136
the subject of the reserve held by the Currency Commissioners of this Colony, I have the honour to forward, for your Lordship's information, the enclosed copies of correspondence with the Singapore Chamber of Commerce, regarding the desir- ability of strengthening the gold reserve held by the Commissioners.
I have, &c.,
Enclosure 1 in No. 191.
JOHN ANDERSON.
The SECRETARY, Chamber of Commerce, to the COLONIAL SECRETARY, Singapore.
SI,
Chamber of Commerce, Singapore, 10th December, 1906.
I HAVE the honour to acknowledge the receipt of your letter, Miscellaneous, No. 6723/06, of the 26th November, informing me that the Secretary of State is prepared to defer to local opinion by increasing the margin of safety in the proposed new dollar, and I am desired to express the satisfaction of my Committee in the decision taken by His Excellency the Governor in agreeing to the maintenance of the present fineness, and to the reduction of the weight of the dollar by one-fourth.
2. I am, however, instructed to bring to the notice of Government the condi- tion of the present gold reserve regarding which my Committee feel some appre- hension in view of the shipments of gold to London, and the later developments that have arisen since they were made.
From the last statement published of the Currency Commissioners' accounts,
I find that the total amount in circulation at 31st October was notes $25,053,105.
The reserve against this is:-
Gold, £023,511 at 2s. 4d.
Silver
Securities present value
Remitted to Crown Agents for investment
Deficiency in values of securities
Less paid in from Colonial revenues to silver
reserve
35,844,380
10,507,490
2,068,780
5,385,596
$23,906,246
$1,894,439
747,580
1,146,950
$25,053,105
The present gold reserve of £623,511 appears to my Committee to be totally inadequate, and might be immediately depleted if a run came upon the Treasury from the holders of currency notes.
酩
3. It is true that such a run might be met by paying our current coin" under the provisions of Ordinance XXVI. of 1906. Such current coin will consist of (a) the present Straits dollar; (b) the new dollar reduced from the present by one- fourth of its weight; (c) the fifty-cent piece.
As regards the first named, it is to be feared that in the event of silver rising it will leave the country, and cease, in time, to be an active factor in our currency, leaving only the new dollar and the fifty-cent piece as the reserve locally obtainable to the note issue, in the event of gold being depleted.
4. The argument used and, we understand, accepted by Government was that it would be futile to adopt a debased dollar with any hope of circulation if gold were not its basis, and obtainable in exchange for it. If that argument be a true one, as we believe, then it is necessary to introduce the use of gold to the public by meeting any demands on the Treasury for it. The action of the Government in making sovereigns legal tender is certainly a step in the right direction, but as the new dollar will be simply a token coin of gold my Committee consider that it should be backed by a substantial reserve of the gold of which it is only the token.
5. What the size of that reserve should be is, of course, the question. The view of my Committee is that at present it should be about £1,500,000, which is practically about one-half of the note issue. The amount may appear large, but my Committee have in view the possible contingency of large quantities of notes being presented for payment. They view with great apprehension the position of
187
the reserve if the gold were depleted and the Government were compelled to tender the reduced dollars. The backing of these dollars is gold, and there would be no gold. The probable result of such a contingency would be the fall of the dollar, and The failure of the whole scheme.
This is, of course, putting forward the extreme possibility, but in a question of this sort, such possibilities should be faced, and provided against. It seems pro- bable that the balance of trade will prevent such depletion of gold, and in that event the present scheme will prove completely successful, provided it gets a fair chance. There is nothing, however, that will do it more harm than a loss of confidence or the rise of suspicion in the public mind.
6. The public here, my Committee believe, agree entirely with the Govern- ment in not tampering with the fixed ratio of 2. 4d., and are of opinion that the Chinese and natives will not suspect a note issue or a token coin, so long as they know that there is gold behind it.
It seems, therefore, of paramount importance to the success of the present scheme that nothing should be done that will in the least degree arouse suspicion, or cause loss of confidence.
7. In conclusion I would draw attention to the strong position of the Indian Government reserves against their note issue as published on the 27th of October.
Against a note circulation of 447 millions of rupees there are held in India
Rs. 189'3 millions in silver coin.
55.5 millions in gold coin.
112 millions in silver under coinage.
100 millions in securities.
In England 63.8 millions in gold coin.
20 millions in securities.
In transit 8 millions in silver.
447-8
It will be thus seen that whereas in India they hold 27 per cent. of their reserve in India and England in gold coin, the reserve of gold in this Colony is only 20
per cent. (which we believe has since been reduced), and taking the remittances to the Crown Agents as gold, 12 per cent. in London or 32 per cent. in all. But the gold reserve in the case of the Colony is a reserve not merely for notes, as in India, but for the reduced dollars also. The parallel between this Colony and India under the changes now being initiated in our currency no longer exists, and it is in view of these changed circumstances that my Committee respectfully but strongly urge the necessity of strengthening the gold reserve here without loss of time even though such strengthening costs money, and involves some loss on recent remittances.
I have, &c.,
A. J. GUNN,
Enclosure 2 in No. 101.
Secretary.
The COLONIAL SECRETARY to the Sæcuntary, Chamber of Commerce, Singapore.
Colonial Secretary's Office, Singapore,
SIB,
11th December, 1006.
I AM directed by His Excellency the Governor to acknowledge the receipt of your letter of the 10th instant, urging the desirability of strengthening the "gold reserve of the Colony.
2. The Governor is in communication with the Secretary of State on the subject of the currency note reserve, and is not in a position to make any statement in regard to it at present.
3. The reference to India in the last paragraph of your letter appears to imply that in addition to the gold reserve which it maintains against its note issue, the Government of India maintains a gold reserve against its metallic rupee currency, and His Excellency would be glad to be favoured with any information in the possna- sion of the Chamber as to the amount of this reserve, and the proportion which it bears to the rupee circulation.
31204
سائل
PUBLIC RECORD OFFICE
TILLCO. 882
8
ALLY WETHE
-NOT GRAPHICA
PUBLIC RECORD OISÉES, LONDOÉ „OF THE