CO882-(6-8) — Page 149

PUBLIC RECORD OFFICE

Reference :-

C.O. 882

7 PUBLIC RECORD OFFICE, LONDON

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APPENDIX:

Taking first the increase from gold standard countries $12,624,000 (Appendix B).

United Kingdom, Europe, America and Australia. Increase 8061,000-3 per cent.

11. This becomes a decrease of 34 per cent. when the difference in exchange between 1890 (36. 53d.) and 1805 (2. 2fd.) is taken into account.

12. Since 1896 a further fall in exchange, of about 17 per cent., has occurred, and if, following on the experi- ence of the previous seven years, the trade overturn in dollars does not increase, a still further falling off in the sterling value must be expected in our import trade with these countries.

13. The importer of European goods has therefore only just maintained his trade as measured even in dollars, whilst his margin of profit has shrunk through the consumers' inability to pay the increased prices required by the fall in exchange.

14. He has further to reckon with increased expendi. ture, and thus the present condition of affairs has become acutely serions, and points to a still further and speedy decline of our once flourishing import trade with Europe, a position of matters for which, in view of the importance of our trade with the mother country, an early and thorough remedy should be devised.

15. It may be here mentioned that, with the view of meeting the inability of the native consumer to pay suf ficiently high prices, goods of lower quality, and of reduced weight and measure, are now being more freely introduced, a feature likely in the long run to prove detrimental to the trade of the colony.

Netherlands India.

Increase $5,528,000-24 per cent. 16. The bulk (see Appendix G) appears as exports to other gold standard countries, having merely passed through our hands. Had the quantities and gold prices of these imports remained stationary, they would have shown an increase of 37 per cent.-the difference in ex- change between 1880 and 1896 whereas the increase is only 24 per cent., although the quantities in 1896 were distinctly larger than in 1890.

17. It may further be remarked with reference to our import trade from Netherlands India, that the increasing uncertainty of our exchange appears to be neutralising the advantage of our natural position and shipping facilities, and tending to prevent the trade from coming past Java and Celebes ports. With fixity of exchange, this trade should be capable of enormous expansion in 1896 it reached $27,984,000 out of our total import trade of $186,196,000.

British India.

Increase $6,135,000-24 per cent.

18. Showing that we remain buyers of their products in spite of falling exchange. Opium, gunnies and Indian food-stuffs are absolute necessities, and must be had at any cost.

19. Fixity of exchange, especially if at a higher rate than the present dollar value, would undoubtedly bene- fit the trade with British India.

We now come to the increase from silver standard countries, $32,564,000 (Appendix C).

Malay Peninsula,

Increase $16,711,000-77 per cent.

20. All imports from the Peninsula necessarily pass- ing through the ports of the Straits Settlements, these figures deserve particular attention, showing as they do, with exceptional clearness, the development of a country under the influence of a depreciating currency.

21. The increase is largely due to one article, namely,

tin.

22. The condition of the tin industry in the Native States being practically the measure of their prosperity or adversity, some inquiry into the circumstances of that part of the population dependent on this industry may be instructive.

23. It is alleged that tin miners in the Native States were more prosperous in 1880 than in 1896, and that any temporary advance in the dollar price during that period was counteracted by a more than oorresponding in-

crease in the cost of labour and food, and was lost through over production. In 1896 many miners were forced to suspend operations, and, from investigations, your Committee are led to believe that depreciation of the dollar has not benefited the producer, except tem- porarily, and that fixity of the dollar, if at a reasonably low rate, would better serve the miners, by ensuring more steadiness in the price of tin, as well as in the cost of labour and food.

Hongkong and China.

Increase $4,867,000-31 per cent.

24. These imports may, in the main, be taken as ro presenting the requirements of our Chinese population. 25. As this population has not grown 31 per cent. during the period in question, it may be assumed that this increase represents the enhanced cost of importa from these countries, and this appears to be borne out by local experience.

