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COMMITTEE ON STRAITS SETTLEMNETS CURRENCY,

15

PUBLIC RECORD OFFICE

Reference :-

TTLE C.O. 882

7PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH-NOT TO

Mr. J.

14

* MINUTES OF EVIDENCE:

tages in introducing a gold standard into the Straits Burkinalue Settlements; do you see any serious disadvantages -I wee no serions lisadvantages, but disulvantages there

25 Nov. 192 would be.

471. What are they --In commercial transactions ; with the transactions between Singapore merchants and residents in Java for instance and surrounding countries. 472. Java has a gold standard 7-Yes, but then I think that largely the transactions are made the contracts are made in the dollar currency 1 believe, and there would be a greater complication in the merchant making his calculations and fixing his price so that the foreign native dealer could understand what he was to pay ultimately on the completion of the bargain.

473. Any other disadvantage-1 do not know of any other and I think that is plain,

474. You think the advantages of the gold standard outweigh the disadvantages -I think they do im- mensely.

475. You have put in a paper showing a method on which a gold standard could be introduced into the Straits Settlements?—Yes,

476. You propose that on what you call the first demonetization date the Mexican dollar should cease to be legal tender! Yes,

477. Or lawfully current in the colony. I suppose of that lawfully current." is simply another means expressing legal tender -No : I put it in to avoid any doubt. I put these words in to avoid any doubt as to its being lawful to use the coin. I would make it unlawful to use it at all.

478. You would make it unlawful to use it at all--It should be unlawful to circulate a coin which was not jegal tender.

479. Even though the two parties agreed among them. selves -Yes, I would knock it out entirely.

180. Well, suppose one man entered into a contract with another to pay him 100 Mexican dollars on a certain date, and that came into the Law Courts, what would you do; would you recognise the contract 1—Of cons in the memorandum I did think of that point, not put precisely as you have put it. In such a short memorandum as that one cannot provide for every detail, but I am inclined to think that such a contract would be enforced by the Courts.

481. It would be enforced no doubt, unless there was a special law to the contrary ---Yes, prohibiting it.

482. But would you pass that special law -I think I should possibly.

483. 1 merely want to know what your view in 1—I think I should. It might then be provided in that prohibition that tender of British dollars should be Bubstituted.

484. You would not demonetize the present British dollar at first 1-Not until the second demonetization date.

485. Well, may there not be a risk that between the two demonetization dates the present British dollar would be largely imported for the sake of being ex- changed-Yes, there would be, but I think the Govern ment ought to take some burden on its shoulders to avoid repudiating the coin that it has itself issued.

486. But the Government of the Straits Settlements could hardly undertake to redeem all the British dollars that have been issued No, they must be redeemed before the second demonetization late; not afterwards.

487. What interval do you allow between the two demonetization detes-I allow eight months from the notification of the first demonetization date.

484. That would be sufficient time to get in all the British dollars in Hong Kong and elsewhere -It would. 489. Assuming your plan were adopted, would it not be better that on the first demonetization date the import of British dollars should be prohibited, because it is rather hard that the Straite Government should accept responsibility for British dollars which had always circulated in Hong Kong! Yes, I think that it would, now that that point is drawn to my attention, but I avoided demonetizing the British dillar at too carly a date, because it will take, boljeve, the fiovern- ment all its time to get the British dollar coined by the second denumetization date.

490. And after the first demonetization date you

would make English sovereigns and half sovereigns legal tender?—Yes.

491. Bank of England notes also ?—Yes.

492. And the subsidiary coins of course as well, and then you would have promissory notes?--The object of that is to mout shortage of coins.

493. And special promissory notes? The promis- sory notes are the present bank notes as issued. Special promissory notes are to meet the case of a demand being made on the Government which it has not coins ordinary promissory notes enough to meet it might give a special promissory note, and the banks I imagine would discount that.

or

494. It could be used as enrrency?—Yes. 495. In the meantime! In the meantime.

406. Probably would be so used? -Yes, that is the great difficulty to get over, as this probably would be done kuddenly; the Government must have some menus of meeting these demands for cashing the demonetized dollars, and I think no one would refuse to take the Government's promissory notes, which could be payable in six or eight months.

497. And you would for 22 days after the issue of the first notification, authorise the Government to buy Mexican dollars, to take in Mexican dollars, and to give in exchange sovereigns or half sovereigns -That is, except that I make it compulsory on the Government to do so on their being tendered.

498. Yes, you make it compulsory on the Government to give English sovereigns or half sovereigns or Bank of England notes or promissory notes for dollars, payable on demand; that is the ordinary promissory note 7-Yes, the ordinary Straits bank note. The Bank of England note, I take it, is a promissory note.

