.
May 23, 1903,
when the Indian min. coinage of kilver:||:
were closed to the free
SAMARTH AXENDIENDY OF 'CHANGE. 33. The question tissue is whether it is better for the Straits Settlements and the neigh- bouring Malay States at the present time, and under existing conditions, to maintain the silver standard or to change to a gold one, and the Committee have endeavoured as far as possible to treat the matter from a practical standpoint. In this view we have considered such papers and documents as would assist us in forming a correct view of the economic position of the Straits Settlements, as well as of the commer- cial and financial relations of that Colouy with the neighbouring States,
34. We have also examined a number of Witnesses, most of whom have had a personal experience of the modes of conducting business in the Straits Settlements and the East gen- erally. These witnessre not unanimous, Lat the majority of them are in favour of the establishment na gold standard. The Com- mittee have tried to make their list of witnesses fairly representative of the different interests concerned, but but from the nature of the case, the witnesses we have examined have represented rather the classes who are in close connection with this and other European countries than the natives of the Straits Settlements and the adjoining Malay States, or the Chinese who form so large a proportion of the population.
·
CHINA OVERLAND TRADE REPORT.
the
38. It is a matter of course that the immense | be found by the Municipality of Singapore majority of the people concerned in this enquiry who are about to raise a loan of some £35,101. are unable to support any opinion on the com- With rapidly developing countries such plicated question of the best standard of value | Straite and by reasons which would stand examination. desirable to scourage the investment of Euro- at Malay‹ States, it is highly The fact remains that the majority of those pean capital, and the absomos of fixity of able to form an opinion appear to be in favour exchange with Western countries undoubtedly of a change to a gold standard, the chief ere p discourages such investment, and may also tions being the banking community and the tend to exclude British and other European mining community. The latter, if we except traders, Firs those in receipt of money wages, have probably been the principal gainers from the continuou decline in the gold value of the dollar.
39. There is no question that the Straits Fettlemens and the adjoining Malay States have prospered under a silver standaıd. Trade has grown largely. The values of the imports and exports and the growth of trado during the last twenty years are shown in the follow. ing figures :-
1881 1891
1901
1882
1892
STRAITS SETTLEMENTS
Imports.
$84,599,397 $135,886,217
***
$310,381,094
Exports.
$77.925,962 $125.805,772 $266,553,270
FEDERATED MALAY STATES.
5,669,078 19,161,159 39,524,603
+
5,538,641 22,662,359 1901
63,107,177 These valuations are in silver, but even if the imports and exports for these years be valued in gold the increase is very great. Prosperity is everywhere apparent.
35. We see no reason, however, to think that the establishment of gold standard could 40. It is contended that there would have directly affect in an injurious manner the wage-been the same or greater growth of trade and earning classes in the Straits Settlements and prosperity if a gold standard had been in exis- the Federated Malay States, and we are disposed touce for the last ten years. However that to think that such a change would, at any rate may be, we are of opinion that there must for a time, have the opposite effect. These be a point at which the advantages said to be classes constitute the majority of the persons derived from a low or falling exchange cease, interested in the matter who have not been and distinct disadvantages are experienced, fully represented before us.
As the dollar has now fallen in value from 48. 2d. to about !s. 7d., the time has come at which these interests which have continuously suffered from the fall may fairly claim to be protected from further loss, unless it should appear that the disadvantages of adopting the necessary remedial measures would outweigh the benefits to be derived therefrom.
41. Fluctuation in exchange is undoubtedly a grave disadvantage to the community gene. rally. It introduces an element of speculation which constantly interferes with legitimate business. The introduction of a gold standard will not do away with this evil, but will trans fer it from the trade with gold countries, to the trade with silver countries. The trade with gold countries, however, is much larger than that with silver countries, as will be seen from the figures supplied by the Singapore Chamber of Commerce [Appendix 18 (12)] The disproportion in favour of trade with gold countries will be increased by the recent addi- tion of Sism to the list of gold countries, and the probable addition in the near future of the Philippines. The same course may be followed in other countries with which the Straits are in commercial relations, and which now employ the silver standard, but we see no prospect of any such change being made in Chion; and the places immediately adjoining that country, which dep-nd largely for their prosperity on their trade with it, will consequently have a strong inducement to maintain the same standard of value.
