CO882-(8-9) — Page 408

PUBLIC RECORD OFFICE

Reference :-

C.O. 882

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH—NOT TO

PUBLIC RECORD OFFICE, LONDON

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value of the dollar My Lords understand that hitherto the Commissioners have attamed this object by offering notes for gold and gold for notes on demand at Singapore, but that the amending Ordinance now before them is designed to substi- tute for these transactions the buying and selling of telegraphic transfers on Laundr The Commissioners already have power, under the existing law, to buy or sell telegraphic transfers on London whenever it would be profitable to remit gold But from London to Singapore or from Singapore to London, as the case may be. difficulty appears to have arisen in making extensive use of this power, owing to the tendency for gold in transit to London to be diverted to satisfy the requirements of Singapore when the exchange on London has risen little, if at all, above 25. 4d., and before, therefore, the Currency Commissioners have power to buy a telegraphic transler on London

Section 7 Bild the amended Ordinance would give the Currency Commis- stopers absolute discretion to lany sovereigns payable in London at any rates between par and the import specie point My Lords recognise that this provision would enable them practically to substitute the buying and selling of telegraphic transfers

• London for the issue and withdrawal of notes against gold actually offered or dmanded in Singapore, and that the disadvantages of accumulating gold in Singa- pore, where no alternative use can be made of it," "would thereby be avoided.

It is, however, open to the objection - applicable to all expedients for regulating the supply of currency which are not automatic in their operation--that it involves the exercise of a discretion on the part of the Commissioners which, if not wisely used, may result in serious financial and economic mischief, while any uncertainty as to the conditions under which the Commissioners might be expected to take action could scarcely fail to paralyse the legitimate activities of the exchange banks, upon the unfettered operation of which the soundness of the currency must largely depend

This objection would no doubt be in part met by the adoption of an arrangement which my Lords understand the Government of India has found to work satisfactorily in connection with the similar problem which arises as regards Indian currency. viz., that the issue of notes against gold to be deposited with the Crown Agents for the Colonies should only be made at lower rates than 2s. 41d. as against gold actually in transit to Singapore (or which the Commissioners were satisfied could profitably and would actually, in the absence of such issue, be imported into Singa pore); and, on the understanding that the power reserved by Section 7 B (1) will only be exercised under such conditions, my Lords will not press their objection to the retention of the provision

The whole of the arrangements will, however, require to be very carefully watched with a view on the one hand to avoiding the accumulation of gold at Singa- pare through refusing to buy gold in transit at sufficiently favourable rates to secure its diversión to London, and on the other to preventing the local parity being sacri- ficed through the issue of notes at cheaper rates than the actual cost of laying down gold at that centre.

26608

I am, &c.,

G. H MURRAY.

3 The bullion value of four million dollars at 244 would be £337,292, and, deducting . per oz for expenses, this would yield £330,270.

This amount might be invested without disturbing the proportion fixed

by law between the investment portion and the coin portion of the Note Guarantee Fund

25398

(N. 193)

SIR.

No 12

I have, &c..

JOHN ANDERSON

THE SECRETARY OF STATE to THE GOVERNOR. [Copy to Treasury, 17 August, 1909. Z. F.J [Ansivered by No. 47.]

Downing Street, 12 August, 1909. WITH reference to your despatch, No. 462 of the 9th of December* and to verbal discussions during your visit to this country on the currency question, I have the honour to transmit to you copy of a letter from the Treasury containing the observations of the Lords Commissioners on Ordinance No. XXVII. of 1908.

I agree with their Lordships that the minimum limit for the coin portion of the reserve to be held locally should be one-third of the issue, and that this minimum I also agree that the Commis- should be held entirely in legal tender silver coin sioners should have power to purchase silver for the minting of fresh dollars in anticipation of a depletion of the local coin reserve. The Ordinance should be amended on these points.

I also agree generally with their Lordships' observations as to the provisions of There will be no need to amend the section, but Section 7 B. (1) of the Ordinance.

the Commissioners should be instructed to exercise their power under it in accord- ance with the last paragraph but one of the letter from the Treasury,

The protest of the Unofficial Members of Council will be practically met by the adoption of this policy. It is, of course, necessary if the accumulation of gold at Singapore is to be avoided (as it obviously should be) to give the Commissioners power in certain circumstances to issue notes in exchange for gold to be paid to the Crown Agents in London at less than the import specie point from London to Singapore. There is a lower import specie point, viz., that from Australia to Singapore.

I have now to inform you that His Majesty will not be advised to exercise his power of disallowance with regard to Ordinance No. XXVII. of 1908, entitled “ An Ordinance further to amend the Currency Note Ordinance, 1899.”

have, &c.,

CREWE

No. 11

THE GOVERNOR to THE SECRETARY OF STATE.

(Received 9 August, 1909.) -

(Confidential.)

MY LORD,

[Answered by No. 13.]

Government House, Singapore, 15th July, 1909. WITH reference to Sir Arthur Young's despatch of the 6th May (confiden- tial), I have the honour to bring to your Lordship's notice that since that despatch was written the price of silver has gone down and there appears for the present little chance of its reaching 253d., the figure mentioned in that despatch.

2 After consulting the Treasurer I am of opinion that it would be best to sell a portion of the thirteen millions of dollars and would therefore propose that the Crown Agents be instructed to sell at their discretion four millions at a price not less than 24d., including expenses.

• No. 9.

26608

No. 13.

THE SECRETARY OF STATE to THE GOVERNOR.

(Confidential.)

SIR,

Downing Street, 13 August, 1909.

I HAVE the honour to acknowledge the receipt of your confidential despatch of the 15th July with regard to the sale of the old Straits Settlements dollars, and to inform you that a copy has been forwarded to the Crown Agents for their infor- mation and guidance.

• No. 276 in Eastern No, 108.

↑ No. 10.

I have, &c.,

CREWE.

No. 11.

$