PUBLIC RECORD OFFICE
"Maference :—
TILLCO. 882
PUBLIC RECORD OFFICE, LONDON:
ALLY WITHOUT PERPERSON OF THE DE REPRODUCED PHOTOGRAPHIC- | COPYRIGHT PHOTOGRAPH---NOT TO
1628
SIR,
(Secret.)
76
No. 101.
THE GOVERNOR to THE SECRETARY OF STATE.
(Received 13th January, 1906.)
[Copy to Treasury, 22nd January, 1906. L.F.] [Answered by No. 114.]
Government House, Singapore, 20th December, 1905. I HAVE the honour to acknowledge the receipt of your despatch, Secret, of the 24th of November,* on the subject of the currency of the Colony.
2. My despatch of the 14th instant has already dealt with some of the points raised by you in regard to my proposals, and I need not repeat what I have already
said there.
3. No doubt owing to the necessary briefness of a telegram, the action sug- gested in my telegram of the 21st [? 18th] of Novemberț does not appear to have been clearly apprehended.
I had no intention of recommending the immediate issue of a new dollar 800 fine, but only that the Government should place itself in a position to take that step with the minimum of loss and inconvenience if it should become necessary, owing to the appreciation of silver to a point beyond that proposed to be fixed as parity of exchange.
4. The recommendations of the Committee to which you refer were based entirely on the experience of India, the circumstances of which are very different from those obtaining here. The Indian experiment was started on a steadily falling silver market while we have to face a rising market. Unless fixity is to be in- definitely postponed we must take some risk in the matter, and I submit that it should be our aim to reduce that risk to the lowest possible dimensions, or, at any rate, not to increase it. For that end the Commissioners must be in a position to tender gold in payment of notes, at any rate to the extent to which they hold gold, and they cannot do that unless gold is legal tender.
If that were adopted and the issue of obe dollar notes allowed, the Government would be secured against loss, at any rate, on the whole of the dollars held by the Currency Commissioners.
5. There is no question of an issue of forced notes such as was rejected by the Currency Committee. That involved the whole available circulation being, for a period of from six months to a year, notes against which there were no immediate realisable assets. My proposal would, if a new dollar of less fineness became neces- sary, enable the Commissioners to pay in gold to the extent of both the gold and gold securities they might hold, and would limit the amount of the issue against which no immediate realisable security was available to the amount of the dollars actually being re-coined. I would, in fact, follow, in regard to the new dollar, exactly the course prescribed by the Committee with regard to the existing dollar.
6. To sum up, my proposals are, if the upward tendency of silver continues:--- (1) that the Commissioners should, as soon as parity is declared, hold all the dollars they may have at the time, and should pay for notes pre- sented in gold, issuing notes against either gold or dollars;
(2) that if the rise in silver should carry it above the parity of exchange fixed, arrangements should at once be made for the coinage of a new dollar of less fineness, to be issued for the existing dollar, in a method exactly similar to that pursued in regard to the issue of the existing Straits dollar to replace the old British and Mexican dollars ;
(8) the issue of one dollar notes as soon as possible against gold or dollars, in order to increase the amount of dollars in the hands of the Com- missioners.
€
The amount they now hold is ten millions, out of a total of thirty-five millions coined, and if, by the issue of one dollar notes, the amount in the currency vaults could be increased to, say, fifteen millions, the issue of a new token dollar would, if gold is made legal tender, present no difficulty.
• No. 98.
↑ No. 97.
↑ No. 91.
鲢
TI
7. It must be remembered that we are dealing with a currency comparatively small in amount, of which the total amount in circulation is definitely ascertained, and are not in the position of India, where the enormous amount of the total circu- lation and the large extent to which rupees have been hoarded and brought out when a rise in exchange took place introduce a constantly disturbing factor.
8. If proof is required that our currency has been completely dissociated from silver, I would refer you to the enclosed weekly statements for the year, from which it will be seen that, allowing for the disturbance due to the sudden rise in silver early in the year which led to a considerable export of Straits dollars, all of which have since returned, our currency has followed a course of its own practically uniformly upwards, while that of Hong Kong has fluctuated with the price of silver. It is in fact the price of tin and not that of silver that is mainly responsible for the appreciation of our dollar, the export of which and the import of British and Mexican dollars are, it should be remembered, still prohibited.
9. If, of course, we are to wait till there is a decided drop in silver, before fixing our standard, we may have to wait indefinitely, and our principal industry, tin mining, will suffer severely. It would be far better for us to run considerable risks in connection with our currency than to imperil our tin industry by unduly inflated wages consequent on a high priced dollar.
1629
No. 102.
I have, &c.,
JOHN ANDERSON.
THE GOVERNOR to THE SECRETARY OF STATE. (Received 6 p.m., 14th January, 1906.)
(Paraphrase.)
TELEGRAM.
[Copy to Treasury, 20th January, 1906. L.F.] [Answered by No. 104.]
In reply to your telegram of 11th instant, † consider that part of the recent sharp rise in exchange is, without doubt, due to speculation on account of rumours that the Government intend to fix the rate of exchange at 2s. 6d. or 28. 8d.
On the 12th instant I spoke at a meeting of the Legislative Council warning the public against the unauthorised rumours as to the Government's intentions and stating that the Government's desire was to fix the dollar as low as possible, consistently with safety. As a result telegraphic transfers were quoted at 25. 4d. yesterday.
The reasons for the legitimate rise are the high price of tin and the investment of outside capital in rubber. Representations are made to the effect that, on account of the rise, legitimate business is disorganised and the export trade prac- tically at a standstill.
In view of your opinion that the fixed rate should be the rate ruling at the time when the notification is issued, the position is very difficult. There is every reason to believe that the present quotation is still largely speculative, and, if speculation in differences can be stopped, it will probably drop to a rate equivalent to $9 to the sovereign. I strongly deprecate the adoption of any higher rate. The present high price of tin cannot be maintained indefinitely and undoubtedly the cost of mining is increasing and a higher rate must lead to the shutting down of many mines now working and to distress.
The nine-dollar rate is safe unless silver rises about 32, and it is improbable that that figure will be reached in view of the action of the Indian Government in restricting purchases when silver is high.
I think that we ought to take action to bring speculation to an end, and I would accordingly propose to invite tenders for payment in London of gold for remittance to Singapore against the issue of notes here.
• Not printed.
↑ No. 100.