COMMITTEE ON STRAITS SETTLEMENTS CURRENCY.
83
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PUBLIC RECORD OFFICE
Reference :-
TPEPEC.O. 882
7PUBLIC RECORD OFFICE, LONDON
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APPENDIX, No. 11.
PROPOSED SCHEME FOR PLACING THE STRAITS CURRENCY ON A GOLD BASIS.
Memorandum by Mr. ROBERT Craig.
1. A loan of £500,000 to bo raised on the credit of the Straite and Federated Malay States, and the proceeds shipped to Singapore to provide a gold reserve against the noto and silver dollar issue, and to form the nucleus of a gold currency.
2. Immediate steps to be taken for the coinage of a Straits dollar and for the issue of $1 Government notes.
3. The importation of dollars into the Straits to be BLopped by Government proclamation
4. The stock of British dollars now held by the Straits Government to be recoined into Straits dollars, and this process to be repeated as soon as a sufficient quantity of British dollars has again aboumulated in the Treasury. As soon as the Government considers that a sufficient number of Straits dollars have been coined the British and Mexican dollars to be demone- tised and sovereigns and Straits dollars to be declared to be the only legal currency.
6. The value of the dollar to be fixed at 28. The advance to that value to be made gradually through the contraction of the currency, otherwise the sudden jump from the rate to-day to 2s. would probably lead to a panic in the bazaar and to the bankruptcy of a large number of Chinano piece goods dealers.
(a) Two shillings is fixed as the value of a dollar, as that sum is 1-10th of a sovereign, which, it is to be hoped, will in the near future be the standard. Two shillings is almost the equivalent of the Japanese yen, and the value of the Siamese tiokal, at the ratio of 17 tickala to £1, as recently fixed by the Sismese Govern- ment, would make the dollar worth nearly 28, at the old exchange of three dollars to five tickals. Two shillings is also equal to Rs.1, so that the value of dollars as compared with rupees can be easily reckoned. It may further be stated that the American Government will most probably introduce shortly a gold standard in the
Philippines with the value of the dollar at or about
25,
(b) Fizing the value of the dollar at 2s. leaves a considerable margin for rise in the value of silver from its present price, so that the danger of its intrinsic value rising above 2s. is minimized. By adopting a 28, dollar the Government would be able to make a hand- some profit from coining dollars, which would go towards the cost of minting and interest on the gold loan,
6. The banks to be allowed to continue their note issue, keeping the required reserve of dollars in Straits dollars or in gold-a sovereign to be calculated as equal to $10.
7. The coining of dollars to be in the hands of the Government, who will issue them to the banks or to the publio in exchange for gold or Government notes. The Government to have the option of paying their notes in gold or in silver, but they are not to be compelled to exchange sovereigns for dollars unless it suits them to do so. As it is difficult to foretell exactly what the effects of the change in the currency will be (Japan it is said was almost denuded of gold when silver was discarded there, and it is said that there is now a constant drain of gold from the Philippines to China) it will be advisable to give the Government the opti of paying their notes in gold or in silver, and at the same time of not compelling them to pay out goid n exchange for silver. After a time it is to be expected that, as the balance of trade is in favour of the Straits, a steady flow of gold from Europe to Singapore (to re- place the silver now exported from this side) wil st in, and the abovo stipulations will then not ho neces
sary.
8. As the lion is the symbol of British power, nad as Singapore is the City of the Lion, it would be singularly appropriate to have a lion represented en the proposed Straits dollar.
APPENDIX No. 12.
Mr. R. CRAIG to THE CURRENCY COMMITEEE.
3, Lloyd's Avenue, London, E.C.
January 16th, 1903. Dear Sir, I am in receipt of your favour of the 12th inst., and I return as requested the corrected proof of my evidence before the Straits Settlements Currency
Committee.
I also enclose copy of a letter I addrossed to the Editor of the "Economist," on the Currency question on the 2nd December, which I omitted to forward with the memorandum I sent you on the 18th December.