26. The adoption of a gold standard would probably not injuriously affect this trade.

Japan.

Increase $3,056,000-411 per cent.

27. This large increase is due chiefly to the develop. ent of the Japanese coal trade, and, in a smaller measure, to the import of manufactured goods.

British North Borneo, etc.

Increase $1,380,000-58 per cent.

28. Due largely to the additional quantity of sago flour exported from Borneo.

Cochin China.

Increase $2,830,000-100 per cent.

29. Of this $1,526,000 is due to rice and $998,000 to fish.

Siam,

Increase $3,711,000-36 per cent.

30. Of this $3,477,000 is due to rice.

31. Reviewing the whole of our import trade, as above detailed, we have arrived at the conclusion that fixity of exchange would, on the whole, be decidedly ad- vantageous to the import trade of these Settlements.

32. Exports have increased as follows :—

Total

1890 $118,511,000 (Appendix A.)

161,777,000)

1898

an increase of

of this

the remainder

$ 45,266,000

33,113,000 is to gold standard countries (Appendix B.) 11,010,000 being to silver standard countries (Appendix C.)

$ 44.123,000 41 per cent. (the slight difference in these figures being caused by the omission of the Inter-Settlement trade figures).

We take first the increase to gold standard countries, $33,113,000 (Appendix B), as follows :—

United Kingdom, Europe, America, and Australia. Increase, $17,514,000-37 per cent.

33. The countries are our chief customers for Straits produce, so called.

1890

1896

-

34. The dollar totals if converted into sterling, viz. :

$46,450,000 at 3/54–£7,983,000 63,964,000 at 2/2] - 6,962,000 shows a marked decrease, whereas quantities (Appendix E) show a very large increase in almost all the leading articles of produce.

35. Although these figures show an increase in dollar totals, it is our opinion that more work is being done for less profit, or, at all events, without any correspond- ing increase of profit, and the higher cost of living must also be taken into consideration.

COMMITTEE ON STRAITS SETTLEMENTS CURRENCY.

36. The constant fluctuations in exchange thoroughly upset and disorganise this business, and, from mer- chant's point of view, there can be no doubt that the elimination of this element of uncertainty would be generally hailed with much satisfaction.

37. The producer has much difficulty to contend with from the same cause, as will appear from Appendix D, which shows monthly prices from 1880 to 1896 of the leading articles of produce.

Netherlande India.

Increase $14,750,000-83 per cent.

36. This expansion of trade with a gold standard country, in spite of the decline in the value of the dollar, is, in considerable measure, due to Java having required to import rice to compensate for short crops, and, in some further measure, the increase is doubtless also due to the advantages of our natural position and shipping facilities, already mentioned in connection with our import trade with Netherlands India

British India.

Increase $840,000-11 per cent

30. merely shows that a depreciating dollar has given us but little assistance in this direction.

Turning to the increase to silver standard countries $11,010,000 (Appendix C).

40. It may be remarked that the increases, with excep tion of that in the case of the Malay Peninsula, have been insignificant, and require little comment.

Malay Peninsula.

Increase $8,033,000-78 per cent.

41. corresponds with the increase in imports (77 per cent.).

Hongkong and Chine

42. Increase $1,446,000-11 per cent.

Japan.

Increase $434,000-400 per cent.

43. is really of insignificant volume, although the per- centage is large.

British North Borneo, etc.

44. Increase $592,000-30 per cent.

Siam,

Increase $1,387,000-10 per cent.

45. The bulk of the exports consists of Europesa gooda, and ought to have increased 37 per cent. to have kept pace with the depreciation of the dollar.

46. The same cause is probably at work here as men- tioned in our reference to the import trade from Europe, via., the inability of consumers to pay the increased prices required by the fall in exchange.

47. It may also be that Siam is now importing direct from Europe to a greater extent than formarly.

Cochin China.

Decrease $882,000-33 per cent.