36. So far as the European community are concerned there can be little doubt that whereas they were divided in opinion in 1897 and previously, they are now nearly unanimous in favour of change to a gold standard. The Committee have received a représentation to the effect that it is absolutely essential that the currency should be placed on a gold basis with as little delay as possible signed by almost all the firms and public companies of the Straits Settlements represented in this country, and on the Continent (bankers excepted'. A petition has also been forwarded by the Governor signed not only by Europeans and those in receipt of salaries whose homes are in countries with gold standards such as Judia and Ceylon, but also by a number of wealthy and influential Chinese, the revenue farmers, shipmasters, bankers, merchants and landowners. The petitioners, without expressing any views as to the sterling value to be given to the dollar, express the opinion that it is ex- tremely desirable that the legal currency of the Colony and of the Federated Malay States should have a fixed relative value to the British ʼn sterling sovereign. The petition repre. sents that violent fluctuations in exchange are very detrimental to the general interest of the Colony, that even if the contention that a dollar of low value stimulates a portion of the trade of the Colony be granted, it must without doubt be admitted that there are numerous interests which have been prejudically affected by the severe fall in 42. Although the aggregate of the trad› with silver which has recently taken place, and China and other silver-using countries is smal- that it is the opinion of those of tho petilor in amount than that with gold countries, it fioners, who desite dollar of low value, that there must be some point at which the advantages derived from low exchange become distinct disadvantages and that this point has been passed.
י,
*
has been represented to us that the number of transactions with the silver-using countries is larger, and that although the existing evils might be transferred to a different class of operations by the adoption of a gold standard, their magnitude would not really, be reduced.
37. The Singapore and Penang Chambers of Commerce and the Municipality of Singa- 43. An important consideration is the d ffi- pore favour a gold standard. In regard to the culty under present conditions of obtaining Federated Malay States opinion seems more capital from gold countries. The Straits Go divided. It is stated in the Governor's tele-vernment have now no debt and the Federated gram of the 25th of December that the plan- Malay States have no external debt. We fera-favour a i gold standard and the Perak understand, however, that the Straits Govern- miners also. Other miners in the Federated ment are contemplating the raising of loans Malay States prefer the existing silver standard for important public works. This capital of value. A petition, very numerously signed | cannot be found locally except at high rates by all the principal Penang Asiatic traders, asks for a gold standard. A numerously signed petition in favour of a silver standard has been received by the Governor from Singapore, the signatures being almost exclusively, Chinese,
of interest, and if a gold loan be raised în London, a fall in exchange, may impose an additional burden on the Straits Government, both as regards payment of interest and repayment of capital. The same difficulty will
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are heavy in connection with the pay of their 44. The gold obligat ons of ti e Government staff. They have now placed all the higher officials on sterling salaries. The pensions of retired officers involve a further gold obligation.
not only aggravates the previously existing 45. The recent fall in the gold calas of silver, difficulties, but may give rise to further difficulties of the same clasy both in the case of the Straits Government and of private person“, As to the future gold value of silver we are unwilling to express any opinion. The evidence given before us by Mr. Pixley is interesting and shows that there are no reasons to anticipate a farther immediate fall of any magnitude. Other witnesses have expressed the same opinion and, as it appears to us, on good grounds." But a very similar state of matters in the past has, not unfrequently, been followed by further and unexpected falls in gold value, and the future must be admitted to be quite uncertain.
55. There are various methods which might be adopted for the establishment of an inde- pendent gold standard in the Straits Settle- ments. The first which wẹ wish to mention is that of which the leading idea originated wi he Sub-Committee of the Singapore Chamber of Commerce, and is explained in its Report of November 6, 1897. Under that proposal the Straits Government would obtain a supply of notes of small denominations, especially of one dollar notes. This supply would require to be amply sufficient to cover the whole number of Mexican and British Hollars circulating in the area of the Colony and the Malay States in which it is proposed to establish the gold standard. The object of obtaining these notes would be temporarily to substitute them for the Mexican and British dollars as the currency of the country, and, later ou, to exchange these notes for coins of a new currency special to the Straite and issued on a gold basis. We have considered the details of the measures by which this could be carried out but as for reasons given below, we do not see our way to recom- mending the plan, we have not thought it necessary to include them in this Report,
=
56. If the procedure above indicated could be successfully followed the question of introduc ing a gold standard into the Straits rettlements would be solved in the speediest way, and solved in a form which would not impose any cost on the Government. But the question whether the general population would quietly accept notes for coin throughout the country is one in regard to which we feel great doubt. From what is known of India we have no hesitation in saying that no such plan could have been or could be adopted in that country, and although the proposal was made by a Sub-Committee of the Singapore Chamber of Commerce, and is supported by other persons who have practical experience of the country, we consider that the risk of its failure owing to the possible suspicion. and opposition on the part of the general native population is so great that on the evidence before us we cannot recommend its adoption.
RECOMMENDATIONS,
57. The plan which we recommend is-gradu. ally to introduce a special Straits dollar of the same weight and fineness as the British dollar at present current in the East to be substituted for the Mexican and British dollara, the latter dollars being demonetised as soon as the supply of new dollars is sufficient to permit of this being done with safety. Under this plan it will be necessary for the Straits to obtain a consider- able supply of the new dollars, and, as soon as this is received, the new dollars should be made full legal tender concurrently with the Mexion and British dollars, and stops should be taken to put them into circulation. The first supply of new dollars might be obtained (with the con• sent of the Indian Government) by remitting to one of the Indian Mints a portion of the coin reserve of the Currency Commissioners to bɔ melted down ard converted into the new Ɛtraits dollars, and this process might be, atinuəd
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