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APPENDIX I.

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Reference :--

C.O. 882

5 PUBLIC RECORD OFFIC

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

"DON

Ile. W'. Keusch.

26 July 1893.

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would be a constant fluctuation in exchange; you would not have a stable dollar.

879. And independently of exchange there would be the same sort of inconvenience that an Englishman finds when he goes from Dover to Calais and a French- man when he comes from Calais to Dover ?-Pre- cisely.

880. (Mr. Courtney.) You could not give us any comparison of the amount of trade that goes through Hong Kong and is distributed in Hong Kong to China, and the amount that goes to Chinese ports direct? No, I have not given much attention to that in the sense of auswering questions upon it.

881. Have you any ides of the relative importance of the two streams of trade, the trade that goes through Hong Kong and is distributed through Hong Kong to Chinese ports or places in China and the trade that goes to China direct ?--In exports from China the great articles of value, tea and silk, only pass through Hong Kong or affect Hong Kong in a very minor degree, and they represent a direct trade from China of vast value. There is also, however, from Hong Kong a considerable export trade that comes- from the mainland of Canton. The import trade again that comes to Hong Kong, including opium, represents a very large sum of money and besides that there is a very large trade in rice, sugar, and other things. The total amounts certainly to a large sum in clue. All these represent figures that unless they were fabulated and put together it would be difficult to form an opinion as to the balance that would be shown, but undoubtedly the trade in exports is greater outside of Hong Kong to other countries than directly, or by trans-shipment, through Hong Kong.

882. But in imports?-In imports opium goes a long way towards making up other deficiencies, but then that opium again is distributed from Hong Kong. It would be very difficult to analyse the figures LC give anything like a correct statement.

888. (Mr. Currie.) Could you form any opinion as to the relative tonnage of the ports, that is to say, the number of ships arriving and leaving ?-Oh! Hong Kong is the greater, but just as I have mentioned before, a great deal of that is in transit. The jook traffic is also very great.

884. (Mr. Courtney.) London might be said to be a distributing place; although there are some manu- factures here the trade of London is mainly dis- tributing -Yes, receiving and distributing.

685. Receiving from abroad and distributing?- Yes.

886. You would not therefore say that it depended upon the consumption of persons only, the magnitude of the London trade?-The surroundings of London are not another country; they are England,

887. Does that affect the question ?-Oh! very much.

888. Remember we are only measuring volumes of trade?~~I am speaking of it relatively to the im- portance of a coin,

889. I was detaching myself if possible for a time from that. Sir K. Welby was putting it to you that it was rather insignificent the trade of Hong

Kong-only 200,000 inhabitants-and that the other trade did not pass through. Would that be any cort of measure of the importance of the trade of Hong Kong; would it be in a corresponding way a measure of the importance of the trade through London, the actual consumption of the people in Loudon ?—I shall leave that question unanswered.

890. (Mr. Meade.) In the Straits Settlements, where there is a very large mixed population which have been accustomed to silver, should you not an- ticipate great difficulty arising from the dissatisfaction of the population if an attempt were made to establish a gold standard ?—I do not know what the probable effect would be on the feelings of the people.

Singapore ?-I know Singapore; yes, we have trade 891. Have you any personal acquaintance with

with it.

892. (Sir R. Welby.) It is a serious matter with a very mixed and ignorant population, as I understand Singapore consists of; it is a matter that change of this kind would create discontent, is it not? ought to be taken seriously into consideration if a

My opinion in that it would create a very serious amount of discontent. It is in the genius of these people the idea of silver a money, and the great labouring classes that come from China and find em- ployment in the Straits would be, I think, seriously inconvenienced were anything done that would affect the coin in which they are paid for their labour, the coin which they take back again to China when they return after having laboured for a period.

893. (Mr. Currie.) That would affect them only if the coin were changed, I understand.

Do you think that the inhabitants of theso countries are suffi- ciently enlightened to know what a change of standard means unless it presents itself in a tangible form ?— I doubt if it would affect them otherwise than the value of the coin that they get in payment of their wagen.

894. That is to say, its purchasing power ?-Its purchasing power when they take it back to China,

895. Have you considered at all what the effect would be of making the Indian rupee a legal tender in these countries ?In the Straits and in Hong Kong?

896. In the Straits and in Hong Kong, making it not necessarily the money in which Hong Kong transactions would take place, but the legal cola in which Government accounts were kept and which Was the only money which the Government would receive?—Yes, if it were done you would bring into every transaction a calculation as to the value of all the other means of payment relatively to the rupee that you had established.

897. Just so, just as you value them now, against gold, so you would value them then against the rupee? That would be the case. The advantages of it I do not see.

898. It would at any rate stop the fluctuations of the exchange with the Government ?-It would perhaps stop the fluctuations between London and these places, it would not stop the fluctuations locally and with the other eastern silver-using countries.

The witness withdrew,

The Committee adjourned, pending receipt of Reports from the Eastern Colonies.

26th July 1898.

GEORGE W. JOHNSON,

Secretary.

[No furthar mesting of the Committee has been held, but the annexed correspondence (Appendix II.) shows what action was subsequently taken.]—G. W. J.

13th November 1804.

APPENDIX I.

MISCELLANEOUS LETTERS, &c. LAID BEFORE THE Committee.

No. 1.

MEMORANDUM by Mr. ADAMSON ON the Proposal to change the CURIENCY of the STRAITS SETTLEMENTA from the MEXICAN DOLLAR to the RUPEE of INDIA (referred to in Mr. Maxwell's Evidence).

ist. The proposal is intended to secure a fixed ex- change, which shall not be affected by any fall in the value of silver.

