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PUBLIC RECORD OFFICE

Reference :-

TTIC.O. 882

ייויויוייד

7PUBLIC RECORD OFFICE, LONDON

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

Mr. Barr Robertson.

27 Jan. 1903.

58

MINUTES OF EVIDENCE:

disaster owing to the depreciation of the standard which some people anticipated t-Yes, that is my point.

2053. Coming to the present state of things, and the matter immediately before this Committee, which of your proposals do you recommend 7-1 prefer the third; I recommend the third.

2054. That is the adoption of a gold standard with a dollar of the same weight and fineness as the present one, at a ratio of about 1s. 8d. 3-Or higher; I do not fix the ratio.

2055. You do not fix the ratio 1-No.

2056. Then it comes to your proposal No. 4, does it not -No. No. 4 fixes the ratio at 25. at once. Suppose you start at 18. 8d.; if you begin there you must continue there it is final.

2057. Once you fix it 3-Take an illustration. You have got your currency reserve, and you fix your rate at 1s. 8d. Suppose you want to raise it to 18. 10d. Of course, you would have a large amount of gold in the currency reserve, and you would have only 18 8d. worth of gold per dollar for a large amount of notes issued. Then it rises to 18. 10d. How are you going to provide for the 18. 10d. per dollar when you have only 18. 8d.?

2058. My argument is that by the contraction of the currency you can increase it to 1s. 10d. without any gold at all 3-If you fix a higher limit, yes. 1 fix 2s. as being a fixed rate which, when you got to it, should remain stereotyped. I do not know that I recommend a rate; it is a serious question recom mending a definite rate. I say they might begin at 18. 8d. If they wanted to raise it, a great deal might happen to render it advisable to adopt one rate or another rate.

2059. Is there not one advantage in that proposal of a new dollar of the same weight and fineness as the Mexican dollar or the Hong Kong dollar, and that is that if, from any reason, you wanted to give up your gold standard or the attempt to introduce a gold standard you could do so very easily ?-That is a very strong ground.

2060, (Mr. Adamson.) Going back to the index numbers, you are of opinion that the lower index number Is due entirely do I understand entirely-to the scarcity of gold 1-Well, I produce a table here to show that from 1877 to 1886 we must have had a deficiency of gold in England to the extent of £35,000,000 sterling, and I find that accompanied by a fall in the gold index number of commodities from 94 to 68. I should say that £35,000,000 sterling was probably one-third or one-fourth of the entire gold circulation in England-- I should say almost one-third. The fall in the index number is from 94 to 68, that is 26 points, but it begins at 94, so that probably it has fallen 27 or 28 per cent. Therefore, there, at least, is the fact that the are two things running together, the one is a very large falling off in the volume of the currency, and the other is the fall in prices during that period.

2061, Would you not attribute a good deal more to economical methods of production, to cheaper carriage, and generally to the improved methods of placing the produce on the market 3-No doubt there are con- siderable differences there; but, on the other hand, these 45 articles are very largely raw materials in which no great improvements took place.

Bay that

2002, Wheat, for instance -I cannot there is any great improvement in wheat; there may be a little economy in it, but it is not very great. There is a larger area-the Argentine, United States, and India contributing large quantities-countries coming into existence as industrial countries which formerly were unknown.

2063. Larger production, cheaper methods 1--Cheaper methods to some extent. There is no doubt there are cheaper methods, but not so much in these raw products, which, as far as possible, are the articles which Mr. Sauer- beck has adopted for his standard.

2064. Then you are of opinion that the purchasing power of silver has not fallen in proportion to gold )— It has not fallen in proportion to the fall in the gold value of silver.

2063. Would not that mean this-that the pro ducers in silver-using countries had greatly benefited

I

by the fall?—That is a difficult question to answer. think they have benefited by the fall; that is to say, they get a higher price, and I daresay that while prices were rising their expenses did not rise for some con- Biderable period afterwards. But, on the other hand, I should like to make this remark, that I simply wish to see justice done between the producing class and the other classes, between the producer and the consumer. Take the case of Mexico, for instance. Mexico has benefited enormously by the fall in the purchasing power of silver, but this has been largely at the expense of certain classes there. Therefore, in entering upon a deliberate policy, the Government could scarcely afford to say. Now, by adopting this plan you will benefit the pro- ducer," and so on, when they know it is at the expense of other classES.

2066. Quite 1-When it happens by a natural process, as it has done, you cannot help yourself, but for a Govern- ment to deliberately attempt it would place it in a different category.

