COMMITTEE ON STRAITS SETTLEMENTS CURRENCY.
67
PUBLIC RECORD OFFICE
Reference :-
C.O. 882
7PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE COPYRIGHT PHOTOGRAPH—NOT TO BE REPRODUCED PHOTOGRAPHIC-
APPENDIX No. 3.
MEMORANDUM by Mr. BURKINSHAW, respecting demonetisation of the Mexican dóllar, and introduction of
a gold standard currency to be concurrent with the silver currency.
1. By alteration of the law, by order of the King in Council and a local ordinance, or by local ordinance only passed under suspension of the standing orders without notice, authorise the following courses.
2. Appoint by a Government Notification two demone- tisation dates. One, herein referred to as the "First Demonetisation date," to be the 22nd day from the publication of the notification. The other, hereinafter referred to as the "Second Demonetisation date," to be a dato eight months from the publication of the notifi cation.
3. Declare that after the first demonetisation date the Mexican dollar shall cease to be legal tender or lawfully rurrent in the Colony,
4. Declare that after the first demonetisation date the following shall be legal tender in the Colony:—
(a) English sovereigns and half sovereigns.
(b) Bank of England notes promising payment of pound sterling on demand, no one notʊ promising payment of more than £20.
(c) The present English dollar (until the second
demonetisation date).
(d) The subsidiary silver coins coined for the Colonial Government for fractions of a dollar
to the extent to which such coins are now legal tender, and also the copper coins, coined for the Colonial Government, to the extent to which they are now legal tender.
(e) Also the promisory notes signed by the currency Commissioners of the Colonial Government, now issued, or to be hereafter issued, pro- mising payment on demand of dollars.
() Also #erial promissory notes of the Colonial Government promising the payment on the second demonetisation date of any sum of money therein mentioned.
5. Declare that after the expiration of seven days next following the publication of the notification, it shall be illegal to import into the colony any Mexican dollars, excepting such as shall previous to their being landed prove to have been, before the publication of the notification, on their voyage to and consigned to the colony.
6. Declare that after the publication of the notifica. tion the basis on which sovereigns and half sovereigns, and Bank of England notes, and the British dollar, anl the subsidiary coinage, and the ordinary promissory notes signed by the Colonial Currency Commissioners, and the special promissory notes of the Colonial Govern- ment, shall be legal tender and legally current in the colony, shall be that twelve dollars equal one pound sterling.
7. Declare that all payments which are obligatory to be made in the colony may, between the first and second demonetisation dates be made in any of the modes (a) to (f) specified above in Clause 4, or, at th payer's option, partly in one, and partly in another of such modes.
8. Declare that between the publication of the no.ifica. tion and the 22nd day following such notification the government shall on tender thereof to the government, purchase from the holder all Mexican dollars tendered by him (except such as have been unlawfully imported into the colony subsequent to the notification), paying the hold therefor in any of the modes which by para- graph 4 are declared to be legal tender, or partly in one of such modes and partly in another.
9. Before the second demonetisation date the Local Government shall coin a quantity of new British dollars to exchange for the present British dollars which on ha date are in circulation, and as shall be deemed sufficient for the local silver currency of the Colony, and continue
from time to time such coinage, taking into consideration the constant depletion of such silver currency by absorp- tion into the surrounding countries, and taking into con- sideration also the extent to which such iver coinage will be displaced by gold coinage and Bank of England notes.
10. As from the second demonetisation date, and until the expiration of three months thereafter, the Colonial Government shall, on tender thereof at the Treasury in Singapore, purchase from the holder thereof all British dollars tendered by him, the Government paying therefor as follows:
(a) English sovereigns or half sovereigns.
(b) Bank of England notes promising payment of
pounds sterling on demand,
(e) Promissory notes for dollars payable on demand signed by the Straits Currency Commis- sioners,
(d) The new British dollars; or partly in one of such modes and partly in another, unless the holder making the tender claim to be paid wholly in the new British dollars, in which case the payment shall be wholly so made.
