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PUBLIC RECORD OFFICE

Reference :-

TTIC.O. 882

7PUBLIC RECORD OFFICE, LONDON

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

Mr. Barr Robertson.

27 Jan. 1903.

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MINUTES OF EVIDENCE:

1938. You have made a series of proposals, any one of which you think it would be possible for the Straits Settlements to adopt ?—Yes.

1939. The first is that the Government should con- tinue the present system of currency 1-In regard to that proposal, I can perfectly well understand people in the Straits being unwilling to venture on new policies, and being in favour of just taking the chances with silver. But I think myself that on the whole it is not the best course.

1940. Do you think it would be a reasonable policy to follow Yes, I think it would be a reasonable policy to follow. At the same time, it is to some extent a dangerous policy to follow, owing to the uncertainty as to what other countries may do.

1941. In the next place, you suggest that the Straits Government might adopt the rupee system ?-I have worked out a plan they could adopt if they decided to introduce the rupee system.

1942. You would coin a separate rupee, I understand? -Unless they could arrange with the Indian Govern- ment to coin their dollars into rupees and give them the profit.

1943. Do you mean into Indian rupees ?--Yes, if they could get the profit of coining. But if they were going to coin by themselves, there would require to be two different rupees as legal tender to the same extent, but not legal tender in both countries. I think, nevertheless, that an arrangement could be arrived at by which the two Colonies could be placed on the Indian system.

1944. But even if they did not get the profit on the coinage of the rupee by the Indian Government, they would not lose anything -They would not lose any- thing except the small expenses of the change.

1945. The Ceylon Government use the Indian rupee, but they do not get the profit on the coinage?—No, that

is 30.

1946. On the other hand, the Indian Government undertake the responsibility of maintaining the rupee at its present gold value ?—I think I say in the statement of my views that I do not propose that the Straits Government should get the profit on the future coin- age. But they start with 8,000,000 dollars of their own in their currency reserve which could be coined into 18,280,000 rupees. If they had no currency re- serve at all, the case would be totally different.

1947. You think the Straits Government might fairly get the profit on the initial coinage ?--I think so, sud after that they would have nothing to do with the coinage. The rupee would flow from and to the Indian ports, and India would hold the gold basis. The rupees would flow to the Straits by the ordinary exchange, the same as they flow to Ceylon, Mauritius, and so on.

1948. And you would propose that the ratio of exchange should be five rupees for four dollars, or 18. 8d, a dollar ?—Yes, I suggest that figure because you are nearly there now, and it would be a round figure if it could be adopted. The difference between 18. 7d. and 18. 8d., considering the wide fluctuations of recent years, is not a very great deal for a final settlement.

1949. Then the procedure for the Straits Govern ment would be, I suppose, to begin by prohibiting the import of Mexican dollars and British`dollars 1— It would be, yea.

1950. And then offering to the actual holders of Mexican and British dollars inside the Straits Settle- ments and the Malay States, five rupees for every four dollars 7-Yes, that is the proposal.

1951. And afterwards, or simultaneously, declaring that the Mexican dollars and the Hong Kong dollars would cease to be legal tender 7—Yes, that is so.

1952. Then, to stereotype the price of the dollar at 18. 8d., the rupee circulating at the value of 18. 4d. ?-- Yes. The difference between 22d, the present price of silver, and 13d, at which the rupee is coined, places it beyond all chance of any trouble from silver.

1953. Then it would seem probable in that case, that the people of the Straits Settlements and the Straits Government would be very much in the position of the people of the West Indies; they would keep their

accounts and think in dollars, but pay in rupees 1-- They might do so, yes. I think they would gradually change to the rupee, in which, for the time being, they would have a positive basis for simple calculation five to four, 1 rupees to the dollar.

1954. And the man who had a dollar to pay would pay 1 rupees 7-The man who had a dollar to pay would pay one rupee, just.

1955. No, 1 rupees 1-Yea, exactly, one rupee and fourpence, 1 rupees.

1956. A rupee and so many cents 7-One rupee and 25 cents.

1957. No, the dollar is 100 cents, and the rupee would contain 80 cents 7-You would require to re-coin them.

1958. If you kept the dollar as money of account 1— No; I think that would not work. You would have two coinages-the rupee and the dollar-on different bases.

1959. It would be like the West Indies 7-Oh, you could do it, but I think they would pass on to the rupee altogether-instead of the annas and pice, it would be decimal-the same as they have in Ceylon. I make this as a suggestion of what could be done if it were adopted. Of course, I am not recommending it at all, though it would be very complete if it was desirable to do it.

