PUBLIC RECORD OFFICE
Reference :-
ITILIC.O. 882
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
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MINUTES OF EVIDENCE:
Mr. F. F. home with them, and it has been suggested that the Whitehood Mexican dollar and the British dollar, even after the gold standard was established, should be allowed to be 20 Jan. 1909. Imported as an article of merchandise into the Straits
Bettlements, so that any man coming to the Straits Bettlements and selling his goods for the new Straits Settlements dollars could then exchange these Straits Bettlements dollars for Mexican dollars, if he wanted Mexican dollars to take home with him?--Yes, I quite see it, but then my difficulty is this the Government will have to redeem Mexican as well as British dollars.
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1827. We are assuming that all that is done, that Mexican dollars and British dollars are demonetised, and those that are in the Straits Bettlements are converted by the Government, and after that the Government say, "You may bring in Mexican dollars or British dollars as you like; they are not legal tender in this country. Mr. Adamson's question is whether an arrangement of that sort would do away with the difficulties which some people have anticipated P-I think the trade could be carried on without that, because it is a very round- about way of financing the movements of mer- chandise. If the Straits sell to China or to Siam they get paid. Banks will negotiate their bills on Bong Kong or Bangkok; they will get paid in the Straits money, and buyers will pay the equivalent in Hong Kong
or Siam.
1828 Well, suppose that the man came from a place where there is no bank; I think that is where the chief difficulty arises; there are places that have not got banks yet!-If it paid the banks to so finance trade Whether they would do it, otherwise they would not.
the trade at these outside ports would aggregate a suf- ficient amount to warrant the banks incurring the ex- penditure of buying silver for coinage into British dollars, and buying Mexican dollars for shipment to the Straits, remains to be seen, but if it paid them they would do it. If the volume necesitated it it could be done. But so long as China and Hong Kong remain on a silver basis these dollars, Mexican and British, will continue to be sent out there.
1829. (Mr. Adamson.) The point is this, they import now $22,000,000 per annum, and only about $3,000,000 remain. To that you must add the Federated States of about $6,000,000, say $9,000,000, so that $13,000,000 are required for the outside trade of the colony, and it is with the view of providing for that that I ask this question: Would trade be interfered with if, after the demonetisation of other coins, there were still permitted ander arrangement a free inflow and outflow of other coins? It might be possible to have that, so long as British and Mexican dollars are obtainable, but such could not be done during the time the standard was being changed.
1830. And would it not be necessary!-It might be necessary if it so happens, an the Chairman has stated, that there are places where there are no banke.
1831. (Chairman.) But there are places at present that take, we will say, 213,000,000 from the Straits Bettle. ments every year, and it is to be presumed that they would even after the change was made in the Straits Settlements continue take $13,000,000 1-Pre- sumably they would continue to take it.
to
1832. Therefore, that being one of the requirements of trade, would it not be convenient to allow them still to get those dollars in the Straits Settlements, not quite in the same way, but very much in the same way as they got them before?-It would certainly facilitate matters, but I do not see how it is possible for Govern. ment to permit their importation. The bulk of those dollars, I presume, are shipped up to China.
1833. (Mr. Adamson.) No!-They are not.
1834. No, we have got particulars of that; a great many go to the Eastern coast of the Malay Peninsula and dodge and scatter about 7-Then it would be a con- venience; yea, very convenient.
1835. (Mr. Blain.) You have described in your memor- andum the machinery by which it might be possible to make a gold standard effective in the Straits Settle- ments: I did not understand you to say whether you think it probable that success could be gained in that way or not, but rather this is the only way that you know in which it could be done, if at all? There are other methods of doing it, but they may be more cir- cuitous; broadly speaking. I think that a change can. not be thorough or effective unless the present dollars are demonetised and redeemed, and a new dollar substituted. 1836. Yes, that is the essence of this scheme as stated here i-Yes.
1837. But you do not commit yourself to saying that it would be possible for the Straits Government to carry that out with success? No, I cannot say that; the ramifications are too endless and too great, while the time required and the cost involved would also be very great; I think it is impossible to estimate either the length of time required to make a gold standard effective or the cost thereof, owing to the situation of the Straits and the Malay States.
