan has a gold standard, and the Philippines and Siam will, it is almost certain, adopt a similar standard at no dis- tant date.
For these reasons, and knowing also that the colony has prospered during the past thirty years, they hesitate to advocate the adoption of a gold stan- dard, not having grasped the fundamental truth that a stable currency is one of the essentials of sound trade.
An objection raised by some in, that should the Straits adopt a gold standard, the trade of the Archipelago, which now finds its way to Singapore, would be diverted to some other entrepôt. That fear, however, is quite chimerical, as the geographical position of Singapore is such that trade will flow to it. When the Philippines and Siam adopt gold, and should the Straits do ao also. Hong Kong will be the only free port in the East having silver as a standard of value (Saigon and the other ports in French Indo-China may be left out of account as far as attracting trade is concerned; besides, there is a proposal on foot to adopt gold there also), and its position is auch that it cannot compete for the trade which now findla a centre in Singapore.
It is to be hoped, therefore, that the Straits merchants will seize the opportunity now presented to them, and do everything in their power to urge on the Govern- ment the adviesbility of adopting a stable currency and of fixing the value of the dollar.
No doubt there are many difficulties in the way of making a change, but these can be overeme, and the benefits that will accrue in the future, it is certain, will far more than compensate for any temporary loes Or dislocation of trade.-I am, Sir, yours faithfully,
December 2, 1902.
BTRAITS MERCHANT.
$4
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