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PUBLIC RECORD OFFICE

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Reference :-

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7PUBLIC RECORD OFFICE, LONDON ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

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APPENDIX:

18. Silver at A cost of 42d. per ounce produces the British dollar at about 3s., whereas silver costing the present price of about 22d. per ounce produces tho like silver dollar at about la. old. The difference between Is. 6. and 36. is about 90 per cent. To change the gold price of the silver dollar from about Is. 6d. to about 3s. (the equivalent of the rupee basis) would cause an increase in the sterling value of the monetary standard of the Straits Settlements of about 90 per cent

19. Up to 1893 all classes in the Indian Empire and the country commercially had been generally pros- perous in the aggregate. The natives of India form an overwhelming proportion of the population, and so far as is known no section of the people askel Govern- ment to make any change in their monetary standard which had hitherto for a lengthened period been silver, and had done its duty remarkably well.

20. The Indian Government's main financial difficulty was brought about through its own action. In years previous to 1893 the Government had elected to cen- tract large debts in gold, partly, no doubt, because in Indis sufficient loans in silver could not be obtained to carry out the large projects of railways, irrigation canals, and other public works for the development of the material resources of the country, and as the rate of interest was lower in England than in Asia. These loans were arranged in gold, though the country's revenus was collected in silver. In the course of time, through the decline in the gold price of silver and the simultaneous fall in exchange between India and gold standard countries, a very largely increased amount of silver money was required for the service of this debt.

21. About seven years ago, when speaking on the subject of the imposition of duties on manufactured cotton imports into India, the present Prime Minister, Mr. A. J. Balfour, said:-

"If we had a reasonable monetary measure as between England and India, there need have been no deficit in the Indian Budget, duties

no protection, direct or indirect,

no cotton

in favour of the Indian manufacturer, because the difficulties between England and India are exchange only

If we wish to have our monetary affairs placed upon a solid basis, fitted for the commerce of a country whose com- mercial relations penetrate to every quarter of the globe, to every nation, to every tribe if we are to lave a currency fitted to carry on those great com- mercial operations, there must be one settled or international agreement, one which will avoid all those difficulties of exchange

and un-

certain fluctuations which now afflict us, one that will serve the main purpose intended

viz.,

become a source of grave anxiety to those intimately connected with the agricultural and industrial de- velopment of the country. In order to give a recog- nised shape and form to the efforts of those who have hitherto raised solitary and inefficacious pro- tests against the system, it has been thought advis able to organise some concerted action in this con- nection, and with this object the "Indian Currency Reform League' has been started in Bombay.

"There is a wide consensus of opinion among economista as well as business men that India's economic welfare demands the reopening of the Mints, and the resolution passed by the Manchester Chamber of Commerce in June, 1898, urging the same course, has therefore their full approval. If, however, the Government consider the reopening of the Mints as impracticable, the League, by re- spectfully pointing out the disastrous consequences of a policy which threatens to impoverish tha economic resources of the country, and involve agri- culturists, plantors, and manufacturers in serious difficulties, will pray Government for the lowering of the ratio to such a figure as would, on the one hand, give equilibrium to the country's finances, and, on the other, substantial relief to producers and others.

"Fully convinced that the object aimed at is to avert, further mischief, and to mitigate the hardship at prosent complained of, the Provincial Committee cordially invites all bankers, manufacturers, traders, producers, and others who sympathise with the object of the League to enrol themselves as mem- bers, and with their support and assistance add weight and influence to the opinions of the League."

24. Since the Government by legislative enactment closed its Mints to the free coinage of silver, it has reserved the right to be the sole and the only medium through which silver could be coined into upees and exchanged for gold at the rate of 16 rupees to one sovereign. The volume of silver currency and Government notes in circulation in India was between 1893 and 1899 gradually con tracted, and ultimately was so limited as to give an approximate fixity of value to the rupee as measured in gold. Nevertheless, the real currency to a very large extent continues to be silver money, and will continue so for many a year. Since 1893 the silver currency of India is a manipulated currency, and for its value is dependent on the action of the Indian Government. Notwithstand- ing the fact that an import duty of 5 per cent, has been imposed since 26th June, 1993, the net amounts of silver imported into India since 1892-93 have been as follows:- 1st April to 31st March.

曲

that of providing a tolerably permanent and a tolerably fixed standard of value."

