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PUBLIC RECORD OFFICE

Reference :-

TICO. 882

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PUBLIC RECORD OFFICE, LONDON

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

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and rapid fluctuations in exchange through the needs of our neighbours when this can easily be avoided by holding our gold reserve in London.

Under these circumstances, I would suggest that the amendment be altered to permit of sovereigns being shipped direct from Australia to London instead of to Singapore, and paid for at 2s. 4d. here when the ship reaches Colombo.

This, as Mr. Anthonisz observes, is the system adopted by the Indian Govern- ment, and would leave the rate at import point as it is at present, and enable the Currency Commissioners to build up a reserve in London without expense.

As Mr. Baker states, it is absolutely necessary that the rate should remain at import point, and on no account should sovereigns be received in London and paid for in Singapore at 2s. 4d. unless against shipments which would otherwise be landed in Singapore. The amount of currency which should be in circulation can only be guided by trade requirements, and if the Commissioners were to receive gold in London from Government Departments and give out notes in Singapore at rates at their discretion we should be in a constant state of insecurity. Government in such a case should he merely one of the public, and no drafts or telegraphic transfers should be sold by the Crown Agents in London except by public tender.

Further, it is absolutely necessary that the rates at which the Commissioners would purchase or sell drafts or telegraphic transfers locally should be fixed at shipment point equidistant above and below the standard as has hitherto been the Any alterations in these conditions, which are natural, would lead to compli-

I have, &c.,

case. cations.

WP Waddell, Esq..

SIR,

The Chairman of the Chamber of Commerce.

Singapore

A. R. LINTON.

III-COLONIAL SECRETARY to CHAIRMAN, Chamber of Commerce, Singapore.

Colonial Secretary's Office, Singapore, 28 August, 1908.

I AM directed by the Governor to acknowledge receipt of your letter of the 24th instant, informing me of the views of the Committee of the Chamber of Commerce regarding the section which it has been proposed should be substituted for Section 7 B of the Currency Note Ordinance.

2. In reply, I am to point out that no reasons are given for the views expressed, and I am to request that you will be good enough to state the reasons which led the Committee to consider that the Currency Commissioners should not be permitted to sell telegraphic transfers on London at a rate which would be better to the buyer than 2s. 4d less the cost of oharges (including interest) which may be incurred in remitting to Singapore the equivalent in gold.

3. I am to add that the Government would also be glad to learn what reasons have led the Committee to consider that no part of the coin portion of the fund should be held in London.

SIR.

I have, &c.,

ARTHUR YOUNG,

Colonial Secretary.

IV-CHAIRMAN, Chamber of Commerce, Singapore, to COLONIAL SECRETARY.

Chamber of Commerce and Exchange, Singapore,

10 September, 1908.

I HAVE the honour to acknowledge the receipt of your letter of the 28th August requesting me, in the first place, to state the reasons which led my Com- mittee to consider that the Currency Commissioners should not be permitted to sell telegraphic transfers on London at a rate which would be better to the buyer than 28. 4d. less the cost of charges (including interest) which may be incurred in remitting to Singapore the equivalent in gold: and, in the next place, to state the reasons which led my Committee to consider that no part of the coin portion of the Note Guarantee Fund should be held in London.

2. In reply to the first question I have the honour to state that as regards the Currency Commissioners being permitted to sell telegraphic transfers on London,

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&c., this question has not so far been laid before my Committee, but is, I understand, quite satisfactorily provided for in Section 7C of the existing Currency Note Ordinance;

3. And in reply to the second question as regards the gold reserve being held in Singapore instead of in London, I have already stated two important reasons for this in my letter of 24th August, viz., that stability of our exchange and confi- dence in our currency would be best established by keeping the gold in Singapore rather than in London. And as a further reason my Committee consider that if gold is handed in to the Currency Commissioners in Singapore in exchange for notes at 2s. 4d. such gold should be held to redeem such notes with when required, for if the gold is sent to London, or if gold be received by the Crown Agents in London and held there in exchange for notes issued here, and the notes be only redeemable by telegraphic transfer on London at 2s. 3 11/16d., there is an absolute loss to the noteholder in the event of his not requiring to remit to London of 5/16ths of a penny or, say, 1 1/9th per cent., or, in other words, the notes instead of being redeemable at par would be actually only redeemable at 11 1/6th (per mille) discount, but if the noteholder wants his gold in Singapore, and has to re-import it into Singapore there would be a loss to him of double the aforesaid amount or, say, 22 per mille. Furthermore, it might often be extremely inconvenient to noteholders, apart from the pecuniary loss they would suffer, to accept redemption of the notes by tele- graphic transfer on London. Gold is imported from various countries chiefly for the purpose of balancing International Trade, and it is only right and reasonable that gold so imported should be held here for re-export to various countries in the event of an adverse balance of trade arising.

4. With regard to the question of the Currency Commissioners being permitted to issue notes for the purpose of buying telegraphic transfers on London at any rate of not less than 2s. 4d. per dollar, which presumably is the first question intended to be referred to in your letter under reply, my Committee are of opinion that what- ever rate of exchange the Currency Commissioners elect to buy telegraphic transfers at, be it 2s. 4d. or any other rate, that rate will come to be our maximum rate of exchange and the difference between that rate, say, 2s. 4d. and our minimum rate of 2s. 3 11/16d., say, 2s. 3 27/32d., the half-way point, will be, so to say, our Mint par or standard of value,

5. It is surely not the object of Government, nor in the interests of the Colony, that our standard of value should be altered now, or be other than 2s. 4d. More- over, my Committee do not consider that it is within the province of the Currency Commissioners to buy exchange, except for the remote contingency of requiring to remit money to London for investment purposes, nor to sell exchange except in connection with the realization later on of the old Straits silver dollars, or such like purposes.

6. The bankers of Singapore who attended the meeting of the Chamber of Commerce on the 21st August were absolutely unanimous on the question of the Currency Commissioners not being permitted to buy telegraphic transfers on London at a different ratio above 2s. 4d. from that at which they would sell telegraphic transfers below 2s. 4d.

I have, &c.,

V.-MINUTE BY THE TREASURER.

W. P. WADDELL,

Chairman.

I beg to submit the following observations on the questions raised by the Chamber of Commerce.

2. Re paragraph 2.-The Chamber of Commerce are correct. It is not pro- posed to alter the conditions laid down in the present Section 7 (C). The reason why no change has been made in the rate fixed by Section 7 (C) is the difficulty of meeting the drafts on London in the absence of a gold reserve, and to make the accumulation of a reserve in London possible.

3.

As to paragraph 3.-It is not denied that the noteholder who gets his note by importing gold will lose if he has to redeem it for a telegraphic transfer at 28. 3 11/16d., but the gold he gets is in London where presumably he wants it, and

he would pay just the same for sending it to London. It seems to be assumed that under the present system the Currency Commissioners will always refrain from