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PUBLIC RECORD OFFICE

Reference :--

EPEREC.O. 882

5PUBLIC RECORD OFFIC

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

IDON

Mr. J. H. Gwyther.

19 July 1899.

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COLONIAL CURRENCY COMMITTEE:

on their dollars as well as the existing charges, which are very heavy.

633. Is there much disparity between the com- mercial value and the raw silver value of the Mexican dollar?-They were sold at ld, an ounce above the price of silver yesterday, whereas their melting value is about 1d. below silver value.

634. (Mr. Currie.) We sold some at lid, above raw silver value ?—Well, we bought them most likely, Up till now I have been a strong opponent of making A British dollar. The silver had to come out of Mexico in the shape of dollars because the coinage was one of the chief sources of revenue to the State, therefore the merchant who brought them home here in exchange for goods, if he could not get a better price, sold them at melting value, ergo, the British dollar could not be made because the expense of coinage would prevent it going into circulation. The point I want to impress upon the Committee is this, that if this Mexican dollar scarcity continues it may be a very serious question indeed for the circulating medium in the far East, and it may be that the Governors of Hong Kong and Singapore will urge upon the authorities here the need for a British dollar of the same weight and fireness as the Mexican dollar.

635. (Chairman.) Had this diminution in the quantity of Mexican dollars commenced before the recent change made in India ?--No.

686. May it be that there is a holding back of the Mexican dollar on account of the low price of silver at present, in the hope that by holding back a better price may be obtained for it ?—That may or may not ie: I am only pointing out what may possibly happen if this notable decrease continues. It is not an absolute Ruggestion of mine, but it is a point upon which the authorities here may receive very earnest instructions from the Colonial authorities abroad.

837. (Lord Farrer.) Is not the great probability that the Mexicans will increase rather than diminish the coinage of their dollars? What motive can they have for diminishing It?-Diminishing it would be because of the mines diminishing their outpat.

638. Then silver would rise?—Nous verrons. I do not believe in a rise.

Case

639. (Chairman.) They might in that import silver, not simply coin the silver of their own mines ?--If they put such onerous duties upon the Mexican dollar, so as to put it to any extent Above its value as raw silver, then the demand for the Mexican dollar would lessen, and the demand for a British dollar based upon the price of silver plus the seignorage would increase. The Mexican dollar, if it were penalised as regards commerce in the sense of having this abnormal duty put upon it, would inake the merchants of the East agitate for the British dollar, which would run pari passy with the price of silver plus the cost of mintage.

640. (Mr. Currie,) Can you tell us what the seignorage is, if any, on the yen ?—I believe one per

cent.

641. How do you account for the Mexican dollar with practically a seignorage of a much higher amount than that superseding yens ?-Because the merchant who takes his goods to Mexico is compelled to receive payment for those goods in dollars. Five-eighths of the whole exports of Mexico are silver, therefore the merchant who sells his Manchester goods has tơ take Mexican dollars because he can get nothing else, and he has to sell them here at the price of silver, and he has to take that into account in fixing the price of his goods.

642. The Mexican Government gains by the seignorage, but the merchant loses P-Yes.

648. (Mr. Fairfield.) The seignorage is in the naigre of a royalty on the mining industry ?—Yes, it is the bulk of the revenue of the Mexican Republic. 644. (Mr. Currie,) A very large proportion of the Mexican dollars are sent out in payment of the interest on the Government debt, railway earnings, and the sdividends of the banks ?—Yes. The company which bas to pay interest to the shareholders gets less gold

than raw silver would yield, because the Mexican dollar already has suffered at the hands of the Mexican Government.

645. (Lord Farrer.) Do you think it is a possibility to be contemplated that the Mexican dollar should become scarcer and rise in value while silver is falling ?-The Mexican authorities, I am afraid, because we know they are in very great straits now, owing to the fall in silver, will with great short. sightedness endeavour to raise a larger revenue out of the Mexican dollar than they do now, in the belief that the Mexican dollar is necessary to the commerce of the East.

646. Then the Mexican dollar will be at an arti- ficial price as compared with silver?-If they act on that principle.

647. (Mr. Courtney.) May they not do with their dollar what the Indian Government is doing with their rupee?-Possibly.

648. (Chairman.) What effect will that have; yo think that that will have some restriction upon the amount that they coin; they will coin less than before? They will coin less because the demand for them would be less in view of the fact that the import of goods into Mexico would probably lessen as the price of silver fell.