2007. Are you aware that something like 20,000,000 British dollars are imported into the Straits Settlements in the course of 12 months ?-I was not aware that that was the case.

2068. If you were told that that was the case, would you not think that some arrangements would require to be made outside the one you suggest for the con- tinuance of this ?--You say 20,000,000 dollars?

2069. New dollars ?—That is, in round numbers, £1,500,000 sterling. Now, there you have only 540,000 people, while with 40,000,000 of people in this country. we do not use more than twice that amount of gold altogether in a year. Is it not the case that the 20,000,000 dollars that go in do not remain there- that they are exported?

2070. Something like 3,500,000 to 4,000,000 dollars seem to be kept in the country-permanently retained -Every year?

2071. Every year. That brings me to ask how you would propose that the Government in Singapore should provide these 3,500,000 fresh dollars every year, or whatever may be necessary? How would you propose that the Straits Government should be paid for these dollars if they are not to be paid in gold? Somebody must pay for them; they will not issue them for nothing-Quite true; and they will issue them for value in whatever form it may be.

2072. But if they import them they must be paid somebody must pay for them ?—If they are imported the Colony must pay for them.

2073. As I understand, you propose that the Govern- ment should be entirely in charge of the coinage and of the issue of the coinage ?—Yes, I think that would be satisfactory.

2074. Suppose the Government found itself in the position of having to provide three or four millions of fresn uvulars every year, and there is nobody to pay for them? Of course, three or four millions-I think that must be an over-estimate.

2075. Not at all.

(Chairman.) Might that not include dollars required for melting down and so forth?

(Mr. Adamson.) Oh no, not for melting down; they would go in the country. We do not know what becomes of them.

(Chairman) How do the people provide the silver they want ?

(Mr. Adamson.) The silver required for silver orna- ments and so forth does not amount to very much.

2076. (Mr. Johnson.) I think that a portion of the 3,000,000 dollars goes out in the pockets of the Chinese who return to China 7-Some may be hoarded also. A certain number of people can only use a certain amount of money on a particular basis.

2077. (Mr. Adamson.) Whether the amount be larger or smaller than the sum I have named, the Government has to provide the coin, and it seems to me that there must be some way by which they should be able to pay for the bullion which they would have to buy in this country?—I will make a suggestion on that point. It seems to me clear enough. I have not con-

COMMITTEE ON STRAITS SETTLEMENTS CURRENCY.

sidered this matter in regard to its details. A bank will undertake to deliver to you the silver and take the dollars back at a commission on the excess beyond 18. 8d. Any of the Eastern banks will undertake to do that. Do you understand my point?

2078. No; I do not quite follow you --You see the rate of exchange rising to 18. 8d., and you say to the bank, "We will deliver coin to you at 1s. 8." The bank will then bring in silver and have it coined, or hand it in wherever the coinage takes place, and supply the excess of silver that is wanted to keep the dollar down to la. 8d. That is a detail, as to who does it, but for a small profit a bank will undertake to do it.

2079. That is a matter of detail, but I understand that your objection was to having the thing rest on gold at all 7-That is the pivot of the whole thing.

2080. Without the Government possessing any gold? -Yes; I do not see any need for it, because, unless you are going to put it into circulation, and in most of these oriental countries it is quite unsuited for that, you had far better not have it at all, when you can produce exactly the same effect by some method of adding to the silver, your pivotal point being to keep the rupee at or near the gold point.

2081. (Mr. Blain.) In these tables of the gold prices and the silver prices of commodities that you give for comparison, what were the silver prices ?--I take the first year, 1873. Gold value of bar silver, 974; gold value of 45 commodities, 111. They are both 100 for the period before 1873.

2082. (Chairman.) Am I right in thinking that the silver price is calculated from the gold price on the basis of the comparative value of gold and silver in the market at the time -With reference to the silver and to the gold price of commodities; that makes the silver price of the commodities.

2083. You take the gold price of the commodities then you say that the ratio between gold and silver is a certain figure at that date, and from that you calculate the silver price; I think that that is the plan ?--Yes, that is so. In this first column, all these have fallen below par of 100; consequently silver is of less value than gold; if it is of less value than gold it requires a higher silver price to make up the gold commodity price. As a figure in the first column is to the par of 100, so is the figure in the second column to the index number of silver prices. A 07:100:111:114; that is the formula.