1960. Then as regards the future, you think the Straits Government should receive gold and give out rupees, taking 16d. for each rupee?-No; I think after they had started on the rupee system India would hold the gold, and the rupees would flow to the Straits and back again to India through the exchange. They would have no coining at all in the Straits.

1061. That would be so, no doubt, but the Straits Government, if they thought it convenient, might arrange to receive gold 7-Yes; if they were coining; they must give out the coin.

1062. They would give the coin out of the currency reserve, and hold the gold there for a time 7-Yes.

1963. If it were thought convenient 7-Yes. 1964. Would you propose to make gold legal tender in the Straits Settlements ?—I am opposed to the legal tender of gold.

1965. You are opposed, and for what reason 7-Yes. I think it is easily arranged without; consequently, I think it is a mistake to introduce a high-valued metal like gold, which is not suitable for currency in the East.

1986. You say that new subsidiary coins would have to be struck off. That would be so if they changed from the dollar as money of account ?---Yes.

1007. But if they kept the dollar 3-Then these would stand. On the other hand, they would require then to coin a new dollar.

1968. No; there are no dollars in the West Indies ? That is quite true. They might make it simply money of account.

1969. That is your second proposal. Then your third proposal-you have modified that 7-Yes.

1970. Shall I keep to the modified one 7-Yes. The other one I find is too complicated in certain ways, and in certain eventualities would fail.

1971. Then your third proposal is that the Govern- ment might introduce a new dollar of the same weight and fineness as the Mexican dollar and the British dollar, and make it a token coin, circulating at a higher money value than the value of the silver contained in it 1— Yes, that is the proposal.

1972. You point out that it is practically impossible to deal with the Mexican or British dollar, except as coins circulating at their bullion value ?—Yes.

1973. For obvious reasons ?—Yes, the immense number in circulation all over the East.

1974. You say that a new dollar must be coined if your proposal is adopted, and that it must be limited in quantity so as to enable it to pass at a somewhat higher value than its bullion value ?—Yes, that is the proposal.

1975. And the question of the gold value to be given to the new dollar is, you think, one which specially concerns the Government, the merchants, and the people generally in the Straits Settlements ?—I think so.

COMMITTEE ON STRAITS SETTLEMENTS CURRENCY.

1976. The first step you propose is the prohibition of the importation of the dollars at present in use?— Yes, so as to limit the quantity.

1977. Then you would coin in advance the dollars at present in the Government currency reserve 7-Yes, about 8,000,000 dollars.

1978. And you would exchange these at the rate of 19 new dollars for every 20 old dollars -Yes. I am taking a figure which happens to be convenient. It is a difference' of about 5 per cent.

1979. Why do you propose that ?—It is a 5 per cent. difference.

1980. Why do you make that difference of 5 per cent? -In the first place, the Straits Government will want Bome method of paying the expenses. Ir the next place, they must begin on a basis above the bullion value of the silver.

1981. Is that necessary 7-Well, I think it is almost You might have a little rise in silver, and necessary. holders would begin to melt down the new dollars.

1982. The Indian Government did not begin above the bullion value ?-But silver was falling away from India. Suppose silver rose 1d. or 2d, an ounce, and you began at 18. 7d. or 1s. 64d., silver would be more valu- able, and you would then stereotype it below the bullion value,

1983. Your silver dollar would be exported until it rose to the bullion value of silver ?—I am not so sure about that.

1984. If the dollar was worth 18. 6d., they would melt it down until by limiting the number it came up to the value 7-Yes, that would be the case.

1985. Would it be possible to do this, to coin a new dollar, and exchange it for the existing dollar, one for one, and then to wait until the new dollar rose to the gold value at which you wished to fix it 7-Yes, if the value of silver did not rise. The worst that could happen would be that the new dollar would be melted down.

1986. Yes, until those that remained became of the value of the bullion contained in them ?—Yes. There is involved the question as to whether you are going to fix an absolute gold valuation that should be permanent. This question of the rate growing up depends upon that to some extent. Suppose you have a current rate for Mexican dollars of, say, 18. 64d. If it was proposed te import actual gold, and give out the dollar at 1s. 64d., I think it would be unwise. You would be stereotyp ing the 18. 61d., a minimun rate.

