CO882-(8-9) — Page 139

PUBLIC

RECORD OFFICE

19.

Reference :-

TILUCO. 882

سلسسلسلنا

9 PUBLIC RECORD OFFICE, LONDON

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

limit.

46

required for each additional exchange of the amount which may be fixed as a The general public will thus become accustomed to the new dollar and be prepared for the next step-the demonetization of the British and Mexican dollars -which is necessary to secure the Government that control of the currency which is essential to fixity of exchange.

5. So far as can be judged at present, it would not be prudent to take that step before the second week in August, after the receipt on the 6th and 7th of that month of the consignment of 2,400,000 dollars which may be expected to arrive from Bombay by that mail. The precise date must, of course, be determined by the state of the currency in the bazaar, but when it is fixed, in order to prevent any complaint on the part of the public, it will probably be desirable to offer for a period not exceeding seven days to give Straits dollars or currency notes in exchange for any-British or Mexican dollars presented at the Treasury. It would be impossible to arrange within that period for any considerable importation of these coins. and if the attempt were made it is most probable that the Government would hear of it and be able to take steps to prevent it.

6.

The demonetization Proclamation will, of course, have to be issued simul- taneously in the several provinces of the Colony, in the several States of the Malay Federation, and in Johore.

7. It will be illegal for the Currency Commissioners after demonetization of the British and Mexican dollars to issue currency notes in exchange for such coins, but I propose to instruct them to do so if necessary, and to obtain an Act of Indemnity for them from the Legislature as soon as possible.

8. The prohibition of the export of the Straits dollar need not be continued after the demonetization of the British and Mexican dollars. Some small exporta- tion goes on even at the present time, but if, as I anticipate, the present premium on the dollar in the Colony is maintained and probably increased, it is obvious that there will be no tendency to export, but, on the contrary, to return those which may have already slipped out.

9. The prohibition of the import of the demonetized currency must, however, be continued for some time after the demonetization until the public has become thoroughly familiar with the fact that the new dollar is the sole legal currency, and that the old dollars have, in the Colony, ceased to be anything but articles of merchandise. It is probable, indeed, that it may be desirable to continue the pro- hibition until the dollar has attained the value which may be ultimately determined as the fixed exchange with the sovereign.

10. The importation of limited quantities under licence for the purpose of re-export would, of course, continue to be allowed.

11. I enclose a draft of the demonetization proclamation and I should be glad to know whether these proposals meet with your approval.

Enclosure 1 in No. 64.

MEMORANDUM.

I have, &c.,

JOHN ANDERSON.

Up to the commencement of the month $16,175,000 in Straits dollars had been received from Bombay.

2. There are still 85,274,822 in old. dollars belonging to the Commissioners of Currency in course of being reminted, besides $1,382,000 still in the currency note vault awaiting despatch to Bombay, making a total of $6,608,822 still to be recoined from the currency note reserve.

8. In addition there are $1,250,000 belonging to the Federated Malay States which have still to come back from the Mint. These two amounts make up a total of $7,856,822.

4. According to confidential returns from the banks in the Colony they still hold on the 31st March last. $6,157,000 in old dollars, while the Chartered Bank in the Federated Malay States held $379,678, which makes up a total of $8,536,678 held by the Banks. There is besides $830,000 held by the Chartered Bank against its note issue which amount is in a vault of which the Government has the control.

• Reprinted here as passed. Bee Gazette of 24th August, 1904.

47

5. As to the amount of old dollars held in the bazaar at Singapore and Penang, the estimate of those who should know (Bankers and Cashiers) puts it at a moderate figure, certainly under $1,000,000, and if $200,000 is added for Malacca, which is Mr. Bland's estimate, this would make a further item of $1,200,000.

6. It is not possible to form any dependable estimate of the amount of old dollars in the Federated Malay States, but I do not think they can exceed $2,000,000, and in Johore, say, $1,000,000, thus making a final item of $3,000,000.

7. If the items given above are totalled they give the following result of old dollars still to be dealt with:-

Currency Commissioners and Federated Malay States

balances

In banks

In bazaar (Colony)

In Federated Malay States and Johore

Total

87,856,822

7,906,678

1,200,000

3,000,000

$19,423,500

(say) $20,000,000

8. If we can calculate on the rate of supply from Bombay continuing at $1,200,000 per fortnight, it would thus take about 17 trips or 34 weeks from the 1st May (say, until the end of December) to get back the whole 20 million in the shape of Straits dollars. But if we deduct the amount now at Bombay or en route ($6,524,822) (made up of $5,274,822 on account of the Currency Commissioners and $1,250,000 on account of the Federated Malay States) there would remain only about $13,500,000 to be sent away for recoining. If this were done at the rate of $1,200,000 per fortnight, the process would take about 24 weeks from the 1st May, so that by, say, the middle of October, the Colony, Federated Malay States, and Johore would have been denuded of British and Mexican dollars. As a matter of fact, whatever steps were taken, there would always remain a number of British and Mexican dollars which had not be collected.

9. Of the $16,175,000 (Straits) already imported the following has been the

method of their disposal:-

Banks in Colony

Banks in Federated Malay States

Government, Federated Malay States

Currency Note Vault ..

Treasuries for making payments, &c.

Total

་

$5,390,000

800,000

8,100,000

3,923,000

3,062,000

$16,175,000

10. I should be glad if the Indian Mint could be asked to endeavour to give

us an increased outturn of Straits dollars, as the sooner we are able to demonetize the old dollars the safer will be our position. If our exchange premium with Hong Kong were to increase (it has lately been over 5 per cent.) there will be even greater temptation to speculators to import the old coins to a degree which might delay our scheme and proportionately increase the cost.

12th May, 1904.

FRED. G. Penney.

Enclosure 2 in No. 04. TELEGRAM from the SECRETARY TO THE GOVERNMENT OF INDIA to the COLONIAL SECRETARY.

•

*Confidential. Your telegram of 18th instant, Straits dollars will be accelerated Bombay Mint shipped 12 lakhs 17th May; can send 20 lakhs ist June and 24 lakhs by every subsequent steamer provided Straits Government at ones increase fortnightly consignment to 24 lakhs British dollar. It must be clearly

• Mr. Siah Liang Siah mys $800,000.