I should like to add to my evidence, though probably that will not be allowed now, that in my opinion the only persons resident in or connected with the Straite who have benefited by the fall in exchange are the mineowners. Their large profits in recent years, how- ever, are owing in a great measure to the rise in the value of tin in Europe and America, though, of course, they have benefited by cheap labour, the coolie, owing to the rise in the price of rice and opium, being little hetter off than he was ten years ago. That the mine- owners have amassed large sums of money is beyond question, as it is well known that they now own large blocks of landed property both in Singapore and Penang.
I am, etc.,
A. E. Collins, Esq.
ENCLOSURE in No.
ROBT. CRAIG.
THE STRAITS CURRENCY.
To the Editor of the "Economist." Bir,-You are, of course, aware that the air is full of rumours regarding the demonetisation of silver in Far Eastern countries-the Straits Settlements, the Philippines, and Sim. Should the three countries named discard silver, as it is not improbable, the effect on the value of that metal will be very considerable, and, as a consequence, on the financial position of Chins, in which Europe and America are largely interested.
With that, however, I have nothing at present to do, but wish to direct the attention of your readers to the position of the Streite Settlements.
Since the closing of the Indian Mint to the free coin- age of silver, in 1893, that colony and Hong Kong (whose standard of currency is silver) have been amongst the largest, if not the largest, buyers of that now de- preciated metal, and the value of the dollar, which in June, 1890, was 38., is now 1s. 6d. and a fraction.
Naturally such a fall in the value of the standard of value has created a widespread feeling of distrust, to my nothing of the louses sustained by Europeans resi
dent in the Straits and in receipt of fixed incomes, and of the steady depreciation of European capital invested there in business or otherwise.
The Straits Government seems at last to have realised the fact that the value of silver is a diminishing quan- tity, and has applied to the Colonial Office to appoint Commission to inquire as to whether it would not be advisable to adopt a gold standard. That Commission has now been sitting for some little time, and has been takking evidence; but, se far sa is known, it has not obtained much light or encouragement from the wit- nesses examined.
"The fact is that the majority of the Straits merchants now resident in London left the East at a time when exchange, though declining, was yet comparatively steady, and do not realize how difficult it is to do busi- ness when it is fluctuating, as it is at present, or as it was when the Indian Mint was closed, or when Japan adopted a gold standard, else they would pray for sability. Another point is, that they cannot forget that in their time the Straits, it may be said, was sur- rounded by a silver ses, but now that is changed. India, Burmah, and Java are practically on a gold basis, Japan has a gold standard, and the Philippines and Simen will, it is almost certain, adopt a similar standard at no dis- tant data. For these ressons, and knowing also that the colony has prospered during the past thirty years, they hesitate to advocate the adoption of a gold stan- dard, not having grasped the fundamental truth that a stable currency is one of the essentials of cound trade.
An objection raised by some is, that should the Streita adopt a gold standard, the trade of the Archipelago. which now finds its way to Singapore, would be diverted to some other entrepôt. That fear, however, is quite chimerical, as the geographical position of Singapore is such that trade will flow to it. When the Philippines and Siam adopt gold, and should the Straits do so also, Hong Kong will be the only free port in the East having silver as a standard of value (Saigon and the other ports in French Indo-China may be left out of account as far as attracting trade is concerned; besides, there is a proposal on foot to adopt gold there also), and its position is such that it cannot compete for the trade which now finds a centre in Singapore.
It is to be hoped, therefore, that the Straits merchants will seize the opportunity now presented to them, and do everything in their power to urge in the Govern ment the advisability of adopting a stable currency and of fixing the value of the dollar.
No doubt there are many difficulties in the way of making a change, but these can be overeme, and the benefits that will accrue in the future, it is certain, will far more than compeneste for any temporary loss or dielocation of trade.---I am, Bir, yours faithfully,
December 2, 1902.
STRAITS MERCHANT.
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