1838. I understand that there are two principal objec- tions that you allege against making such an attempt. The first is, from the point of view of the Government, the difficulty they would have in making it effective and the expense that might be involved if they are to see justice done between man and man?-Yes.
1839. And the other one is the economic effect upon the community as a whole, which, I think, you define as resulting from the scarcity of the money? Of the quantity of money.
1840. Restricting the quantity of the circulating medium-Limiting the coinage; and there are other economic disadvantages.
1841. But in your examination by Mr. Adamson just now it rather seemed to me that that difficulty tended to disappear. I do not understand that the question of the supply of a circulating medium for trade transac tions within the colony is the important point I think it is a very important point.
1842. The sufficiency of circulating medium for the internal trade of the Straits Settlements you think a very important point -A very if not an all important point, inasmuch as the trade is carried on with Asiatics, and their money has been and will continue silver, whatever the standard may be.
1843. Because of the effect upon prices if the cir- culating medium was insufficient -The Asiatics and the trade require the movement of immense quantities
of silver money from one point to another.
1844. Within the colony-Within the Straits Settle- ments and the States.
In
1845. And the States ?-Shipment by steamer. the Malay States it is an ordinary occurrence to ship $400,000 or $500,000-of actual dollars-from Singa pore or Penang to one of these States.
1846. But those are places that are all under the same currency law?-All under the same law.
1847. And if you have a new law that increases the value of your standard coin a smaller quantity shipped would serve the same purpose, would it not?--I do not think it would at first. The ratio at which you would effect a change would, I presume, be near to the present level of the gold price of silver. But still, even after the change was effected, I think there would still be the transfer of large amounts of silver from one place to another, and principally from the main points, Sings- pore and Penang, to the States of these large quantities of the new coinage That would still be going on, it is only natural to conclude.
1848. But as regards the external trade of the colony, from what you said in your examination by Mr. Adam- Bon, you agreed that if there were facilities for import- ing and exporting the existing dollars merely as articles of bullion, that would be sufficient?-That might be done by the banks if the aggregate amount required warranted the expense of the shipments and the pur- chase of silver on this side for coinage into British dollars at the Bomby Mint; but I repeat, I do not see how it is possible to do this if a gold standard is to be established and made effective.
1849. And would you go further than that with regard in the effect of going on to the gold standard in the Straits Settlements; would you say that besides the embarrassment and injury to trade that would result from limiting the quantity of the circulating medium, the Straits would be liable to suffer in competition with other countries that remained on a silver basis?—The main products of the States is tin, and that, I think, is a speciality, and so is pepper, and even with the re stricted and limited currency or volume of money, that trade, I think, would continue. But the greater diffi. culties are these that through unforeseen and unknown causes the gold price of silver may increase 10 or 15 If the gold price of silver appreciates, the per cent token silver currency in the States would be shipped away to the nearest markets and melted and sold 'for the 10 or 15 per cent, profit. An export duty would not stop the export, because there are hundreds and thousands of Chinese who would take these dollars
COMMITTEE ON STRAITS SETTLEMENTS CURRENCY.
away in their boxes and pockets, and the most elaborate Custom House machinery could not prevent the Asiatics from smuggling these coins away if they could make 10 or 15 per cent. by so doing.
1860. But in your main evidence you attributed a much greater importance than this to the question between gold and silver, and I think you have said that some of the gold countries in the world had as regards some of their main industries been disastrously effected by the advantage that other countries had got from having a depreciating currency. You do not anticipate any disastrous result of that kind in the Straits Settlements if they adopt a gold standard ? -Not of the same magnitude.
1851. Because they have got no industry that it can affect in the same way?—No great industries. No.
1952. So they really in that respect are in a better position for going on to gold than some of the other countries that have done it already because they have not competing industry which is liable to suffer?--In that respect yes, but there are other causes which render the proposed change hazardous in many ways.
1853. (Chairman.) Is there anything you would like to add, Mr. Whitehead; we have no more questions ?—— In regard to Siam putting the standard on a sliding scale. This is a gold standard which automatically moves with the rise and fall in the gold price of silver, and to make contracts in such a standard is attended with great danger.
1854. (Mr. (Adamson.) Is not that arrangement in force only until they arrive at their intended ratio ?—— For three months, but contracts made at the beginning of the three months might easily be out 15 per cent. by the end of the three months.
