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PUBLIC RECORD OFFICE

Reference :-

TITLC.O. 882

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Straits dollar equal to two rupees, Is there still any intention of making the official rate of exchange 29. 8d.?

(3) To prevent the smuggling of coins out of the Colony, and at the same

time to render unnecessary any disturbance of the official rate of ex change of 25 d. there is open the expedient of lessening the intrinsic value of the Straits dollar, by lowering the fineness of the coin, or reducing its weight.

In bringing these points to your notice, our object is not to interfere in any way with the policy of the Colonial Government, but to elicit some information which will enable us to carry on with confidence the large transactions we have at present outstanding between the Straits Settlements and London, as well as to guide us in continuing arrangements we have recently entered into, of a financial nature between the Straits Settlements and other points where the currency is on a gold basis, having for their object the furtherance of trade.

I am, &c.,

38484

No. 153.

CALEB LEWIS,

Manager

THE GOVERNOR to THE SECRETARY OF STATE. (Received 9.47 a.m., 18th October, 1906.)

TELEGRAM.

[Copy to Treasury, 22nd October, 1906. L.F.]

[ Answered by No. 156.]`

Desire your authority prohibit export of Straits dollars Netherlands India when necessary.

38597

SIR,

ANDERSON.

No. 154.

TREASURY to COLONIAL OFFICE.

(Received 19th October, 1906.) [Answered by No. 163.]

Treasury Chambers, 19th October, 1906. THE Lords Commissioners of His Majesty's Treasury have had under con- sideration your letters of the 16th and 17th instant (Nos. 37996 and 38373/06),* with enclosed copies of communications from the Governor of the Straits Settle- ments, respecting the steps to be taken in view of the threatened rise of silver to a price which would make the bullion content of the Straits dollar worth more than 28. 4d.

In reply, their Lordships desire to submit to the Secretary of State for the Colonies their observations upon the two alternative courses for dealing with the situation which are referred to in the Governor's despatch of September 13th.† These are:-

(1) To withdraw the Order of the Governor in Council whereunder the Cur- rency Commissioners have undertaken to issue notes in exchange for gold at the rate of 60 dollars for £7.

(2) To take power by Local Ordinance to redeem currency notes in either gold or silver at the option of the Currency Commissioners, to make gold a legal tender, and to take steps for reducing the silver content. of the Straits dollar.

Were it not for the great weight which Sir John Anderson attaches to the local considerations in favour of a determined effort to maintain the Straits dollar at 2. 4d., my Lords would have been disposed to prefer the first alternative as the

↑ No. 146

Nos. 149 and 151.

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easier and more natural means of escape from the threatened difficulties. At pre- sent the only link between the Straits dollar and gold is the undertaking of the Currency Commissioners to issue their notes in exchange for gold at 2s. 4d. The severance of that link would set the dollar free to rise in value as silver rises, with- out risk of the Colony being denuded of its silver currency and without need for interfering with the present composition of the dollar. There is no exceptional advantage in 2s. 4d. as the permanent exchange value. If the opportunity of the present rise in silver could be taken to carry the dollar to a higher point, it might be possible hereafter to fix it at an exchange value which would have a reasonable prospect of remaining unaffected by subsequent fluctuations in silver, and to attain that end without any reduction of the silver content of the dollar.

The Governor, however, objects to this procedure on the ground of the disloca- tion of business which would be entailed during the period of transition to an enhanced value of the dollar; he also attaches great importance to impressing upon the inhabitants of the Colony, and especially the Chinese, the conviction that the dollar has been finally divested of its character as a silver coin, and has become the representation of a definite amount of gold. It would clearly be more difficult to bring home this conviction to the community if it were necessary now to make a departure from the exchange value originally proposed.

My Lords are not prepared to press for the adoption of the first course in the face of these objections, and they therefore agree to the adoption of the alternative course recommended by the Governor with the concurrence of his local advisers. They have, accordingly, caused the draft of an Order in Council to be prepared, of which a copy is herewith enclosed, and are taking steps for its submission to His Majesty in Council on the 22nd instant.

The draft Order provides for the three measures which are proposed in the letters under reply:

(1) For making the British sovereign legal tender in the Colony for any amount, concurrently with the Straits dollar, which will continue to be the standard coin. For reasons already explained it is not desir- able or necessary that the half-sovereign should be included.

(2) For reducing the millesimal fineness of the Straits dollar from 900 to 800 in future coinages. It is not proposed that the new dollars should differ from those hitherto coined except in fineness, or that the pre- sent dollar should cease to be a legal tender, as suggested in the Governor's despatch.

(3) For making the silver Fifty-cent pieces legal tender for any amount. These pieces, though of the same degree of fineness, 800, which is proposed for the future dollars, are not of the same proportionate weight. The disparity of the standard weights is not, however, of importance under present conditions.

It is provided that the date of operation of each of the three provisions shall be fixed by Proclamation of the Governor.

38472

No. 155.

I am, &c.,

E. W. HAMILTON.

COLONIAL OFFICE to THE CHARTERED BANK OF INDIA, AUSTRALIA, AND CHINA.

Downing Street, 19th October, 1906.

SIR,

I AM directed by the Earl of Elgin to acknowledge the receipt of your letter of the 17th instant, † enquiring as to the intentions of the Government in respect to barrency in the Straits Settlements.

I am to draw your attention to Reuter's telegramț of the 17th instant, pub- lished in the newspapers,§ to the effect that the Government of the Colony advises the introduction of a Bill empowering the Currency Commissioners to pay notes either in gold or silver, at their option, and that the Government accepts gold in payment of dues. Any further measures necessitated by the situation will be

• For Order in Council as passed see Enclosure in No. 161.

"Financial News" of 18th October. ‡ Not reprinted.

† No. 152.

01104

6

PUBLIC RECORD OFFICE, LONDON

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

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announced in due course at Singapore, and Lord Elgin regrets that he cannot anti- cipate such announcements furnishing information in this country.