649. (Lord Farrer.) But would not the demand increase if coins became scarce in the East ?-If mer chants found that they were so excessively penalised by this arbitrary act on the part of the Mexican Government to try and put their dollar far above the value of raw silver, then these traders will ask the Colonial Office to make a British dollar which, with a fair seignorage, say of one per cent., would run cur. rent in the Straits Settlements.

650. (Mr Currie.) But the British communities are not the main consumers of Mexican dollars, are they? Do they not go to China ?-They are the distributors

of them.

031. (Lord Farrer.) That would tend to prevent the Japanese from ceasing to coin their yens, would it not ?--The Japanese are very anxious to be within the circle of civilisation, and when they see civilised nations ceasing to coin silver, they will say, we will come within that circle and cease coining silver 100. That is their feeling; it is one more of pride than anything else.

652. That would lead to the shutting up of rival mints for the coining of silver ?—Yes.

653. (Mr. Meade.) I think you said just now there Was a notable decrease in the supply of dollars from Mexico ?—Yes.

654. Could you give us any figures; do you know at all to what extent ?-No; it is too recent. news is received by telegram.

The

655, (Chairman.) There cannot really have been any great change in the amount; there has not been time for it; therefore the Mexican dollars that for- merly came must be somewhere ?The Mexican dollars are generally sold for arrival nowadays; that is to say, the banker in Mexico employs the broker in London to sell to us and to others the dollars for a month's delivery.

656. Still Mexico has not as far as anyone knows made any change in minting a far as she can, and as fast as she can ?-No.

657. Therefore one does not quite see about this soroity that it can be real. It must result from people holding back what they have got in the hope of some change or for some reason or other, must it not?-I am only pointing out what may possibly be in the near future, if what one hears from people interested in Mexico is true, that the Government there are seriously contemplating adding to the export duty on the Mexican dollar, whịch would, as I my, compel the British colonists to think of a coin for themselves.

658. (Lord Farrer.) The inconvenience of depend- ing upon a foreign mint ?—Yes.

659. (Chairman.) That would depend, I suppose, on the extent of the change which Mexico made ř.-

MINUTES OF EVIDENCE.

Yes, I only mention that parenthetically while I am here; especially as Mr. Meade is present.

660. What is the difference in value-I am not asking figures-but there is some difference in value at present, between the yen and the Mexican dollar. Intrinsically the yen is worth more than the Mexican dollar, is it not?—The fiueness and the weight are practically the same,

661. ls that wo; that is just the point, because it would secin leas ?-Well, it is so near that we call it the same 1.3 for banking experience is concerned.

662. The yen is put at 416 of 900 millesimal fineness, and the Mexican dollar at 417.5 of 908 millesimal fineness? That is not correct.

We reckon the Mexican dollar at 900. I may say that, thanks to the imperfection in their assaying possibly, the Mexican dollar from different minta in Mexico varies slightly. We have had them as low as 898; we have had them as high as 902, but taking them olla podrida they come out about 900.

663. (Mr. Currie.) With the exception of the towns in Mexico they are all private enterprises, the mints; they are farmed? Yes, they are all farmed.

664. In the City of Mexico the Government have possession of it now ?~I understood in Mexico they were all private mints, but the Government had a royalty.

665. (Chairman.) What I am giving you is the result of an investigation by the Royal mint in 1891, A varied sample of 1,147 Mexican dollars, and it gives the result of the dollars from the various places, and there are fractional differences, they are very very slight; but the average is 417 grains ?-Well, then, you see it is a kind of lottery. You may have coins from a certain number of mints which are below your average, and a certain number which are above, and you get lighter weighted or inferior dollars in a greater proportion you are worse off than with the yen. On the other hand, if you get a greater proportion of the dollars from the better mints, then you are better off than with the yen.

if

666. I see they vary from the highest millesimal fineness, which is 908-3, and the lowest 899 4?

667. (Mr. Courtney.) Do you discriminate at all between the Mexican dollars and the yens in receiving them ?-Not where they are legal tender.

668. And in sending them away, do you ever pick out one -We may, because we have to send Mexican dollars to Hong Kong and yen to Japan.

