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Orders in Council issued by the Governor under that Ordinance and two Proclama- tions issued under the Order of His Majesty in Council of the 25th of June last, and also the draft of a despatch* which Mr. Secretary Lyttelton proposes to address to the Governor respecting the Ordinance.

While concurring generally in the terms of the despatch, my Lords are of opinion that it is not desirable that the Government should be definitely committed to the withdrawal of the prohibition upon the import of British and Mexican dollars as soon as the exchange has been effected. That course is suggested in paragraph 63 of the Departmental Committee's Report; but in practice there might be some risk of these coins circulating on sufferance, after they ceased to be legal tender, to such an extent as would endanger the success of the new currency policy, and it may therefore become necessary to continue the prohibition, or at any rate to impose restrictions upon the importation for some time, until the new currency is firmly established.

My Lords concur in Mr. Lyttelton's view that the penalties to be imposed for infraction of the prohibitions should not be unduly severe, provided that they are sufficient to secure that the law is respected.

I am, &c.,

40731

G. H. MURRAY.

43193

SIR,

37

No. 53.

THE SECRETARY OF STATE to THE ACTING GOVERNOR. (Confidential.)

Downing Street, 3rd December, 1903. WITH reference to my despatch, No. 405, of this date,* paragraph 4, I have the honour to inform you that the Lords Commissioners of the Treasury have expressed the opinion that it is not desirable that the Government should be definitely committed to the withdrawal of the prohibition on the import of British and Mexican dollars as soon as the exchange has been effected. They point out that while that course is suggested in paragraph 63 of the Committee's Report, there might in practice be some risk of these coins circulating on sufferance, after they cease to be legal tender, to such an extent as would endanger the success of the new currency policy, and it may therefore become necessary to continue the prohibi- tion, or at any rate to impose restrictions upon the importation for some time, until the new currency is firmly established.

43193

I have, &c.,

ALFRED LYTTELTON.

No. 54.

PUBLIC RECORD OFFICE

། ། ། ཀ

Reference :-

C.O. 882

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

9 PUBLIC RECORD OFFICE, LONDON

No. 52.

THE SECRETARY OF STATE to THE ACTING GOVERNOR. [Answered by No. 59.]

(No. 405.) SIR,

Downing Street, 3rd December, 1903. I HAVE the honour to inform you that His Majesty will not be advised to exercise his powers of disallowance with respect to Ordinance No. 24 of 1903 of the An Ordinance to regulate the Legislature of the Straits Settlements, entitled import and export of coin into and from the Colony," a transcript of which accom. panied your despatch, No. 455, of the 14th October.t

2. I informed you in my telegram of the 12th Novembert that I approved the Orders in Council issued under this Ordinance, prohibiting the import of Mexican and British dollars, and the export of Straits dollars and exempting the Federated Malay States and Johore from the operation of the two preceding Orders, copies of which accompanied Sir F. Swettenham's despatch, No. 431, of the 7th October.§

3. I observe Sections 3 (3), 6 (5) and (6), and 7 of the Ordinance re-enact the provisions as to the circulation of prohibited coin contained in the Foreign Coin Prohibition Ordinance No. 2 of 1891. The severity of those provisions was criticised in Viscount Knutsford's despatch, No. 106, of the 9th April, 1891,|| and I under- stand that no Order in Council prohibiting the circulation of any foreign coin was ever issued under the 1891 Ordinance.

4. As at present advised I do not think it will be necessary to bring these provisions into operation with regard to British and Mexican dollars when they cease to be legal tender. When that takes place, the prohibition of the import of these dollars may be withdrawn, and it is suggested in paragraph 63 of the report of the Currency Committee that they should then freely pass as merchandise. It may, however, then be necessary to enact some provision to prevent these dollars being passed to ignorant persons as being equivalent to legal tender coin. punishment for that offence, unless the accused can prove that he acted bonâ fide, might well be severe, and I should be glad if you would sumbit for my approval the draft of an amending Ordinance on the above lines.

The

5. I observe also that Section 6 (1) leaves no discretion to the Court as to the forfeiture of the whole amount of the coin in question. This provision might act hardly in the case of ignorant coolies, and on this point I would refer you to my predecessor's despatch, No. 157, of the 26th May, 1899. It might have been better to give discretion to the Court to order the forfeiture of something less than the whole amount of the coin. This would have been in harmony with the last words of Section 6 (2) of the Ordinance.

I have, &c.,

A

SIR,

COLONIAL OFFICE to TREASURY.

Downing Street, 3rd December, 1903.

your I AM directed by Mr. Secretary Lyttelton to acknowledge the receipt of letter of the 28th ultimo,† on the subject of the Straits Settlements currency, and I am to request you to inform the Lords Commissioners of the Treasury that the view expressed in paragraph 2 thereof has been communicated confidentially to the Governor.

The draft despatch enclosed in the letter from this office of the 21st ultimo has been modified by the alteration of "will be withdrawn" in the second sentence of paragraph 4 to "may be withdrawn."

Attached to 42496

No. 55.

I am, &c.,

C. P. LUCAS.

MR. L. ABRAHAMS (INDIA OFFICE) to MR. A. E. COLLINS (Colonial OfficE).

(Extract.)

MY DEAR COLLINS,

*

34, Lansdowne Crescent, W., 6th December, 1908.

#

One question that you ask is whether the profit on the Indian note issue is used as a reserve for the maintenance of exchange. The answer to that question is in the negative. The profit of the Paper Currency Department goes to general revenues. There is a special Gold Reserve Fund, held apart from revenue, and consisting of the profits on coinage. It is invested in Consols and similar securities, This fund will be used, if occasion and the interest also is invested as it accrues.

arises, to support exchange. The exact way of using it for that purpose will have to be decided when the occasion does arise, if ever; but, of course, all such funds must, if they are to be effective, be employed in such a way as to reduce (for the time) In the Straits presumably the the active circulation of the depreciating coin. Government would offer to buy up dollars at the "legal" ratio (out of its gold reserve fund) at any time at which the dollar was falling below that ratio. In India it is probable that the procedure would be different, and that the sale by Government in London of remittances on India would be reduced, the Gold Reserve Fund being used to keep the India Office in funds.

Yours, &o.,

L. ABRAHAMS.

ALFRED LYTTEETON.

• Bee No. 52. ↑ No. 47.

† 41229: not printed.

No. 45.

| 5489/1891. ▼ 12636/1899.

• No. 52.

+ No. 31.

‡ No. 48.