CO882-(6-8) — Page 100

PUBLIC RECORD OFFICE

Reference :-

C.O. 882

7PUBLIC RECORD OFFICE, LONDON

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

Sor

T. Jackson, Bart,

10

MINUTES OF EVIDENCE:

SECOND DAY,

Tuesday, November 25th, 1902.

PRESENT:

Sir David BarĦOUR, K.C.B.I., K.C.M.G. (Chairman), presiding.

Mr. W. ADAMSON, C.M.G. Mr. G. W. JoHNSON,

Mr. W. BLAIN.

Mr. A. E. COLLINS, Secretary.

Sir THOMAS JACKSON, Bart., of the Hong Kong and Shanghai Bank, called in: and Examined.

329. (Chairman). You have experience of trade aul business in the East ?—Yes.

330. Have you resided there? Yes, I have reside 25 Nov, 1902, a very long time there.

331. In what parts 1-Principally in Hong Kong. 332. Have you ever resided in the Straits Settlements! - No, never.

333. And what has been the nature of your occupation! It was chief manager of the Hong Kong and Shanghai Bank for 25 years.

334. And the Hong Kong and Shanghai Bank has branches all over the East 1-Yes, in every place.

335. In the Straits Settlements 1-Yes, in Singapore, and Penang.

336. And any branches in Java --We have two agencies in Java.

337. Borneo - We have mercantile agents in Borneo; there is no bank in Borneo.

338, 1 suppose you have branches at Canton and Shanghai We have an agency at Canton; we have no branch at Canton; we have one at Shanghai, one at Tientsin, one at Peking, one at Hankow and agencies at the smaller ports.

339. And have you given any attention to the question of substituting a gold standard for a silver standard in the East-That is a question that has received attention at intervals for a great number of years.

340. I wished to know if it had received your personal attention -Yes, it has.

341. And have you formed any opinion as to the expediency and possibility of introducing a gold stand- ard --I think the introduction of a gold standard would be attended with very great difficulties.

342. In what places -In the Straits.

343. In the Straits 7-Yes.

344. Do you think it would be possible to have a gold standard in China - I think it would be quite impossible.

345. Quite impossible?—Yes.

346. Looking at conditions as far as we can forecast them you think it impossible --As far as we can forecast them it is an absolute impossibility.

347. Do you think it would be expedient to have a gold standard in Hong Kong if there was a silver standard in China? I am afraid it would not be managed.

348. You think not --No, the whole of the Hong Kong trade-Hong Kong is a very small island and its main importance is as a depôt for the whole of the South of China and the currency which the South of China would have would be the currency that we would have to have in Hong Kong.

349. Then as regards the Straits Settlements what is your opinion - The Straits Settlements are in a some- what different plane. They are fortunate enough always to have a surplus of exports over imports, and it would be possible to establish a gold currency in the Straits, but at the same time there are many difficulties connected with doing that. For instance, the outstand ings there are enormous. The Straits I should say on au average import $20,000,000 annually, and these all go into the surrounding States. Some of them go to the Malay Provinces; they go to Achin Acheen, Siam : sone go to Saigon, -all over the place, and Mexican dollars are the currency of all those places.

350. Well, I suppose even though the Straits Settle- nients went to a gold standard those dollars would still be imported for transmission to the places you have mentioned?-Yes, I think they would, I think they would still go on importing dollars as they do at present 351. And exporting them to these various places ?— You mean the Straits.

352-3. Yes, the Straits?--Yes, I think they would. The steamers all go to the Straits pretty well, and then branch off in different directions to these different places.

354. Then they would go as an article of merchandise rather than as coin -They go as coin to these places; we cannot call silver in the East merchandise.

355. No, but it would become merchandise in the Straits Settlements if the Straits Settlements had a gold standard-Yes, and demonetized it.

356. If they had a gold standard, they must demone- tize the Mexican dollar 3-Yes.

357. It would not be possible to have a gold standard with the Mexican dollar freely circulating --They would lose their character as money in Singapore and Penang.

358. But not elsewhere --But not elsewhere; it would continue the currency of the people.

359. You think that with a gold standard the Mexican dollar would be used very largely as currency inside the Straits Settlements -It would be altogether used; I do not think the people of the country would handle the gold at all.