2nd. The rupee, though not unknown to the Straits mercantile community, is a foreign coin, and in this respect stands precisely in the same category as the Sovereign.

3rd. An attempt to introduce the rupes into the Straits was made by the East India Company, and failed. It is submitted that whatever difficulties were then found to exist, making the change impracticable, have been greatly increased by the lapse of time and the growth of new interests round the present currency. 4th. It is very doubtful how far a legislative enact. inent, making the rupee a legal tender, would, in the absence of penal clauses greatly modify, even in the Colony itself, the present usages of trade, and whether the greater convenience, and even profitableness, of Bargains made in Mexican dollars, would not practically lead to a continuance of the present system.

5th. If penal clauses are proposed forbidding any bargains to be made payable in Mexican dollars, the effect of such restriction should be carefully considered in its bearing, not only on currency, but on trade generally,

ith. Whatever legislative action might effect in the Colony, it could have no binding force elsewhere, not even in the States under our rule in the Malay Penin- sola. The trade with countries outside the Colony would continue to be carried on in Mexican dollars.

7th. It would follow, then, that rupees would only be wanted for local circulation, and that dollars must con. tinue to be imported for payment of the bulk of our produce.

8th. It is important to remember that Singapore and Penang are mere depôte; that their trade resta on their unrivalled position as distributing centres, and on the cheapness and freedom of their transit arrangements. Whatever restricts this freedom, or adds to the cost of carrying on the trade, lessens by so much the commer- cial power of the Colony, and increases that of the con- tributing countries to trade direct with the consuming countries without the intervention of Singapore, or Penang. India, for instance, might impose an import daty of, say, 5 per cent, on her trade, without any violent disturbance of it, but such an impost in the Straits Settlements would effectually kill the bulk of her import trade.

9th. We cannot, therefore, socept as a safe guide the practice of other countries, but we must judge for our- selves what will be the effect of any proposal, and we should be exceedingly jealous of any change which would restrict our freedom or impose upon our trade, slirectly or indirectly, any increased charges.

10th. It is probable that to change our currency from Mexican dollars to rupees would involve-

A. An increased coat (which cannot at present be estimated) due to the greater seignorage charged by the Mint of India for converting silver into rupees, as compared with the similar charge on the Mexican dollar.

B. A loss to the Government on the present

Bubsidiary coinage.

C.-Mexican dollars being demonetised will become

only an article of trade, which nobody will be compelled to keep, and we may look for periods of scarcity and extreme prices, as with sny other commodity.

D.-As the trade in dollars must, like every trade,

pay for the cost of conducting it (say interest, storage, and profit to the dealer), it is evident a new charge will be incurred on the balk of our transactions.

E-Temporary disorganisation in trade circles, which cannot but have a bad effect, confusion ព 77381.

in the Government accounts, and great ineon- venience from the Colony having one system of currency and the Native States another system.

11th. As the rupee in a foreign coin, and the pro- posal to adopt it has for its object to secure a fixity of value in the standard, it is clear that any other coin which has a fixed gold value would answer the purpose. Assuming, therefore, that a change is absolutely neces sary, is there any reason why the rupee, with its annas and pie, should be preferred to the English sovereign, with its shillings and pence?

The above might, with a few unimportant alterationa apply equally well to a proposal to base our currency on a gold standard. The latter is to be preferred to the rupee, that is all.

No. 2.

Subjoined is a copy of the letter referred to at the close of Mr. Gulland's examination :--

THE SILVER QUESTION.

WHAT SHOULD THE STRAITS AND HONG KONG DO P

(To Editor," L. & C. Express."') SIR-If India closes her minta what will the Straits and Hong Kong do? It is time this by no means easy question was discussed, so that, if the necessity arise, no time need be lost should it be considered desirable to take action.

Cheap money may be a blessing in many ways, but it is possible to have too much of a good thing, sod, with trading communities such as these two colonies are composed of, fixity of value is perhaps of equal, if not more, importance.

Should it be decided that it is not advisable to follow silver to a still lower level, what steps can be taken to avoid so doing where the currency is Mexican dollars, over the production of which these two settlements have no control P

The simplest plan would seem to be to decry Mexican and all other silver dollars, and to substitute doilar of the value of two rupees, or say de, nomiual, instead of the present nominal 4s. 6d. dollar; then rupecs would circalate in the Straite and Hong Kong na half-dollar pieces, and the means taken by India to protect the value of the rupee would protect the Straits and Hong Kong against sudden fluctuations in exchange.

When the India Government has closed its mints and fixed the value of the rupee, then the Straits and Hong Kong Governments would prohibit the further importation of dollars of any sort, bat offer to take all dollars sent in before a certain date, and give rupees in exchange at an equivalent in value according to standard, weight for weight, less cost of converting the dollars into rupees.

In exchange for the dollars the Government might issue rupee notes which could be used as currency while the dollars were being coined into rupees (or two-rapes pisces), and theso notes could be called in as the new coins came to hand. This operation com- pleted, dollars might again be imported, like any other metal, as they would not be a legal tender within the two colonies. The present subsidiary coinage would remain as at present, future issues, if thought necea- sary, being reduced slightly in value,

As soon as the Indian mints are closed there will probably be a large profit in the coinage of rupees, to which the Governments of the Straits and Hong Kong might think themselves entitled on the silver taken by them; but the difficulty is that they could not guaranted some proportion of that silver not returning to India in the natural course of business; perhaps some arrangement might be come to by which India would allow them a certain sum, but if not the Colonies would be no worse off than at present.

E

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