11. Declare that if, hereafter, the average of the price, for a mouth, at which silver can be purchased in the London market shall be not less than 25. or 27d. per ounce, it shall be lawful for the Colonial Government, by a notification (if 25d. be the average acted upon) to notify and appoint that 1s. 10d., or (if 27d. be the ater- age acted upon) to notify and appoint that 2s., from the publication of such notification (or from a date to be therein declared), shall thenceforward be the sterling ratio value of the British dollar instead of 1s. 8d., and that the provisions of paragraph 6 are modified accord- ingly such notification to be issued within six weeks from the end of the period on which the said average is calculated, and only one such notification may be issued; and after such issue the fixed sterling value of the British dollar may not thereafter be increased or reduced under this change of the law.
SUPPLEMENTARY CLAUSE.
12. The great change which has taken place in the value of the dollar operates particularly hardly on mortgagees, who (many of them English investors) have lent money on mortgages of lands and houses in the Straits Settle- ments. The covenants in the mortgages are for the re- payment 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 tho loss in the value of the repaid mortgage debt falla wholly on the mortgagee, with whose money, to the extent of two-thirds or three-fourths of the value of the land, the mortgagor has originally acquired the land Such cases might fairly be met by providing, by ordi- nance, that any mortgagor of lands or houses holding under a mortgage made prior to the demonetisation noti- fication, shall, unless the mortgagor (at the time when the mortgagee in entitled to and notifies to the mort- gagor his intention to exercise his power of sale) repays to the mortgagee the sterling value of the morteage debi, (calculated at the demand rate of exchange in Singapore at the date of loan by the mortgagee of the mortgage debt) be at liberty to sell by auction the mortgages pro- perty, and thus recoup himself the last mentioned sterling valne an! sale expenses, and then to pay the surulu to the mortgagor Such provision would be applicable to mixed mortgages, of immovable together with movable property, only in a modified degree.
APPENDIX No. 4.
MEMORANDUM by Mr. G. PERTILE on the Straits Settlements Currency Question.
1. Our present currency, consisting of British and Mexican dollars, is most undoubtedly a bad currency, both on account of its depreciation and of its fluctuation in value.
This was unanimously admitted in the report of the sub-committee of the Singapore Chamber of Commerce of 1897, in which it is also stated, "That the trade of our Colony has not benefited by the low exchange."
2. Accepting the conclusion that our currency is bad and of no benefit to the Colony, the convenience natur- ally arises to change this bad currency as soon as pos- sible. Silver has been repudiated by nearly all civilised countries; the production gives no sign of decrease, not- withstanding a fall of 60 per cent., and we cannot abso- lutely remain the last supporters of this steadily de- preciating metal. We must absolutely do something before a further inevitable drop takes place, bringing our dollar to perhaps 1s., or even to 60.
3. Several schemes have been proposed during the last few years.
The above-mentioned Committee on Straits Currency proposed a gold standard, with a dollar at 2s., but this change would have caused a heavy primary cost to the Government, who were expected to give 2s. for every dollar, when exchange had already dropped to is. 9d.
There also remained the great risk that in case the intrinsic value of the silver dollar should go again at any time above 2s., all the coins would at once leave the Colony. Besides, if it could seem favourable to get 2s, for a dollar at the moment exchange had dropped much lower, it was all the same already very low, com- pared with the original value of 4s. 6d., and, as long as a rise of silver was not absolutely excluded or des- paired of, it seemed hard to accept for ever a reduction of over 50 per cent.
4. A very sensible scheme in some respects was also one of Mr. Jos. Heim, which was published in the "Straits Times" of the 29th September, 1897. It pro- posed a Straits dollar to remain the only legal tender after demonetisation of all other dollars; the Govern- ment to stop then the coinage until a certain limit of value should gradually be reached at which Government would coin dollars only in exchange for gold.
This scheme, representing exactly the one adopted in India, presented, in my opinion, one great difficulty, namely, that in comparatively small country like the Malay Peninsula, a special currency does not seem advantageous, and the scarcity of the dollar, which it would be necessary to cause in order to keep the dollar over its intrinsic value, could be at certain times very dangerous and hampering to our trade.
