PUBLIC RECORD OFFICE
Reference :-
། ། ། ། ། CO. 88?
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
PUBLIC RECORD OFFICE, LONDON
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exercising the discretion vested in them to refuse gold and tender silver, and that there will be gold always available to meet the demands of the noteholders who have obtained their notes in exchange for gold. Such is not the case. The gold imported by some of the noteholders went into other hands, and their notes were redeemed by telegraphic transfers at 2s. 3 11,16d., so that the state of affairs described in this paragraph has already occurred under the present system. It is also assumed that the effect of the amendment will be to drive gold away from Singapore, and that gold, if received here in exchange for notes, will be immediately shipped to London. Both these assumptions are incorrect. The Commissioners are not bound to issue notes in exchange for gold offered in London at any time, and at any rate tendered by the Bank provided that it is above 2s. 4d. The gold received here will be held here, and will be available for the redemption of notes so long as it lasts.
+ But the principal alterations that will be made by the amendment will be to eliminate the personal element which must exist under the present system, that on the occurrence of a severe drain on the gold reserve and the forcing up of the rates of exchange, the Commissioners instead of refusing to give out gold and tendering silver will adopt the more scientific method of buying it back, thus recover- ing in London the gold taken out here and at the same time keeping exchange down nearer the standard. It is evident from the last part of paragraph 3 that the main object of having the gold here is to enable the Banks to take it out and ship it to the countries where it is most profitable to them regardless of the needs of this place This is exactly what we are endeavouring to prevent. The noteholder does not want gold in Singapore except for the purpose of replenishing his treasury with local currency or for the purpose of export. Gold will not be imported here except when the import point is reached, and it is profitable to do so.
5. Re paragraph 4—The Chamber of Commerce appear to imagine that by having fixed buying and selling rates above and below 2s. 4d. that a Mint par at 2s. 4d will be established. I should have thought that the exchange value of the dollar was what concerned them most. Under our present law, exchange has been forced to 2s. 4d. (January, 1907), and forced down to 2s. 3§d. (February, 1908)
up for demand drafts.
6. The Currency Commissioners will not elect to buy at any rate above 2s. 4d. on a permanent basis. Supposing exchange is forced up to 2s. 44d., the Commis- sioners will buy at that rate till the dollar is brought down hearer the standard, and will stop buying as soon as it is evident that further purchasing will weaken exchange. The rates will vary according to circumstances, and to say that whatever rate the Commissioners elect to buy telegraphic transfers, that rate will become our maximum is an obvious fallacy.
7. Re paragraph 5.-The object of the Government is to maintain the dollar at 2s. 4d., and to prevent it from being forced up unduly. The want of a sufficient gold reserve prevents us from selling between 2s. 3 11/16d. and 2s. 4d., and we are powerless to prevent the rate going down below 2s. 4d. till it reaches the limit.
8. The sole object of the Government is to acquire a sufficient gold reserve to equalise matters without dislocating the revenues of the Colony or without raising & loan.
9. I do not understand why the Commissioners should not buy and sell exchange if by so doing they can keep the dollar in the neighbourhood of our standard of 2s. 4d., which is the only object the Government have in view. As we have no gold in London, the necessity for remitting to London has been forced on us by the Banks buying telegraphic transfers from us.
10. If our debts on such sales are to be met by the sale of our investments, then, when such investments are exhausted, we shall have to fall back on revenue for our ordinary working expenses, and start de novo with our Currency Note Scheme.
11. Paragraph 6 needs no comment.
16 September, 1908
J. O. ANTHONISZ.
VI-COLONIAL SECRETARY to CHAIRMAN, Chamber of Commerce, Singapore.
Colonial Secretary's Office, Singapore,
18 September, 1908.
SIR,
I AM directed to acknowledge receipt of your letter of the 10th instant in reply to mine of the 28th ultimo.
2.
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It is presumed from paragraph 4 of your letter under reply that there was an error in my letter of the 28th ultimo, the words "sell" and "buyer" in the second paragraph having been written by mistake for "buy" and "seller" respectively.
3. The concluding portion of that paragraph should have read "should not be permitted to buy telegraphic transfers on London at a rate which would be better to the seller than 2s. 4d. plus the charges, &c."
I have, &c.,
Enclosure 6 in No. 276.
ARTHUR YOUNG,
Colonial Secretary.
Singapore, 28 November, 1908.
1. We, the undersigned, unofficial members of the Legislative Council, hereby protest against the passing (on the 27th November, 1908) by an official majority of the Council of an Ordinance further to amend "The Currency Note Ordinance of 1899," and do so on the ground of our disapproval of Section 10 of the said Ordinance worded as follows:-
·
It shall be lawful for the Commissioners to issue Straits Settlements dollars, fifty cent pieces or currency notes in exchange for sovereigns payable in London to the Crown Agents for the Colonies at a rate not less than the equivalent in sovereigns and not exceeding a rate which will afford a suffi- cient margin above the equivalent in sovereigns to cover all charges (includ- ing interest) which would be incurred in remitting to Singapore from London such equivalent in sovereigns."
2. We understand that this section is introduced for the purpose of empower- ing the Currency Commissioners to adopt such means as they may deem expedient to obtain gold in London instead of in Singapore in exchange for notes issued here at a rate of exchange of not less than 2s. 4d. per dollar, the end, in the opinion of the Government, apparently justifying the means; and we are of opinion that the effect of such action will be to lower the average exchange value of the dollar and result in the rate ruling in the neighbourhood of 2s. 3 27/32d. T.T. rather than 2s. 4d., notwithstanding that the Colonial Treasurer, in paragraph 7 of his minute of the 16th September, 1908, distinctly states that:-
"the object of Government is to maintain the dollär at 2s. 4d., &c.,”
and again in paragraph 9 of the same minute,-
"I do not understand why the Commissioners should not buy and sell exchange if by so doing they can keep the dollar in the neighbourhood of our standard of 2s. 4d., which is the only object the Government have in view."
though in paragraph 8 of the same minute he says:—
"the sole object of the Government is to acquire a sufficient Gold Reserve to equalize matters without dislocating the revenues of the Colony or without raising a loan."
3. The said section, in our opinion, will check, if not render altogether impracticable, the import of gold for purposes of balancing international trade, and will result in all notes issued in Singapore against gold paid to the Crown Agents in London being taxed not less than 11 per mille, and possibly as much as 22 per mille owing to their only being redeemable at 2s. 3 11/16d. in London.
4. We submit that a tax of this nature is opposed to the principles of free trade, and cannot but have injurious effects upon the trade and business of the Colony. The free import and export of treasure tends to keep exchange steady and prevents violent fluctuations; it also facilitates business and encourages and stimu- lates trade.
5. If, as we contend, the effect of the section referred to will be to reduce the average exchange value of the dollar to a lower level than before, then, in our opinion, the Government commit a breach of faith with the public of the Colony and people in England and elsewhere who have been induced to invest money in enter- prises in the Straits Settlements and the Federated Malay States at rates of exchange