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PUBLIC RECORD OFFICE

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Reference :-

C.O. 882

7PUBLIC RECORD OFFICE, LONDON

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

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APPENDIX:

9. Speaking generally, therefore, we say that the policy adopted in respect of the bulk of the British possessions in Asia should, if possible, be applied to this small colony (including, of course, the Native States), lying as it does on the outskirks of India. It can ill support the inconveniences which British India has found to be intolerable. We should be glad, therefore, if it were found possible to secure fixity of exchange by the adoption of a gold standard, supposing that the ex- periment of the Government of India is found to be a

success.

+

10. There is no mint in the Colony, and the only silver coins in circulation which have been introduced by the instrumentality of the Government are subsidiary token coins representing 50, 20, 10 and 5 cents of a dollar respectively.

The unit is the silver Mexican dollar, which was fixed as the standard by the Queen's Order in Council of October 21st, 1890. The Japanese yen is also in general circulation, and both of these coins are legal tender up to any amount.

11. But these dollars are foreign coins, the use of which has been recognised by the Government in order to facilitate commerce, law, in this case, following Oustom. What we now advocate is the establishment in the colony, for the first time in its history, of a British currency.

12. It has been represented to us that time is of im- portance, and that immediate action is required.__ With- out endorsing this, we are of opinion that the Gover- ment should be prepared with a policy of its own if, by reason of action on the part of the United States Government or a change of policy on the part of Mexico, there should be a further serious fall in exchange.

13. We have come to the conclusion that the easiest and most practical way of obtaining for this Colony what it has been attempted to obtain for India by the closing of the minta there, viz., a silver currency on a gold standard, would be to extend the Indian currency to the Straits Settlements. We do not overlook the difficulty of effecting any such change in a community where the dollar has always been in use, and where all mercantile transactions are carried on in dollars, and where the mass of the people are unacquainted with the use of any other coins the silver unit. We are aware also that when the Government of India wished to insist on the use of the rupes here many years ago, this was resisted by the European community. For many reasons we should prefer that the silver unit of the Colonial cur- rency should continue to be a dollar, but if the difficul- ties of arranging this on a gold standard should prove (as we fear) insuperable, we would advocate the intro- duction of a rupes currency subject to the concluding hypothesis in paragraph 9.

W. E MAXWELL. H. TROTTER.

T. SHELFORD.

W. EDELMANN. M. METER.

I agree with the above report, with the exception of the commencement of paragraph 13, not being satisfied that it is proved that the easiest and most practical" method of obtaining a gold basis is the extension of the Indian currency to the Straita.

II

E E IEEMONGER.

1. We think it very desirable that the Government should have some direct control over the currency of the Colony, and are therefore in favour of a British or Straits dollar (of the same weight and fineness as the Mexican) as an addition to the present currency. If Mexico or Japan attempt in any way, later on, to put a fictitious value upon the dollar or yen, then this new coin could be introduced without loss to the Govern- ment, and steps should be at once taken to prepare for such a contingency. But in any case, it appears to un to be the duty of Government to provide currency if required.

2. We are not at present in favour of a gold basis coin, and agree with the letter addressed to the Com- mittee by Mr. Butt, local Manger of the Hongkong and Shanghai Banking Corporation, as to the wisdom, under present circumstances, of delay in attempting any such alteration, success being doubtful, and trade certain to be unfavourably affected.

J. R. CUTHBERTSON,

W. H. C. Van CattenbURCH.

III.

1 I read the evidence as indicating the belief that the trade of the Colony would not gain or its prosperity be increased, by our continuing to have a currency the value of which rises and falls with the gold value of the metal therein;

and

that our having a currency bearing a fixed relation to gold would not be detrimental to the trade and general interests of the Colony, provided there were no violent alteration in value in passing from the existing posi tion to the new.

2. The advocates of fixity are divided as to the means by which that end is to be attained, whether

by a fictitious silver currency of our own;

Or

by our being included in the Indian currency

system.