1987. You propose to give three or four months' notice to present the old dollars in the Straits 7-Yes.

1988. And a longer period in the Malay Straits 7— Yes. This is for local people. I would not make the period too long.

1989. There is a danger of imports 1-Yes; the shorter the period the better.

1990. Do you think there might be any objection on the part of the people to exchanging their dollars at the rate of 100 for 95 3-Of course, that is a question as to the exigencies of the currency. My view is that it would be unwise to begin at the bullion value of silver. 1991. Yea; but it would rather come home to the people, would it not, if they found they had to go in with 100 dollars and get only 95 in exchange ?--Yes, but they would get 95 new dollars that would be of more value than the 100 old ones, and in paying taxes 100 old dollars would only count as 95.

1992. In the long run it comes to the same thing, } admit; the only thing is that the change comes very pro- minently to their notice 1-Yes. On the other hand, you must consider that there would be large expenses to be incurred in coining, and all that sort of thing. This is taking out of circulation the tax necessary to pay the expenses of conversion. Besides that, I think from the currency point of view it is wise to start 5 per cent. above the bullion value of silver, so as to have a new hasis on which to launch your new dollar-a new basis of currency altogether. The two dollars are thus entirely separated from the beginning.

1993. Suppose you did give only 95 new dollars for 100 old dollars, it does not follow that your dollar at

55

Mr. Barr Robertson.

first would be above the bullion value of silver ?—The new dollar t

1994. Yes I think so. If you have a large body of 27 Jan. 1903. dollars circulating in the country, and you say that for every 100 dollars in circulation you will have in future only 95, clearly that has the effect of contracting to the extent of 5 per cent.?

1995. Certainly, so far as regards the dollars that are circulating 7-Yes.

1996. But suppose dollars are exchanged which have not been circulated 1-There you come upon a different question altogether. I do not think that those which do not circulate count particularly in this question.

1997. You think they would not be presented for exchange 7-It is the notes that count. The reserve of dollars for notes issued is there to create a mental im- pression, viz., that everything is all right there, but it has no effect on the volume of currency which circulates.

1998. You would propose also to diminish the number of notes in circulation 7-Yes, for the same reason.

1999. How would you do that?—They must be called in.

2000. What would you pay out in exchange for them -New notes, 95 in the 100. The notes are the real currency. Whether there is a reserve is quite immaterial from the currency point of view; it is locked up.

2001. Then you would expect that the new dollars would tend to rise in value as regards gold ?—I should certainly expect that.

2002. And you think it would rest with the Straits Government and people to decide finally what the rate would be at which they wished the dollar to be masin. tained-Yea, I think that is a question for local con- sideration.

2003. Having settled in their own minds what they wished that rate to be, when the time came they would have to undertake to give out new dollars for a certain quantity of gold -Well, I do not favour that.

2004. I thought you did 1-No. This proposal, No. 3, is not to have any gold at all.

2005. How would you keep your dollar at its fixed value? We will suppose 18. 8d. to be the rate. Sup- pose the exchange rose to ls. 8d. There would then be profit to the exchange banks and the bullion dealers o exporting gold to the Straits.

2006. Yes?-Very well. The Bank would not concern themselves as to whether it was right for the Straits cur- rency to be increased or not, but they would increase it all the same by their act. There would be a profit in doing so, and their business is to make profits.

2007. Yes 7-Very well. They send out a certain amount. What is the effect of that in the Straits 7 The effect is that the gold goes into the currency re- serve; the equivalent of it in dollars is taken out of the currency reserve and goes into circulation, adding so much to the circulation. The effect of it going into circulation is that it lowers the exchange to là. bd. or even below. The effect on the Straits currency when the exchange rises to ls. Bid. is solely to add to the circulation and put the exchange down to ls. 8d. again. Where do you need any gold to do that when the people in the Straits know far better than, or quite as well as the people in London, that there would be profit in sending gold, that the rate is tending to rise above the limit at which they wish to keep it, and, consequently, why should they not immediately coin and issue new dollars to circulate over the Straits?

2008. It has been suggested that one way of doing it would be for the Straita Government to issue dollars in exchange for billa on London. For example: If a bank wanted £100,000 or so many dollars in the Straits, under one system it would have to import so much gold and hand it over to the Straits Govern- ment, and get the silver dollars in exchange ?—That is one way.

2009. But another system would be that when the bank wanted silver dollars in the Straits, it should go to the Straits Government and say, "If you will give me so many dollars in silver I will give you a bill on