1855. (Mr. Johnson.) But so they could on the pre- sent silver basis 1—Scárcely as much as 15 per cent.
1856-9. (Mr. Blain.) They were quite willing to give you absolute fixity at once?-Mr. Chairman, I desire to draw the attention of the Committee to a most in- teresting article which appeared in the "Statist," one of the leading financial newspapers in London, of 17th January, 1903, in connection with "the fall in silver and the Far East," and the problem now being considered. The following is an extract from the
article:--
"It is to be hoped that the Commission appointed by the Straits Settlements to consider the advisa- bility of adopting the gold standard will very seriously and very fully consider the question from all its aspects. In India, whose example is likely to have an undue influence upon European opfilon in the Far East, the interest, or apparent interest, of the official classes, civil and military, and of im-
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porting merchants and bankers, had entirely too Mr. T.E. great weight. The real welfare of the vast popula- Whitehead. Ïation of India was lost sight of, and what was sup- posed to be the dominant party amongst Europeans 20 Jan. 1903," carried everything before it. We hope the mistake will not be repeated in the Straits Settlements. The Commission should always bear in mind the It peculiar position of the Straits Settlements. is surrounded by immense populations using silver currencies. It is a vast entrepôt for the trade of the Far East, and it is a kind of half-way house The Australasian on the way to Australasia. communication may seem to point to the adoption of the gold standard. But Australasia, whatever it may be a century or two hence, is a small affair compared with Eastern Asia, with its seven or eight hundred millions of people, close to which the Straits Settlements lie. The question is too big to be dealt with adequately here, but there is one part of it to which we would invite the atten- tion of all who have influence in the Straits Settle- ments. As we said last week, the renewed fall in silver that followed the closing of the Indian minta has given a marvellous stimulus to the export trade of China-has, indeed, enabled China to carry on a considerable export trade throughout, the whole year, because it has made it possible for her to establish new branches of trade, which were quite out of the question while the gold price of silver was high. On the other hand, the stimulus has been nothing like so great in India India has all the advantages of good government, of internal peace, of high credit, of easy communications, of immense expenditure upon railways, irrigation, and other public works; lastly, of the great skill, enter- prise, and capital of Europeans. Yet her export trade has not developed as rapidly in proportion sa that of China, because, as we said above, the Indian Government was swayed too much by the sup- posed interests of officials, civil and military, and did not take due heed for the welfare of the Empire."
1860. (Chairman.) Does that include all you have to say P-I do not think I have anything more at the present time, but should anything further occur to me I will send it in to the Secretary, or add it to my evidence.
1861. We are very much obliged to you, for it must have given you much trouble to prepare your memoran- dum f--Well, of course it did, but the consideration of the moneys of the Far East has been, in a measure my daily life for the last 28 years.
1862. But, even so, to prepare it all over again was a considerable task 1—Yes, thank you, but it has been
"labour of love."
NINTH DAY.
Tuesday, 27th January 1903.
PRESENT:
Fir DAVID BARBOUR, K.C.S.I., I.O.M.G. (Chairman), presiding.
Mr. W. BLAIN.
Mr. W. ADAMSON, C.M.G. Mr. G. W. JoHNBON.
Mr. A. E. COLLINS, Secretary.
Mr. Barr
Robertson.
Mr. J. BARK ROBIETSON, called; and Examined.
1863. (Chairman.) I think you have long been every portion of it, but with the substance of it so far familiar with the questions arising out of the variations as it affects the present inquiry 1—Yen. in the relative value of gold and silver in recent years? 1886. You consider, I understand from your memo 27 Jan. 1903. -Yes, for the last 25 years.
randum, that the difficulties which have arisen in the silver-using countries owe their origin to the adoption of a gold standard by Germany in 1872 1-Yes; that
1864. You have put in a memorandum; have you any objection to it being printed with the evidence ?- No, none whatever. As the tables are there, perhaps it will be better for reference if printed.
1865. I propose to ask you some questions on your memorandum, not dealing in the oral evidence with
6849.
is the origin of the difficulties.
1867. Which was followed by France stopping the free coinage of silver 3-Yes, limiting it in 1873, and finally refusing it in 1876.