1892-3

1893-4

1804-5

1895 6

1896-7

1897-8 1898-9

Nothing has been done up to the present to place the monetary affairs of the Empire upon the "solid basis" to which Mr. Balfour referred, or to provide what has been within the reach of the British Government at any time during the last 30 years viz., an international agreement affording "a tolerably permanent and a tolerably fixed standard of value.'

22. In the absence of any international agreement pro- viding a tolerably fixed standard of value," which, since 1873, British statesmen have systematically and deliberately refused to adopt, though other Govern- ments were desirous of making an agreement for the purpose, the Indian Government's financial position ultimately became so embarrassed that it was forced to close its mints on 26th June, 1893, to the free coinage uf silver. It did so in order that it would be in a position to restrict the silver rupee currency, and so give an artificial value to the rupee as measured in gold. The object has been eventually attained, and the Government has benefited substantially by the higher rate of archange. There is good reason to believe, however, tha certain classes of the people and certain branches of the country's commerce and in- dustries, suffer from the economic disadvantages in- separable from the giving of an artificial gold value to the rupee

23. It may not be uninteresting to here quote the following circular_recently issued on behalf of the Indian Currency Reform League, which appearal in the Indian newspapers :~~~

The grievous effects of the artificial currency system adopted by the Government in 1893 have

1899-1900

1900-1 1901-2

Rs. 12,86,35,693 13,71,98,182 6,32,92,307

6,58,22,225

5,85,60,297

8,47,34,805

3,98,07,858

3,57,68,978

9,50,72,321

7,46,28,343

Included in the above figures are imports by the Indian Government for the purpose of coinage:-

1892-3

1803-4

1894-5

1895-6

1896-7

1897-8

1898-9

1899-1900

1900-1

1901-2

Rs.

1,35,000

83,200

90,000

92,000

5,43,000

1,16,000

1,42,000

8,08,65,000

1,21,30,000

The net imports of silver into India mainly for the arts prove to be a much larger proportion of the net total importations than the official estimated amount when the Mints were open.

COMMITTEE ON STRAITS SETTLEMENTS CURRENCY.

25. On the coinage of silver into rupees the Indian Government now makes a profit of about 90 per cent. The present market gold price of silver is about 221. per juice, and silver at that price can be minted at a cost of about 84d. per rupee; whereas the Government obtains for each rupee so coined 1s. 4d. in gold. To what extent, if any, there has been counterfeiting, it is not possible for me to express any opinion, but it is important to remark that the profit on buying silver at 221. per ounce and surreptitiously coining in into rupees of the same weight and fineness as those in circulation would be about 90 per cent. The more the gold price of silver declines, the greater will be the Indian Govern- ment's profit on the coinage of silver into rupees, but the greater also will be the inducement to pounterfeit. This remark will apply with equal force to the silver dollar in the Straits and the Malay States if the artificial gold value given to the silver dollar is substantially higher than the market gold price of silver.

The profit on buying silver at 22d. per ounce and coining it into guilders of the same weight and fineness as those now in circulation in Java is about 174 per cent. There is reason to believe that in recent years there has been counterfeiting of guilders in Java to a considerable

xtent.

In connection with illicit guilder coins, the following paragraph appeared in the Times of 21st August, 1895:-

"Our Singapore correspondent, writing under date of 24th July, says that an object lesson in one disadvantage of a silver coin with an artificial value, may be found in the Netherlands Indies.

There, the silver guilder is retained by legislation at its old value, while the silver, of which it is made, is worth only about a half of what it used to be.

As

a consequence, coining factories have been estab. lished in Chins to export guilders to the Nether- lands Indies. They turn out coins of exactly the same fineness and weight as the mint-coined guilders, and dispose of them in the Netherlands indies at a great profit. It is estimated that nearly two millions of such counterfeit coins have been put in circulation in recent years, and the evil threatens to increase."

Between 1894 and 1896 the bank I am connected with found quantities-hundreds of illicit guilder coins in shipments made from the East to Holland. These were sized by the police and confiscated. We could only ubtain three specimens on guaranteeing the Dutch Government that the coins would not again be put into circulation. The illicit or false coins were so complete an imitation of the genuine coins that our officials in the Straits and Java could not detect the falsely uttered money. In consequence our bank has since refused to buy guilder coins unless we can obtain a satisfactory guarantee from the seller to refund the cost of coins found to be illegal and confiscated. This action has checked the issue of false coins, but I have reason to believe that there are a large number of false silver guilders in circulation, though care is taken not to present them to the banks, which, by mutual agree ment, give the holder the option of allowing them to be cur, or having the matter placed in the hands of the police.