3. To deal with the former of these alternatives :—I understand the Government to repudiate all responsi- bility as to the existing coinage (which it has made legal tender) on the ground that such coinage is not its own. I hold that it cannot avoid its responsibility, but, if I admit the position it takes up, I must condemn the waste of Colonial resources there would be in starting, without there being a necessity for so doing, a legal tender säver token coinage. In India pre-existing re- sponsibility for its coinage compelled the Government to

Auch a course.

4. It has been said that economy is the greatest source of revenue. In spending large sums of money in pur- chasing silver to establish a fictitious coinage, I consider that the Government would be wasting the revenue which that money might be made to yield, seeing that the trade of the Colony would derive no greater benefit from a silver token currency than from one of cheaper material. A silver dollar of the same weight and purity as the existing coinage, bearing a face value of 38. with only 2. worth of silver in it, would not be of greater use, for the purposes of trade, than a token of leather or paper, provided the credit of the Government re- mained good for the face value. Moreover, spurious coins of full weight and purity might, and probably would defy detction. Not so with a forged note. We thus come to the point that a forced paper currency would be no greater detriment to trade than a silver currency, the metallio value of which is one-half or two-thirds of its face value.

5. Roughly speaking, the

is :-

Paper, Silver,

Deduct commodity money,

currency of the colony

$7,000,000

$7,000,000

$14,000,000

-

2,000,000

$12,000,000

exclusive of subsidiary coinage. Were a forced paper currency to be issued to the extent of $12,000,000 (with

• fixed value in relation to gold) and the proceeds in- vested by the Government at an average of 3 per cent. per annum; the Colony would derive revenue therefrom to the extent of $360,000 per annum, which might be devoted to useful purposes. The $2,000,000 I allow for commodity money represents the Mexican dollars and yens that must continue in circulation for the purposes of our trade with some countries.

COMMITTEE ON STRAITS SETTLEMENTS CURRENCY.

6. All that I have written about a forced paper cur- rency is in argument against the introduction of a new token silver coin as legal tender; my views on the note issue remaining with the banks, I have given in the memo. I wrote for the Chamber of Commerce in July. I am not urging a forced Government issue, but if the alternative has to be adopted, the powers and obliga tions of the officers to be appointed Commissioners of Paper Currency would be clearly defined by law. Under Government responsibility they must be trustees for the public, and responsible to the public for any illegal act they may commit, even though it be at the instigation of the Executive Government.

7. A forced paper currency may have a limit to its inconvertibility. To explain this I may here state that the gold obligations of the Straits Government are:-

Military Contribution,

Pay, Pensions, etc.

- £100,000 75,000

175,000

Obligations by private individuals,

225,000 firms, corporations, etc., at least,

per annum, £400,000

From figures supplied by the Secretary to the Cham- ber of Commerce, I take the following:-

Imports from gold using and gold basin countries including India amongst the latter for the year 1892,

$57,946,000 72,150,000

14,213,000

Exports to same, -

Surplus, say 25 per cent

Excluding specie in both cases. The figures of trade with silver countries are unre- liable, as the Asiatics, who largely carry on the trade, do not, I think, accurately furnish statements to the Government.

The question arises-Will a surplus export of 25 per cent. in our trade with gold countries, less the gold obligations above referred to, enable the Government, with the aid of legislative measures, to maintain com- parative fixity in exchange with gold countries, for, apart from the trade position, the Government would not be able (to borrow the words of President Oleveland in his message to the American Congress) to make "ita If the answer be fiat the equivalent of intrinsic value."

in the affirmative, then it should be possible for the Government to limit the inconvertibility of its paper by enacting that the Commissioners of Paper Currency shall, on demand, give a sterling draft at sight on London at par. against any Government notes of the value of 50.000 dollare (or such other sum as may be arranged) tendered at any one time by any individual, firm, or cor- poration.