59

Mr. Borr Robertson.

silver out of the reserve and setting it adrift, simply abstained from adding to it until the notes had in- creased so that the proportion became one-half, you 27 Jan. 1903 would have no objection -No; it is only the effect of putting the silver on the market; though you must remember that if they go on increasing the notes they may find that the note circulation has also lowered the value of silver there, as they are adding to their cir- culation.

2092. And economising silver 1-But the question is that when you are trying to settle this question you do not wish to disturb the existing relations. It would be a drawback to issue more paper money now because you would be lowering the gold exchange between that and the dollar by adding paper dollara which circulate, and the silver dollars do not circulate at all.

2093. (Mr. Johnson.) Over against that, you are reducing the number of dollars in circulation; when you put more paper in circulation there is a smaller number of dollars-There you are lowering the value of your dollar. But whereas this question may be dealt with in ordinary times when there is no particular pressure, you have now come to a point where you wish to maintain the gold value of the dollar. Yet you have a proposal to place two million more dollars on the market, which would certainly tend to increase the difficulty of conversion.

2004. (Mr. Blain.) Do you think that in the intro- duction of such a scheme as that which you contem- plate for a Straits dollar to be fixed at a sterling rate, the special position of the Straits Settlements in regard to the nature of their trade would present any special difficulties -You change the relation, of course, between your currency and the silver currency; you would have a gold value fixed, 18. 8d., 1s. 9d., or 18. 10d.; you would be on a par of exchange with gold countries, and with India, Ceylon, and Mauritius, and so on; and you would have lost the tie with China, the Philippines, and the oriental archipelagos.

2095. That is true in one degree or another of any country which changes its basis of currency ?—Yes.

2096. But do you think that the Straits Settlements, owing to their peculiar position, are perhaps the most difficult country in the world to make a change 1--Well, it is a difficult country, because for most of its trade it is only a distributing basis.

2007. Would you say that there has been any pre- cedent of any other country making a similar change

2084. The gold price is taken from the actual prices in circumstances of anything like equal difficulty ?—

of the commodities in the market 7-Yes.

2085. Then you look at the gold price of silver at that date, and you calculate the silver price 1-Yes,

2086. (Mr. Blain.) I understand, from your examina tion, that the object was to show that the variations in he gold prices of silver and of commodities were differ int, that they did not correspond to one another ?-I take the year 1899, and I say that from 1873 to 1892 the gold price of bar silver had fallen to 65-4, while the gold price of commodities had fallen from 100 to 68- that is within two and a half points. Silver had fallen a little more than commodities. The consequence was that silver was then a little above par; instead of being 100 it was 104. If it was exactly 65, and the other was 65, my figure of silver price would be 100.

2087. (Chairman.) I understand Mr. Robertson's conclusion to be that, that up to 1892 commodities and silver got cheaper at practically the same rate as compared to gold 1—Yes.

2088. And after that silver fell more rapidly 1- Gold prices of silver and of commodities had fallen 35 per cent.; but the commodities and silver stood together. In 1892 silver began to fall faster than the gold price of commodities.

2089. (Mr. Blain.) Incidentally, with regard to the Government notes in the Straits Settlements, you said you objected to the proportion of the reserve being reduced from two-thirds to one-half -On grounds in connection with the currency movement.

2090. That is what I want to make clear. It is not merely as to the effect on silver 1-Yes.

2091. For instance, if the note issue was rapidly increasing, and the Government, instead of taking

The precedents are so very few. You may say that India is the only one that is really effective.

2008. India is an enormous country in itself, and ita internal trade must be very much more considerable in proportion to its external trade than is the case in the Straits -Yes.

2099. That must considerably modify the problem 1— Yes, It might be a benefit in India, with its immense population and internal trade, to make a change, but in a mere port of exchange like Singapore it might not be so satisfactory. As I said in the beginning of my examination, to continue as it is, is defensible, though I think my proposal No. 3 is the one that would be most likely to suit for a gold par of exchange.

2100. (Mr. Johnson.) To return to a point we have had before; though I see your objection to introducing gold coins, I do not see how the Government is to discover automatically when the currency is short - How is it discovered now? It is discovered by some gentleman sitting in a bank parlour in London that the exchange in the Straits is rising to a certain point, and that consequently there would be a profit in trans porting gold there.

2101. I rather meant this. Of course the Govern- ment could discover it, but I meant to say that, unless a special official was appointed whose sole duty it would be to attend to this matter, the Government would not bother much, it would not hurt them if exchange rose to la. 8d. ?—It would not hurt them, but it is the weather signal that the currency is getting scarce.

2102. But I do not know of any instance where a Government has taken upon itself the duty of watching over things of this kind --That is probably