360. Supposing they had revenue to pay the Govern- ment they could not pay it in Mexican dollars ?--Then they would go and exchange it.

381. They would go and exchange it ?...—

362. Your opinion I gather is that alongside the gold standard and the gold coins, and the subsidiary coins (coins subsidiary to the gold coinage) there would be a considerable circulation of Mexican dollars also-Yes, I am sure there would be.

363. Are there any other objections that appear to you 1 --There would be a difficulty about the outstand- ings there at the present time, and then a good deal would depend upon what ratio you would fix.

304. What do you call the outstandings 7-Well, for instance, the Straits Governments circulation in 120 lakhs at present by the latest accounts.

36h. Do you mean of notes -Of notes, yes; well, they would have to redeem them, I should say at what ever rate they would fix upon.

36. Certainly, that they would have to do so -Then what about the outstandings of the banks similarly.

367. What do you include in the outstanding debts due to the bank! We have very few notes in circulation but the Chartered Bank has more, because we have been calling in our note circulation in the Straits for some years, and all our notes as they come in are cancelled. When the Straits started tiir issue we agreed that we would not issue further in Singapore and we would rcase our issue in Penang as soon as the Government had their Treasury and machinery in order for going on with their issue.

368. Well, that could he got over by the Government providing the banks with the new coins taking the present Mexican dollar in exchange and giving them the new coins? It would be all right if the new coins were the same weight and fineness as the Mexican dollar.

369. If a dollar of the new coinage was by law

COMMITTEE ON STRAITS SETTLEMENTS CURRENCY

declared to be sufficient discharge of the obligation for a dollar note it would be all right as far as the bank is concerned-It would, if they were always exchang- able for gold but not otherwise, because then the native would simply say: "This represents the 100 cent. worth of silver; it is only worth 90 or 95, or whatever it But if he can might be. I shall not take this again.

go to the Treasury there and get gold, it would be a suitable medium of exchange.

370. Do the people understand gold in the Straits? All the Eastern people understand gold thoroughly, but they use it for turning into gold leaf and things of that kind. The Straits are large buyers of gold.

371. My meaning is this: there are men in India and in every town of importance in ndia who thoroughly understand all about gold and the ratio between gold and silver -Yes.

372. But the bulk of the population would have no idea of the relation between gold and silver. Is it different in the Straits Settlement, do you think?—No, I should say it is not. I should say the bulk of the people do not know much about gold, but there are a great many merchants in the Straits who know about gold, who know as much as the gold dealers of India.

373. As much as anybody in the City of London 7-- Much more. There is no broker's office in London where they are so familiar with gold as they are in the bazaars in the East.

371. Have you lived at all in India --No, I have passed through Bombay three times; my utmost stay there was was a fortnight at a time; but, of course, we had had an enormous business with India from Hong Kong.

35. Is there any other objection which occurs to you --Well, I think we must all admit that the trade in the Straits Settlements is at present a very prosperous The Straite have made very great progress, and there is a good old proverb of leaving well enough alone that might occur to some of us.

one.

376. So that on the whole you are not in favour of the change?—I am not in favour of the change if it can be avoided.

377. You recognise that the fall in silver, the fall in the value of silver as compared to gold, has been a very serious matter -I do, and I feel it, that is much more.

378. You are not singular in that. Have you formed any opinion as regards the future price of silver -It is very very hard to say anything about that because we have been so disappointed in times past. We have done all we could to try and find out what was the bottom of silver and each time we found the bottom there was a lower bottom still.

379. You have been disappointed like many other people --We have been disappointed like many other people, but this we do know that silver is not mined now for itself. No person goes out deliberately to mine silver they merely get it as a bye product.

380. In many places they are mining it - That is the most favoured mines. They are not starting new mines; they are not looking for silver. About twenty-five or thirty years ago they were exploring all over Mexico, Colorado and Nevada, looking for silver mines, now no person looks for a silver mine. It is only the best that are being worked for silver. The silver that is coming on the market now is simply a bye product from the mining of lead and other things.

