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STRAITS SETTLEMENTS. 
 
 'straits ''settlements currency 
 
 committee. 
 
 REPORT. 
 
 (FOR MINUTES OF EVIDENCE AND APPENDICES, see Cd. 1585.) 
 
 )imnk)i ta M\ |0KSts 0f |arlianient bg ComnianD af |is Pajesig. 
 
 May, 1903. 
 
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 BY WTMAN AND SONS, LIMITED, FETTER LANE, E.G. 
 
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 1903. 
 
 [Cd. 1556.] Price 2d. _&./, 
 
REPORT. 
 
 TO THE RIGHT HON. JOSEPH CHAMBEELAIN, M.P. 
 SECRETARY OF STATE FOR THE COLONIES. 
 
 The instructions issued to the Committee appointed to consider the 
 question of the establishment of a gold standard in the Straits Settlements 
 and the neighbouring Malay States are contained in a letter from the 
 Colonial Office to the Chairman of the Committee, dated the 12th of 
 November, 1902. In this letter the Committee were asked to make a report 
 with reference to 
 
 " (1) The expediency or otherwise of introducing a gold standard of 
 currency in the Straits Settlements and the neighbouring Malay States. 
 
 " (2) The practicability of making the change and the steps which in the 
 opinion of the Coiximittee should be taken to effect this object if the change 
 should be decided onj' 
 
 2. The letter proceeded to say, " With regard to the expediency of 
 the change JNIr. Chamberlain realizes that the Committee may not feel them- 
 selves in a position to offer final advice on the subject, but in that case he 
 trusts that they will be able to indicate the lines on which further investiga- 
 tion shovild be made locally before a final decision is come to." 
 
 Countries falling within the Scope of the Cojdiittee's Enquiry, 
 
 3. The Committee apprehend that, in addition to the Colony of the 
 Straits Settlements, the scope of their enquiry includes the Federated Malay 
 States of Perak, Selangor, Negri Sembilan and Pahang, and also the State 
 of Johore. In the opinion of the Committee, it is desirable that the standard 
 of value and the currency of the Strait.s Settlements and the Federated 
 Malay States should continue to be identical, and they hold the same 
 opinion with regard to Johore. 
 
 4. There already exists an Agreement between the Secretary of State- 
 for the Colonies and the Sultan of Johore, regarding the supply of the 
 subsidiary coins of the Straits Settlements for use in Johore, but altogether 
 apart from this Agreement the Committee consider that Johore should, on 
 general grounds, be included in any scheme that may be decided on for the 
 Straits Settlements and the Federated Malay States, and this is in 
 accordance with the opinion of the . Representative of the Sultan and 
 Government of Johore in this country, who appeared as a witness before the 
 Committee. 
 
 5. The Committee have learnt* that Sarawak is anxious to join in such 
 a scheme, but they do not consider that any Colonies or States other than 
 those already specified fall within the scope of their enquiry. 
 
 Existing Currency. 
 
 6. The currency of the Straits Settlements is regulated by an Order 
 in Council of the 2nd of February, 1895, as amended by the subsequent Order 
 in Council of the 20th of Octol^er, 1898. The standard coin is the silver 
 Mexican dollar, of 902*7 millesimal fineness, with a minimum weight of 411 
 grains. The British dollar and the Hong Kong dollar of 900 millesimal 
 fineness, and a minimum current weight of 411 grains, are, under the Orders 
 in Council, treated as equal to the standard coin. The Japanese dollar or 
 yen, of the same weight and fineness as the British dollar, was under the 
 earlier of the two Orders in Council, placed on the same footing as the 
 British dollar, but was demonetized by the subsequent Order in Council. 
 
 * Appendix 18 (7). 
 6849. 875— Wt. 17734.— 5/03. Wy. & S. A 2 
 
[ ^ J 
 
 7. The dollar is divided into one hundred cents, and the following 
 subsidiary coins are made legal tender under the Order in Council of the 
 2nd of February, 1895 : — Straits Settlements silver pieces of 50, 20, 10 and 
 5 cents of 800 millesimal fineness, and Straits Settlements copper or mixed 
 metal pieces of one cent, a half-cent, and a quarter-cent. The limit of legal 
 tender in the case of silver subsidiary coins is two dollars, and in the case 
 of copper or mixed metal coins one dollar. 
 
 8. By enactments in the different Federated Malay States the same 
 currency is established, with the exception that the Hong Kong dollar is 
 not placed on the same footing as the standard coin. 
 
 9. As regards Johore, the Committee have no definite information as 
 to what is legal tender in that State, but they understand that Johore has 
 no currency of its own, and that it uses all the coins that are accepted as 
 legal tender in the Straits Settlements — the whole trade of the State being 
 with Singapore. The Agreement with Johore of 1885, which deals with the 
 supply of subsidiary coinage to the State, has already been referred to. If 
 it is decided to estabUsh a gold standard in the Straits Settlements, and if 
 Johore is included in that scheme, it would be necessary that a definite 
 understanding should be arrived at as to the use of the Straits currency 
 of unlimited legal tender in the Johore State. 
 
 Note Issues. 
 
 10. The Government Note Issue in the Straits Settlements is regulated 
 by Ordinance No. 4 of 1899. These notes may be for the following 
 denominations : — one, five, ten, twenty, fifty or one hundred dollars, and for 
 any multiple of one hundred dollars. They are legal tender in the Settle- 
 ment.s for the amount expressed therein, except a tender by the Com- 
 missioners of Currency at their office or a tender in redemption of its own 
 notes by any bank lawfully authorized to issue notes, but no Government 
 notes f)f the denomination of one dollar can be legal tender for a greater sum 
 than ten dollars. No notes of one dollar have yet been issued. 
 