669. You would send the Mexican dollars to Hong Kong and the yen to Yokohama 2-We send the Mexican dollars to Hong Kong and the yen to Yokohama,

670. Supposing they are going to be sent into China? They are not known there,

671. The yen are not ?—No.

072. (Chairman.) Would not that be a difficulty in the way of the suggestion that the yen should be made legal tender in Hong Kong, with its constant com- munication with China, that the yen is not known in China -No, because pa far as regarde the island circulation the banks would feel more confidence in letting go the Mexican dollars, which are wanted for the mainland because they leave the reserve of the yen for their liabilities in notes.

673. (Sir R. Welby.) They only want a small amount for actual use in the Colony ?-Hong Kong is a large place; there is a large amount of business going on there.

674. (Lord Farrer.) Are yens over melted down? -When exchange has been favourable in the Straits, we have sent them to India.

675. Do you think they would be melted down and turned into rupeos ?—Yes, it is a mere question of the lance of trade. Up till now, China has for many years past on balance owed money, and she made her payments by sending silver to Iudin.

676. (Chairman.) And that was generally in the form of Mexican dollars ?—Generally yes.

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677. (Sir R. Welby.) You said just now, as I understood you, that possibly there was a diminished output of silver in Mexico. Now, if I am right in thinking you said so, is that a supposition on your part, or have you any facts ?—I have got some facta, but they are not reliable enough yet to give to the Committee. Of course there are views, and there are views.

678. (Mr. Meade.) To go back to the yen question for a moment; when in Hong Kong the question was last raised there was an objection expressed to the yen. I think, on the ground that they had not suid- cient confidence in the integrity of the Japanese mint. Now, I understand you wish to have the yen legalise d in Hong Kong. Are you satisfied with the Japanese mint ?-Yes, the Japanese dismissed the English mint master, who is a friend of mine, after they thoroughly knew the work, and naturally for a time the European mind in the East was rather perturbed because as long as he was there they had every belief that he would act honestly and honourably; but the Japanese, ever since he left, have been quite up to the mark as regards the yen, and we now, by experience finding that they have in no way tampered with the coin, believe it is safe to trust them. The Mexican dollar is a very notable case of honest coinage where a nation has been very much tried by revolutions and impecuniosity. Every one feared that the Mexicans would debase their coins, but they have never done so.

679. And if there is no change in the output of Mexican dollars would you still recommend the yen being legal tender in Hong Kong ?—I would on the ground that it is very near to Yokohama, and you can get relief easily, and that if the Mexicans get very much embarrassed by this great fall in silver they may adopt some empirical measures which might lessen the export of Mexicans.

680. (Lord Farrer.) Have the Japanese a large gold currency ?—No,

681. In Japan ?-No, for practical purposes we may say they have none just now.

682. They have none now ?-They have a certain quantity of it in reserve, which I think they crestel whon they saw the gold coin was leaving the country so rapidly some years ago.

663. (Mr. Currie.) And is the yen coined ex- clusively for external purposes, or does it circulate in Japan? It is the coin of Japan; yen is only the Japanese word for dollar.

684. (Sir R. Welby.) I think you said that you had heard of the idea being entertained that that is a possibility yon would admit the yen to legal Japan would follow the example of India. While

tender in Hong Kong ?-I would at the present time because of Hong Kong's urgent needs. We bavo had two or three telegrams from Hong Kong pointing to a very great exodus of coin.

685. (Afr. Courtney.) No harm would result, if the Japanese did follow the example of India, in respect of making the yen legal tender; it might disappear ?—— Of course it would accelerate the fall in silver.

688. I mean the yen might, although legal tender, be so much more valuable than the Mexican dollar that it would never be used; it would disappear and be withdrawn.

687. (Chairman.) Then no harm would result from having a stock of yen in that case ? All the better.

·688. (Mr. Currie.) Not to the man who had the yen.

689. (Sir R. Welby.) It would be no use if that alteration took place ?—They would be useless.

690. Chairman.) The prospect of that change taking place would be no argument against making the yen legal tender at the present time?—No, in fact it would be rather the other way.

091. (Mr. Courtney.) I am not quite clear about Supposing, wisely or unwisely, the Government of the the process of passing from one system to another.

Straits Settlements resolved to attach themselves to India, and to get their coins from India, paying for them according to the present system, getting them if necessary in exchange for gold, and were to slopt the

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Mr. J. H. Gwyther

19 July 1993.