381. And that makes it particularly difficult to say what the price is likely to be in the future -That is a very difficult point, sir; very difficult.

382. I believe the production in the last two or three years has not fallen off-No, it has not fallen off.

383. It has rather increased -Slightly increased. 384. Did it fall off after India, demonetized silver }-- No, I do not think there has been in one year a falling off, but the big increase that might have taken place, think was stopped by India demonetizing silver, and the subsequent drop in its price.

385. Are you prepared to suggest any means by which

■ gold standard could be introduced into the Straits Settlements if it were decided to introduce it -The only way they could do it would be to accumulate the stock of gold, and simply exchange it for dollars and notes.

388. But you could not exchange it for Mexican dollars; you would get all the Mexican dollars in the world? You would, yes, that is the difficulty. Then

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the difficulty crops up what will you do with the Mexican dollars.

387. You would lose a great deal on them if you gave gold freely for them?-Who would be inclined to boar that loss?

388. You could not safely say that if anybody comes with a Mexican dollar you will give him say 28. for it!-- No, I say that that is the difficulty I see.

389. You would be swamped by the influx of Mexican dollars The volume of Mexican dollars that is to be had the quantity of them that is about would make it impossible to put a gold backing to them, as it is said.

390. A gold backing to them; quite so. And I suppose once you begin to give 28. for the Mexican dollar, the Mexican Government would be prepared to buy silver, and coin more dollars --That is if silver was low.

391. If silver was cheap. Would it be possible to substitute in the Straits Settlements a special dollar for the Mexican dollar, of the same weight and fineness, gradually substituting it for the Mexican dollar, and then say you would give gold in exchange for that Yes, but that would be a very slow special dollar process,

392. That would be a slow process --And then there is another thing; it is a very bad time to switch on a new currency when the old one is at its lowest ebb as you may say.

393. But if you wait it may go lower still-On the other hand, it is a long lane that has no turning.

391. It is, but so far there has been no turning —In my experience I have never yet known a great, big slump of this kind, that there has not been a reaction. True from decade to decade, the parity has been lower as compared with gold. That is uiy experience. When there is a great fall every ofe is very much frightened, and then there is a certain amount of recovery, and then the fall went ou again.

395. That is my experience too.Some people think we have touched bottom.

396. But you cannot say we have arrived at the bottom yet-Well, I would rather back a rise than a fall.

397. Is there anything else you would like to say on the subject-No, sir, I do not know that there is, but if you have any questions that occur to you I will be very glad to answer them.

3.9. 1 think I have asked all the questions that occur to me. Perhaps Mr. Adamson will have something to ask There is one thing I think ought not to be lost sight of. Whatever importance others may attach to it, I look upon a low level of exchange as being very munch in favour of silver-using countries as against the gold. For instance, now before the mints were closed, the average rate on India in fact, 225 rupees were equal to 100 dollars, whereas at the present rate, 105 or 110 rupees or something of that kind is equal to 100 dollars, conse- quently when they are shipping rice and other things as compared with Burmah rice from Saigon or Bangkok, or rice from Wuhu in China, a silver-using country has a very great pull over a gold-using country, and though statistics show that that has not told to anything like as great an extent as from a theoretical point of view, you would look upon as a certainty, at the the same time 1 think it must tell in the future, and I think that the tendency will be for a very large export from the silver- using countries with this low rate of exchange, and if there is a large export, there will be a large import, so that the volume of trade should improve.

390. You are aware that that is a disputed question! ---I said so, but I do not see how it can be a disputed question. Here is an article that is exported largely from China now, hides and tallow and things of that kind that were impossible to be exported long ago when we had a da, exchange. There are an hundred and one articles exported from China now that were impossible 25 or 30 years ago.

400. Do you think the advantage is permanent ? [ think it would tend to increase as time goes on.

401. You think it would tend to increase as time gues on; you think think that prices and wages do not gat adjusted to the new rate of exchange in time --No, not quite; to a certain extent they have, but not quite.

402. You said that a fall in exchange increased the exports and that that led to an increase in the importa? --Yen.

Sir

7. Jackson

Bart.

25 Nov. 1902.