One of our agents in the Federated Malay Status wrote home, quite recently:-

"During the past few days there are reports of a good number of counterfeit dollar coin being in circulation. The counterfeit is somewhat difficult to detect, the outside of the coin being of silver, the design of which is identical with that of the genuine coin, the interior is of a black kind of metal, the weight of the spurious coin is practically the same as a genuine coin, the ring of the false coin requires an expert to detect the deception. We have up to the present destroyed about 60 of these coins re caived over the bank counter, and are, of course, using every care to protect ourselves against loss.

"The senior magistrate informs us that he is of opinion that the modus operandi was to shoar off the exterior portions of a genuine coin, and then fill the interior with a metallic substance."

26. On 26th June, 1803, when India closed its Mints, only the rupee coins already minted, the uncoined silver already in India or en route, and the Government rupen note issue had to be dealt with; therefore the question of limiting the subsequent issue of silver rupees in India vas not surrounded with any extraordinary difficulties,

68-19.

87

The rupee coins in circulation and held in the Govern ment Treasuries had not to be demonetised or any change made in their character, inasmuch as both the coins and Government rupee notes in circulation continued to be unlimited legal tender as before.

27. Great Britain has a single gold standard, but in reality uses both gold and silver, the one boing as indispensable to the requirements of the people as the other, although in the payment of debts, silver money can be legally employed to the extent of forty shillings only. Still there is in circulation in Great Britain silver money representing a value of at least £22,000,000—and it is doing its duty remarkably well. The people could not get on without it or its equivalent in some shape, though its metallic value is less than £7,500,000, America has in circulation silver money for at least £15,000,000 performing full duty for busi ness purposes, while its metallic value is about £5,500,000, and France has in circulation silver money for about £11,000,000, also performing fall duty for business purposes, while its metallic value is about £4,000,000, Other countries have large amounts of silver money in circulation on a gold value basis of 60d. per ounce, which are equally indispensable to the needs and the requirements of their people.

28. The official reports from 1890 give the quantity of silver purchased and minted by the British Mint into coins representing 58., 4s., 2s. 6d., 28, 1s., 6d., and 3d. These coins have been issued on the basis of silver costing 66d. per ounce, though the average actual price at which the Mint purchased silver between 1890 and 1901 was only 331d. per ounce. uninteresting, indeed, to note here the average yearly It may not be cost of silver per ounce, the rate of seigniorage, and the annual profit derived by the Government from the par- chase and cointage by the British Mint of silver from 1890 to 1901.

Year,

Average Mint price in pence per ounce.

Scigniorago per cent.

Annual

Profit.

d.

£.

1890

4871

35:56

321,000

1891

45-

45'65

239,000

1892

391

85*78

287,000

1893

81.75

274,000

1994

125.64

342,000

1895

11728

405,000

1896

11773

504,000

1897

136*77

400,000

1898

142:20

501,000

1899

140-00

770,000

1900

133:03

15024

975,000 534,000

1901

Lord Liverpool, when the British monetary system was changed to a gold basis, intended that the Mint should earn only a small seigniorage on the coining of silver, whereas during the last twelve years the Govern- ment has made a profit of upwards of £5,600,000 from that source. In other words, it sent into circulation during 1890-18901 an amount of silver money the metallic value of which was £6,681,000 less than its nominal value. The coins are legal tender to the extent of 40s. for any one payment, and circulate at that equivalent rate, whereas their metallic value is only 136, 4d., and the metallic value of one shilling is at present four- ponce. Such is the anomaly of the British monetary system,

29. Though there does not exist a monetary system or measure of value which is "legal tender throughout the British Empire," the British Government has re- quired the inclusion, in the Anglo-Chinese Treaty signed at Shanghai on 5th September, 1902, of an Article (2) embodying the following stipulation:-

"China agrees to take the necessary steps to provide for a uniform national coinage which shall be legal tender in payment of all duties, taxes, and other obli. gations throughout the Empire by British as well as Chinese subjects."

For the sake of consistency and in the interests of the population in British Colonies China might on her part reasonably have stipulated for utform national coinage reciprocity on the part of the British Government,

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