8. Taking it for granted that fixity is possible, I would ask in which are the public likely to have greater confi-

dence-

(1) A silver token coin (to be called a dollar) of the face value of 3., established by the Govern- ment at a cost of 2s. 6d., and against which the Government accounts show an asset of 2s. 6d., whereas the metal in sema has subsequently de- preciated to 28., auch coin being absolutely in- convertible into gold ↑ or

(2) A Government note of the face value of 38., against which the Government accounts show an asset of 38., and which, in quantity, is con- vertible into gold by a demand draft on Lon- don at par!

I think there can be only one anewer. Why should the Government speculate in silver? Why should it deliberately take up a position from which it might not be able to retreat without considerable lose, when it has an alternative from which, were fixity found an im- possibility, it could go back without los

9. So far I have dealt with obtaining fixity through a currency of our own. I will now abade a few objec- tions to the Colony coming under the Indian currency

■■tem. Our exports are pretty evenly distributed

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throughout the year. Indian exporta are of much greater volume at contain sensons of the year than they are at others. We should thus maintain our so-called fixity within narrower fluctuating points than could possibly be the case in India, where, during the active season, exchange might go abore la. 4d., and during the sack season go to ls. 24d., or lower. Again, in India there is always a bassar demand of greater or lesser extent for aver an element, as we have lately seen, conducive to fluctuations. We have no demand in this Colony for ailver a metal. Further, the large operations in Government paper between England and Indis greatly affect exchange-a difficulty we should not meet with in acting independently. We can at present only say that the convertibility of the rupee into gold may be a pos- sibility in the future. There is a fact, which some may consider of no consequence, as the credit of the Indian Government is no good that in their accounts there can be no provision, in the form of an asset, for any differ. ence between the real and fictitious value of their our- renoy. If further reasons are wanted, they are that, throwing in our lot with India will not bring the Colony the revenue which a currency of its own would, and that the introduction of the rupes currency may necessitate legislation to fix, for the settlement of debts, an arbi- trary exchange between the rupes and the dollar, which might work harshly in many instances.

10. To conclude, I am in favour of a British dollar following silver as being likely to give impetus to planting enterprise and production generally in the Malay Peninsula, but the Government, before introduc- ing such a coin, must clearly decide never to make it a token.

G. S. MURRAY.

IV.

1. As the conclusions at which we have arrived, after mature consideration, differ materially from those formed by the majority of the European members of the Committee, we feel it our duty to tender a separate report,

2. In the Colony and its dependencias the apprecia tion of gold in relation to silver has, in our opinion, done more good than harm.

3. The present low prices of Straite produce in the markets of the gold-using countries are not due to the depreciation in the value of silver, but rather to the general dulness of trade now prevailíng in all the trading centres of the world.

4. The Colony of the Straits Settlements, which is acknowledged by all to have become a prominent centre of trade in the Far East, could not have been expected to escape with impunity the evil of the general depres- sion in trade by which every other part of the commer- cial world has been affected. That depression began with the collapse of one of the largest and most eminent financial firma in the City that is the gold market of the world, and but recently nearly all the banks of Australia closed their doom. Australia is a country producing gold, and with an exclusively gold currency.

5. To such causes may, in a messure, be attributed the recent decline in some branches of trade, but the chief reason was the heavy losses incurred by our traders during a long period of speculation, particularly during the time of the Pahang share speculations. This caused mumerous failures and bankruptcies among the traders in the Colony, and the value of local securities fell to ite lowest point.

6. The condition of this Colony is so different from that of India that we fear that any attempt to imitate the currency policy of that country would meet with failure, and bring disasters upon this Colony.

7. In this Colony, in order to obtain fixity of ex- change, it would be necessary to demonetize the whole of our present currency, and to introduce in its stond some new coinage of protected value. But the tank of making such a change would be attended with much cost and great difficulties which might prove insurmount able.

8. Fixity of exchange, further, would not obriste the inconvenience at present experienced by our Govern- ment and by a small section of the trading community.