PUBLIC RECORD OFFICE
Reference :-
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PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO
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The codies thoms already made of the old coins of unlimited legal tender am
812,833,9×1 In the copy of the Treasurer's Memorandum forwarded with sa John Anderson's confidential despatch of the 14th January,* the total This collected at that date was, it appears, by clerical error given at $12.834.532 shuld have read $12.034,532, and the amount received since that date is, therefore, Of the total collections, $375,951 is in fifty-cent pieces, and these about 800,000
The actual it is proposed to utilise for the recoining of the new subsidiary coin amount of old dollars available for sale, and already in our possession, is, therefore, $12.455,030 I am of opinion that the present estimate of $13,000,000 likely to be collected is a safe one, and that calculations for fixing the selling price of silver may without danger be based on this figure
The surplus dollars received as the result of the reminting are only very slightly in excess of the estimate of $4.750,000 so that this sum may continue to be These new dollars are being placed in taken for the purpose of our calculations.
At 25d. nett per oz. the the Currency Note Vault in exchange for old dollars. value of the surplus dollars will be £417.229, and the difference between the face valne and the bullion value of the balance of $5,250,000 will be £237.53×, leaving a net profit of £179.391 Against this there will be the present charges against the Gold Standard Reserve amounting to £126.042. enumerated in the Treasurer's Memorandum forwarded under cover of Sir John Anderson's confidential despatch of the 14th January, 1909 *
It is necessary to point out that in the estimate of £12.042 above men tioned no account has been taken of the profit and loss that is likely to arise out of the minting of the new subsidiary silver and the disposal of the old subsidiary coin. In view of the instructions contained in paragraph 4 of your predecessor's despatch of the 18th January, 19071 which were given effect to in Section 16 of the Currency Note Ordinance. Ì×99, Amendment Ordinance, 1908,‡ which is still under your Lordship's consideration, it would appear desirable to indicate the steps proposed to be taken in the matter
The amount of small silver withdrawn from circulation now forming part of the Treasury balances is of the value of $1,164,156. This is exclusive of the amount of the old fifty cent pieces, of the value of $375,951, held in the Note Guarantee Fund, which it is proposed to release by exchange for new dollars from the surplus on the reminting. The amount, therefore, that will be sent to the Mint for conversion into On the new subsidiary coin of 600 fineness will be $1,540.107 worth of smali coin. the receipt of the new coin they will be gradually exchanged for the old coins which will in their turn be reminted. These operations will, no doubt, spread over four or five years, and keep the account in suspense until the minting is completed. It is expected that at the close of these operations there will remain a certain amount of the old subsidiary coin, which will have to be sold. What that amount will be, will depend largely on trade conditions, but there are reasonable grounds for think- ing, in view of the very adverse trade conditions now prevailing, and the complete cessation of the demand for further withdrawals of this coin from circulation, that the amount for disposal will be considerably less than our present holdings. The opening up and development of the new Malay States will also result in the absorp tion of a large part of our surplus small coin. Taking, however, even $1,164,156 worth as the amount of the redundant silver at the close of our operations available for sale, the loss to the Colony at 25d., viz., the difference between the face value and the bullion value, will amount to £34,923. On the other hand, the conversion of every one million dollars' worth of old subsidiary coin of 800 fineness into subsidiary coin of 600 fineness will result in the release of 187,387 oz. of standard silver which at 25d, will realise £19,519. The cost of conversion, freight, insurance, should not exceed £4,500, so that the net profit will be £15,000 roughly for every million dollars. The records in the Treasury dating from 1871 show that $7,598,000 worth of small coin have been minted. It is not probable, however, that more than five millions will be called in.
6 In view of paragraph 6 of Sir John Anderson's confidential despatch above referred to, it seemed desirable, having regard to the present rapid rise in the price of silver, to acquaint your Lordship of the minimum selling price it is now con- From the information given by the sidered advisable to fix, viz., 25d. nett per oz. Crown Agents in their telegram of the 19th July, 1907, that 3/10d. would cover all
• No, 279 in Eastern No. 108. ↑ No. 196 in Eastern No. 108. See No 276 in Eastern No. 108.
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charges including freight, insurance, and refining, and in their letter (confidential), of the 17th November [1908), forwarded as an enclosure to your confidential despatch of the 3rd December.*that the charges for bringing the dollars to London and dispos ing of them would be somewhat under 18. an ounce, it appeared to me reasonable to fix 253d. per oz. as the minimum selling price so as to provide that the Gold Standard Reserve Fund shall he left with about £50,000.
I have, &c.,
25398
SIR,
No. 10.
ARTHUR YOUNG
TREASURY to COLONIAL OFFICE.
(Received 29 July, 1909.)
[Ansivered by L.F on No. 12 See also No. 29.]
Treasury Chambers, 28th July, 1909. THE Lords Commissioners of His Majesty's Treasury have had before them Mr. Jast's letter of the 6th April last (187,1908-09),† with the accompanying copy of a despatch from the Governor of the Straits Settlements forwarding an Ordinance further to amend The Currency Note Ordinance, 1899," and other documents relating to the currency of that Colony.
Lords
my
In reply, I am to request you to inform the Earl of Crewe that, while concur in the desirability of establishing a reserve in London for the purpose of regulating the exchange, they view with considerable apprehension the provisions of the Ordinance under which such reserve is to be treated as an integral portion of the coin reserve held against the note issue.
A gold reserve held in London would have no appreciably greater efficiency towards securing the immediate convertibility of notes circulating in the Colony than have readily realisable securities held by the Crown Agents for the Colonies the proceeds of which would; equally with gold held in London, be available to meet drafts issued in exchange for notes at Singapore.
reserve.
It appears, therefore, to this Board that a minimum limit for the coin portion of the reserve to be held locally should be fixed quite irrespective of the amount of the gold reserve in London, which, from the point of view of the local convertibility of the note is comparable rather to the investment than to the coin portion of the This minimum proportion has, as the Secretary of State is aware, never previ- ously, in the case of any Colonial Government note issue, been fixed at less than one-half, but, regard being had to the experience which has now been gained in the Straits Settlements, my Lords are prepared in the special circumstances to consent to its being reduced to one-third, upon the understanding that it is held entirely in legal tender silver coin actually available for the payment of notes presented-old dollars either waiting or in process of reminting being excluded from the calculation. My Lords think it necessary to stipulate that the reduced minimum of one- third should consist entirely of silver, since they understand that the sovereign, though legal tender, does not, in fact, circulate in the Colony. Any part of the local coin reserve which may be kept in the form of sovereigns is, therefore, of little value for securing the convertibility of the notes in the event of a panic.
Further, in order to maintain the minimum silver reserve, the Commissioners of Currency should, in their Lordships' opinion, have power to purchase silver for the minting of fresh dollars in anticipation of any depletion of the reserve, instead of being required to wait until the reserve has actually fallen below the minimum as appears to be contemplated by Section 7D (1) of the amended Ordinance.
The other portion of the problem-the maintenance of the gold value of the dollar, as distinct from the arrangements necessary to secure the convertibility of the paper currency-should be dealt with separately.
In order to maintain the parity of exchange the Commissioners of Currency must be in a position to issue new notes whenever a growing demand for currency threatens to raise the gold value of the dollar, and to withdraw notes from circula- tion whenever. a contracting demand for currency threatens to depress the gold
† No. 1.
• No. 274 in Easteru No. 108,