490. It is ?-The bank notes of the Straits Currency Commissioners is a promissory note, payable on demand. 500. But suppose the Government had not got enough sovereigns or half-sovereigns or Bank of England notes or new British dolls Then they would have to issue an undue proportion of these special promissory notes.

501. In paragraph 10, I do not think you mention the special promissory notes!

502. (Mr. Adamson,) No; unless it be under Clause C! -Oh no, it is not under the Clause C, "Promissory notes for dollars payable on demand signed by the Straits Currency Commissioners," as from the second demonetization. No; I am assuming that I give the Government eight months to get there a plentiful supply of Bank of England notes, or plenty of new British dollars coined, and I do not think it is fair to force on the public the acceptance of their promissory notes after the date which allows the Government sufficient time for coining the British new dollar.

502* (Chairman). In the 22 days they may purchase the Mexican dollars under certain conditions Yes

503. And then, after the second demonetization date and up to three months, they may purchase all British dollars, on certain conditions! May I ask, sir, what alause that is?

504. Paragraph 10. I see you make a distinction ?—— Yes, I make a distinction: I recapitulate it therefore in Clause 10, the particular mixtes in which the Govern- nent can jy after the second demonetization date.

505. You make a distinction as to the method of pur chasing Exactly.

506. But you say it would he necessary to prohibit the import of British dollars ' -think it would.

507. Now the new British dollar to be coined; what sort of a dollar is that to be! Well, at first I thought it ought to be a dollar nearly an ounce of silver, but that would open the temptation on a change of the value of the dollar to hurry these dollars out,

508. You mean it ought not to be the same weight as the Mexican dollar?--I thought so at first, but now I am inclined to think it should be a token coin.

509. A token coin? Of as large a value as you can make it to avoid its being bought for the sake of silver only. I think it would not be safe to have it more than

token coin; that is the difficulty.

$10. Under the conditions laid down by you, supposing your system were carried out completely, that dollar would be worth 14. 8d. } –Yes.

511. Twelve dollars to the £13-Not the coin itself.

512. The new dollar would be worth 18. ed.; the monetary unit would be 18, 87, ?—Yes.

513. And you have a provision hy which if the price of silver went up, it would be lawful for the Colonial Government to fix the new dollar at 1×, 167, or 2×, {--Yes. 514. But the Government could only be allowed to make one change - Yes; we ought not to have a great uncertainty about the value of the dollar.

515. 274, corresponds to what--to 28. does it 1- 27th, corresponds thereabouts to 28. The present price is 221 —23 is about 1×, 8., so I put a rise of 21. per ounce in the price of bar silver to correspond to a rise of 2d. in the value of the dollar. That is subject to adjustment, I put in these figures to illustrate what mean. 516. To illustrate what you propose 7- Yes.

517. Now there was evidence given here that if a man had purchased property in the Straits Settlements before the fall in silver, say a house, an estate of some sort, and had now to sell it, he would'not lose because the rupee value of his property would have increased pro- portionately in the meantime. Is that your experience 1 -Well, I have drawn a supplementary clause, touching, I think, the point you mean, but I did not want to burden this memoraridum, and therefore kept it out.

518. It is a question of fact; is it so 7-Yes, as the dollar depreciates the land appreciates.

519. The land appreciates in silver 1—Yes. 520. Has that been the case from the beginning of the fall in silver —I think it has. There has been a great rise, partly due to the progress of the place; but it is a standard; I think it is an accepted maxim in Singapore that as the silver goes down the land improves in silver value.

521. The value of land and houses increases (--Of land and of houses, bocanse the price of building houses had gone up when I left Singapore 30 or 35 per cent. over what if was not many years ago, and it is probably now 50 per cent, that the prices have gone up.

522. The cost of building the same class of house 7- The same class of house.

523. Now what items of expenditure in the cost of building have increased 1--The labour.

524. The wages of labour? -The wages and the labour and the inaterial.

525. The imported materiall--Not imported material only the wood and the bricks all made there have increased enormously, and none of the present houses could be put up for what the old houses were put up for. Houses nineteen or twenty years ago could be put up for half what they could be put up for now.

526. Formerly they could have been put up for hall what they could be put up for now They could have been put up for half what they could be put up for now. The hardship on that point is very great on mortgagees, and I have drawn a supplementary clause abont niort- gages.

(Chairman.) We shall be very glad to have it if you will give it to me. Perhaps I had better read it.