48. This appears to be the only country with which the trade of this colony shows a decrease, and this is doo, almost entirely, to the prohibitive tariff of differential duties applied since 1892.

49. Reviewing the above trade statistics, our deduc- tions therefrom bring us to the conclusion that the best interests of trade in this colony would be served by fixity of exchange, provided the value of the dollar is fixed at a suitable rate.

50. We believe that a dollar fixed at a gold value of 2s. would not handicap our export trade. We believe also that a dollar of this fixed value would considerably assist in maintaining, at somewhere near its present extent, our import trade, with gold standard countries in particular, whilst at the same time this fixity would

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give to the conramer the advantage that cost of living would not be further increased by the depreciation of silver.

51. A point which we think deserving of very grave consideration in this matter is the protection which fixity of exchange would assure to the large amount of European capital already employed in the tenda of these Settlements and the encouragement which it would offer to the introduction of fresh capital to the colony, and also to the Federated Malay States. There is already much necessity for the restoration of that con- fidence which should attach to investments in these parts.

52. We therefore give it as our opinion that a fixed sterling value of 2s, for the dollar would beneût the trade and general interests of this colony, and we rug- gest that the Committee of the Chamber of Commerce move to obtain fixity at that rate.

53. One object of our investigations has been to sug- gest, if possible, some means by which fixity of suchange can be attained. It will be apparent to everyone that no reliance can be placed on silver as the basis of our currency. We are of opinion that a fictitious value to our silver currmmey, brought about by the contraction thereof, is a course which certainly could not be main- tained with safety or advantage.

54. A gold standard being the only one which promises stability, we advocate the conversion of our present currency to a gold basis.

55. Having arrived at this conclusion, we now proosed

to suggest, for the consideration of the Chamber of Com- merce, a scheme by which this change might be brought about.

PROPOSAL FOR A GOLD STANDARD FOR THE STRAITS SETTLEMENTS,

56. It must, we think, be recognised that it will be im- possible to change our currency from silver to gold with- out primary cost to the Government, although that cost, under the scheme which we are about to suggest, should be amply compensated for by subsequent advantages. As far as we are aware, in no country has the obenge from a silver to a gold standard (and there have been many such changes within the past 20 years) been made without cost to the Government making the con- version. In our view, the burden involved by any con- varsion must necesarily be borne by Government as representing the whole community, as any action to- wards demonetizing existing currency, without due pro- vision being made for withdrewing the coin so demone- tised, would lead to disastrous results amongst the less enlightened classes of the population,

57. The opinion of the members of the Straits Cur. rency Commission of 1803 was divided into those who wished for a dollar following the fortunes of silver and those who advocated the Colony being included in the Indian currency system. We believe it will be admitted from a perusal of this report that a dollar following the fortunes of silver is detrimental to the general interents of this Colony; whilst as to the suggestion that the currency of the Colony should be joined to that of India, although that might have been practicable in 1893, it will surely at the present time be admitted that the difference in parity between the rupee at about Is. 4d. and the dollar in the vicinity of 1, 104d, is so anor- mous and would involve such a complete dialocation of trade as to render such a course extremely hasardous. In this connection it should be noted that, taking 1s. 4d, the present value of the Indian rupee, to in- clude the surrency of this Colony under that system would be equivalent to raising the dollar here to 3.- ls, 4d, bearing the same ratio to 2a. (the old par valus of the rupee) as 3. does to 4a. 6d. (the old par valus of the dollar).

58. As the result of inquiry made by us early in Sep- tember, we have been informed that 16,000,000 British dollars had already been coined at the Bombay mint. and from the large amount of silver then and now waiting coinage at Bombay into British dollars, the nount is likely very soon to exceed 20,000,000 dollars, We do not suggest that the Government should con- sider any scheme which would involve the Colony taking over these 20 million dollars on a basis of 2s. per dollar, as a large portion of the coin is not in the Colony now in the Federated Malay Siates. We do not suppose there

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