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PUBLIC RECORD OFFICE

Reference :-

TILLHC.O. 882

سلسلسيلانيا

9

PUBLIC RECORD OFFICE, LONDON

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3. As to the arrangements now made with regard to the keeping of a joint account in India for the Colony and the Federated Malay States, they appear to us to be desirable, but we do not see that they would have any effect in putting a stop to the drain of gold from Singapore to India if a further attempt should be made to keep a gold reserve in Singapore

4. With regard to the old silver currency, which it is estimated will amount to 14 million ozs. of silver, it appears to us that it would be desirable that the Colonial Government should fix a price to include expenses at which it is prepared whenever it and that We should be given authority to sell to sell,

that we can obtain that price-it being understood may happen that all the arrangements for the realization of the silver will be left in our hands, and that the Colonial Government will undertake to ship the silver to any place It is essential, in our opinion, we may indicate upon receipt of a telegram from us. to the successful conduct of the business that the whole of the arrangements should be left in our hands, subject, of course, to a limit in price, and that the Colonial Government should not again repeat the mistake which it made in 1907 of selling some of its silver to a local bank and at a price considerably below that which we could have secured for it In other words, the Colonial Government should remember that in dealings with the local bank self-interest is likely to be the pre- dominant factor, whereas we, as the Agents for the Government, are likely to protect their interests better than when they are entrusted to a local bank.

5. At present I regret to say that there does not appear to be much prospect of any substantial rise in the price of silver, although the situation in India has somewhat improved of late. It would appear probable, therefore, that the Colonial Government may have to hold the silver for a considerable time if such a price as 25d. net per oz is fixed as the limit below which the Colonial Government cannot afford to sell. In these circumstances it would seem advisable that the Government should consider very carefully whether it might not be better to cut a portion of the loss by selling some of the silver at a somewhat lower limit than 25d. per oz. rather than continue to add to the cost of the silver, which is, of course, running up in consequence of the loss of interest which is involved in the capital lying idle: In 14 million ozs. representing no less than £1,493,055 11s. 1d. at 25d. per oz. view, however, of the unfair attitude which the Colonial Government has adopted in the past in allowing us to be attacked without proper defence in the Legislative Council, it appears to us that the whole responsibility in the matter should be left to the Colonial Government.

6. Pending the realization of the silver, or at any rate of some considerable portion of it, there would appear to be no prospect of putting the remittance proposals into force, but in the meantime it would seem to be desirable that the Currency Ordinance should be amended so as to make the keeping of the gold reserve in London possible.

7. As regards the terms upon which the operations of the Currency Commis- sioners have been financed by us, they have been fully shown by the accounts which we have rendered monthly to the Colony. The total amounts of the telegraphic transfers given upon us have amounted to £967,345 4s. 4d., which we have met by the sale of securities which have realized £504,566 6s. 9d., and as those securities cost originally £496,465 3s. 7d., a profit of £8,101 3s. 2d. has been made over that portion of the business. The balance of the debt-£462,778 17s. 7d.-as there were no further securities in the fund which could be realized at present, without loss, has been provided at deposit rate of interest-at present, and for some time past, 1 per cent. interest. The Currency Commissioners have, therefore, had temporary accommodation on singularly advantageous terms, and this will continue so long as the deposit rate may continue below the rate of interest which is being earned on the securities held for the fund.

8. In conclusion, I beg to say that the difficulties in which the Governments of India and of the Straits Settlements have recently found themselves involved over their exchange operations, would appear to throw great doubt on the wisdom of the policy of attempting to give a fixed gold value to a silver currency.

I have, &c.,

E. E. BLAKE.

32026

SIR,

No. 269

THE SECRETARY OF STATE to THE GOVERNOR.

(Confidential.)

[Answered by No. 270.]

Downing Street, 18 September, 1908. I HAVE the honour to acknowledge the receipt of your confidential despatch of the 8th of July,* respecting the gold reserve of the Currency Commissioners and the arrangements for making remittances between this country and Singapore.

2. The arrangement mentioned in paragraph 3 of your despatch appears to be a desirable measure in itself, though it would not have any effect in stopping a drain of gold to India if a further attempt should be made to keep a gold reserve in Singapore. In this connection I note that it is your intention to obtain legislative powers to keep a gold reserve in London.

3.

With respect to the old silver currency, which you consider will amount to about 14 million ounces of standard silver, I think that you should fix a price, to include expenses, at which you will be prepared to sell, and that the Crown Agents should be given standing authority to sell whenever it may happen that they can obtain the price. In such a case, all the arrangements should be left in the hands of the Crown Agents, and the Colonial Government should undertake to ship the silver to any place indicated on receipt of telegraphic advice from them. The Crown Agents would then be in a position to take advantage of any favourable opportunities in the silver market to dispose of, at any rate, small parcels of silver from time to time at prices not less than that specified.

4. It would be well that you should telegraph to me, as soon as possible, the price that you are prepared to fix. In coming to a decision on this point you will, of course, have regard to the fact that while all the silver remains unsold the Colony will be losing interest on its value-nearly £1,500,000—and that, therefore, it may not be desirable to fix the price too high, especially as I am advised that there does not appear to be much prospect of any substantial rise in the price of silver.

5. With reference to paragraph 6 of your despatch, I have obtained from the Crown Agents particulars of the terms on which they have financed the operations of the Currency Commissioners as shown by the monthly accounts which they have rendered to the Colonial Government. It appears that the total of the telegraphic transfers given upon them amounts to £967,345 43. 4d., which they have partly met by the sale of securities. The latter cost originally £496,465 3s. 7d., and have realized £504,566 6s. 9d., showing a profit of £8,101 3s. 2d. As there were no further securities in the fund which could be realized for the time being without loss, the balance of the debt-£462,778 17s. 7d.-has been provided at deposit rates of The Crown Agents have, interest at present, and for some time past, 1 per cent. therefore, been able to obtain temporary accommodation for the Currency Commis- sioners on singularly advantageous terms, and this arrangement will continue, if necessary, so long as the deposit rates are below the rates which are being earned on the securities held for the fund.

I have, &c.,

39142

No. 270.

THE GOVERNOR to THE SECRETARY OF STATE. (Received 12.15 p.m., 26 October, 1908.)

TELEGRAM.

[Answered by No. 274.]

CREWE.

Referring to your confidential despatch of 18th September,† paragraph four, please instruct Crown Agents sell 27 pence net 7,000,000 dollars at present for sale. ANDERSON.

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• No. 262.

↑ No. 269.

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