SUPPLEMENTARY CLAUSE

12. The great change which has taken place in the value of the dollar operates particularly hardly on mort- gagues who tuany of them English investors) have lent money on mortgages of lands and houses in the Straits Settlements. The covenants in the mortgages are for the repayment of the number of dollars which were advanced at the date of the mortgages. At the repayment of the mortgages the sterling value of the mortgage debt has, at the present rate, depreciated about 20 per cent., whereas the saleable value of the mortgaged property has appreciated at the same time 20 per cent. ; for, with fall in value of the dollar, the price in dollars of the land appreciates in a corresponding ratio. Thus the loss in the value of the repaid mortgage debt falls wholly on the mortgagee, with whose money, the extent of two- thirds or three-fourths of the value of the land, the mortgagor bas originally required the land. Such cases might fairly be niet by providing, by ordinance, that any mortgagor of lands or houses, holding under a mortgage may prior to the demonitisation notification, shall, unless the mortgagor (at the time when the mortgagee is entitled to and notifies to the mortgagor his intention to exercise his power of sale) repays to the mortgagee the sterling value of the mortgage debt (calculated at the demand rate of exchange in Singapore at the date of loan by the tuortgagee of the mortgage debt) be at liberty to sell by

anction the mortgaged property, and thus recoup himself

Mr. J. the last-mentioned sterling value and sale expenses, and Birkinshaw. then to pay the surplus to the mortgagor.

Such pro- visions would be applicable to mixed mortgages, of im 25 Nov. 1902. movable, together with movable property, only in a modified degree." --You

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there the mortgagor would get the benefit of the rise in value of his land.

597. That is what you propose The mortgagee would not lose if he foreclosed the mortgage, but a mortgagee cannot foreclose a mortgage if when the money is asked of the mortgagor it is tendered to him. I point out the difficulty, and I point out one way of meeting it.

528. That is to say the mortgagor must repay the sterling value of what he received at the time of the mortgage-At the time of the mortgage. It is easily found out; the banks can always know what the demand rate of exchange was on the day the mortgage was executed.

529. Is not that rather hard on the mortgagor. He made a contract to repay so many silver dollars; he made his contract in silver dollars, and if he made it we will say five years ago he no doubt paid a higher rate of interest than if he made it in gold. It is rather hard now to say he must pay it in gold?-There is a hardship on the mortgagee. There is a much lesser hardship by applying this remedy thrown on the mortgagor. It is possible in one case out of 500 that some discreet mortgagor had foreseen that the dollar was depreciating, and that he would get so many dollars back, while this land was appreciating in value, but the cases I should say were very rare where that has been foreseen.

530. At any rate if you make a change in standard some people must gain and some must lose 7-Yes.

531. And the question you have got to consider is the balance of gain or loss to the whole country--what you have got chiefly to look at 7-Oh, well, I hurdly take that

view.

532. But must not somebody lose when there is a change of standard, and somebody gain 1- Well, I think

we must look to a very large extent to the gain to the Colony.

533. Yes, that is what I say? --No.

534. That is what I said, somebody must lose, and somebody must gain, but what you must consider is the gain or loss to the Colony Yes; I thought you said the opposite.

535. Is there anything else you would like to say — No, I think not.

536. (Mr. Johnson.) I understand that the new dollar which you recommend should be established, would only circulate in the Straits Settlements and the Federated Malay States but would not circulate outside the Colony at all?-We can only legislate for its circula- ting in the Straits Settlements we cannot prevent people who buy them, exporting them, or bringing them away with them.

537. Well, you could pass a law forbidding export1 -You could.

538. (Chairman.) But if you give your dollar a higher alue in the Straits Settlements than its intrinsic value in silver, there would be no fear of its being used any- where else -No.

639. For instance, if you can get is. Bd. for a dollar in the Straits Settlements, you are not likely to take it to China in order to get 18. fd, for it 1-No.

540. (Mr. Johnson.) But if that is so, would not the people who now, to a great extent, apparently, pay for the goods they import by exporting "dollars be incon

venienced - Pardon me.

541. An enormous number of dollars are imported into the Colony at present-By the Clovernment."

542. No, not by the Government-Imported by others.

543. By the traders ?—Yes.

344. 20,000,000 dollars or thereabouts are imported every year, and 18,000,000 dollars or sometimes more are exported every year, and these exports of dollars are, largely, I supposa, in payment for imports / -Yes.

540. And would there not be a considerable incon- venience to the trade of the place if they had not any their own country? current coin that they could export -To the traders in

540. No, to the traders in the Straits Settlements - Oh, which they could export. I take it that they would