5. The best proposal, as has been now proved by facts, was certainly the one made several years ago, advocating the adoption of the rupee, the currency of the great Indian Empire. India, by regulating the coinage of the rupee, has been able, notwithstanding the great fall of silver, to keep the value of the rupee at a reasonable level, and to go over to a gold standard, preventing a too great impoverishment of the whole country.
6. If we would have to decide now to go over to a gold standard, we would lose about 50 per cent, more than what India has lost on the same transaction; but I firmly believe that, with the help of the Indian Government we could still adopt the rupee, avoiding this extra loss, and with mutual advantage.
7. The procedure of the Government for the change proposed by me would be the following:-
I. To pass a law, and issue a notification to the effect that during a term sufficiently short to prevent im- portation, all dollar coins then legally current in the Colony would be received at certain specified places in the Colony and Native States, and Government curren y notes given in exchange, and that after the expiry of such time all dollar coins would be demonetised.
This being, so far, exactly what was proposed to be done, as a first step, in the scheme of the Sub-Com- mittee on Currency of 1887, I suppose it should present no difficulty whatever.
II. At the same time, or shortly afterwards, the Government would notify that, having made suitably arrangements with the Indian Government, it will send to the Indian mint all dollars received in exchange for notes (which would exactly represent the actual amount of silver circulation of the Colony and Native States), to have them coined into rupees, and that as soon as the rupees will arrive, which would be in three or four months, the Government would be prepared to tako back again its notes, giving two rupees for every dollar, More rupees, if required later on, would be provided only against gold at the rate of 1s. 4d., the Colony thus adopting, in fact, the Indian currency.
8. The immediate result of this notification would be a rise of the value of our dollar to about 2s. 8d.
This would naturally, for a short time, and to a cer tain extent, cause a small disturbance in our trade, be- cause the prices of certain articles of produce would have to go down. But the difference would be probably divided between producers here and buyers at home, and would not be of great importance. Erempli gratia: If tin was, at the moment of the change, at 80 dollars in Singapore and at £125 in London, it would not drop in Singapore to 55 dollars and remain at £125 in Lon- don, but it would probably go down only to 70 dollars in Singapore, and rise to £140 in London. The loss on the price would be compensated for us by the increased value of the dollar, and matters would soon be read- justed by the usual law of demand and supply.
We would have only one disturbance, and, after that, stability of exchange for ever, instead of the daily dis turbances caused now by the continual fluctuation of exchange.
9. A great advantage of this change would be that it would not affect the relations between debtor and creditor in the Colony, and during the term of three to four months of exclusive notes currency the people would get accustomed to consider a dollar as a double rupee, and the rupee as a half dollar.
10. Of course, to render this scheme possible, it is necessary that the Government of India” should allow us to use the Indian Mint to coin rupees with our dollars, and thus give us, in fact, rupees against silver departing from the present rule to coin rupees only against an equivalent of 18. 4d. in gold for every rupee.
At first sight it might seem absurd to expect this,
but I hope to be able to prove the contrary.
11. I start from the principle that the best thing for everybody, money-changers excepted, would be to have only one currency all over the world, and I get to the conclusion that it must be an advantage for India to extend the circulation of her currency to any part of the world, where it is not circulating now. Consider- ing the very large export trade of India to this country (opium, gunnibags, rice, cotton, etc.), I think that to have the same currency in the Malay Peninsula would be indeed a great advantage to India.
12. Disadvantages, I can see none.
There is, in fact,
no danger of our rupees going back to India and having any effect on the rate of exchange of that country, be cause we only ask for the coinage of once the quantity of our actual present circulation, and this quantity must naturally remain in our country if the Govern ment takes back from circulation all notes issued for the purpose of this change, and will, of course, adopt the rupee for the reserve of Government and banks against any local notes issue.
13. It can be said that India could object, because if
at any time Indis should decide the withdrawal of all
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