 11. The Government notes of the Straits Settlements have been made 
 legal tender in the Federated Malay States by local Enactm.ents subject to 
 the same limitation in the case of one dollar notes (if such notes were issued). 
 
 12. The Government notes are covered by a reserve partly in coin and 
 partly in securities. The minimum legal coin reserve was originally two- 
 thirds of the whole. Its i-ethiction to one-half of the whole has lately been 
 sanctioned. 
 
 13. There are two banks in the Colony authorized, subject to certain 
 conditions, to issue notes payable to bearer on demand, the Hong Kong and 
 Shanghai Bank, and the C'hartered Bank of India, Australia and China. 
 The notes is.sued by these Banks are not legal tender in the Straits 
 Settlements, though they circulate freely. The authority to issue expires in 
 December, 1904, in the case of the Chartered Bank, and in August, 
 1908, in the case of the Hong Kong and Shanghai Bank. 
 
 14. It may be mentioned that under Enactments in the Federated 
 Malay States it is unlawful for any bank to make or is.sue within the States 
 bank notes payable to bearer on demand. This does not prevent the 
 circulation of the bank notes now in question. 
 
 *RECTiNT History of Cukrency in the Steaits Settlements. 
 
 15. On the transfer of the Straits Settlements from the charge of the 
 Indian to that of the Imperial Government, which came into operation in 
 1867, an Ordinance was passed I)}' the local Legislature repeahng all laws 
 
 * Full infornuitiou us to the history of currency in the Straits Settlements will be found in 
 the " History of Currency in the British Colonies," liy Robert Chalmers (Eyre and Spottiswoode, 
 1«9.H,) 
 
for making Indian coins legal tender, and tleclaring that from the 1st of 
 April, 1867, " the dollar issued from Her Majesty's Mint at Hong Kong, the 
 silver dollar of Spain, Mexico, Peru, and Bolivia, and any other silver dollar 
 to be specified from time to time by the Governor in Council, shall be the 
 only legal tender," with the exception of certain subsidiary coins. 
 
 16. Subsidiary silver and copper coins were supplied from the Hong 
 Kong Mint, but on the closing of that Mint in 1868, two years after its 
 opening, it became necessary for the Straits to provide their own subsidiary 
 coinage, ^nd since 1871 the subsidiary silver coins have been struck at the 
 Eoyal Mint. The total amount of such coins struck at the Royal Mint from 
 1871 to 1901 inclusive was 6,462,000 dollars, and a further amount of 
 750,000 dollars was struck in 1902, up to the 17th of November. So far as 
 the Mint are aware, all these coins are still in circulation. The value of the 
 different denominations of subsidiary silver coins struck since 1871 will be 
 found in Appendix 19, Table IX. The subsidiary copper coin issued in 
 the Straits Settlements in the years 1871-1902, amounted to the nominal 
 value of 1,887,500 dollars. 
 
 17. By order of the Governor in Council of the 10th of January, 1874, 
 the American Tr\de dollar, and the Japanese yen were admitted to unlimited 
 legal tender. 
 
 18. Under Order in Council of the 21st of October, l'-!90, all laws regula- 
 ting legal tender in the Colony were repealed. The Mexican dollar was by 
 that Order constituted the standard, and the American trade dollar, the 
 Japanese yen, and the Hong Kong dollars and half-dollars were made 
 unlimited legal tender. The Straits Settlements half-dollar, and other 
 subsidiary silver coins, of 800 millesimal fineness, were made legal tender 
 for an amount of two dollars, and the Colonial copper or mixed metal coins 
 were made legal tender for an amount of one dollar. 
 
 19. Under Ordinance No. 2, of 1891 the Governor in Council was given 
 power to prohibit the importation into the Colony or the circulation therein 
 of coins not being legal tender. The importation of certain copper or bronze 
 coins which had ceased to be legal tender under the Order in Council of the 
 21st of October, 1890, was subsequently prohibited under this Ordinance. 
 
 20. The Orders in Council of the 2nd of February, 1895, and of the 
 20th of October, .1898, which regulate the existing currency, have already 
 been referred to. It is only necessary to add that under the first of these 
 Orders the United States trade dollar, which had ceased to be struck in 
 1878, became no longer legal tender, whilst the demonetization of the yen 
 under the Order in Council of 1898, was the result of the estabhshment 
 of a gold standard by Japan, and the demonetization of the silver yen in its 
 country of origin. 
 
 21. Ordinance 11 of 1898, prohibited the importation of yen. The 
 penalties imposed by the Ordinance did not apply to Japanese yen imported 
 for transhipment under a Hcence from the Colonial Secretary. 
 
 Actual Circulation. 
 
 22. The actual circulation of the Straits Settlements, the Federated 
 Malay States and Johore at the present time is composed of— 
 
 I. British, Mejcican and Hong Kong dollars. — The amount of Hong 
 Kong dollars still in circulation is so small that it may be neglected. 
 It is impossible to form a reliable estimate of the number of 
 British and Mexican dollars circulating in the Settlements, the 
 Malay States and Johore, but the Colonial Treasurer roughly 
 estimates the number at 30,000,000 dollars. This total, which is 
 only put forward as a guess, includes the specie reserve against the 
 Government Note Issue and cash in the banks. 
 
[ 6 ] 
 
 II. Siihxidiary Silrer Coii/s. — The amount issued since l.s71 is 7,212,000 
 
 dollars (nominal). It is estimated by the Colonial Treasurer that 
 of this amount 300,000 dollars is in Foreign Countries. 
 
 III. SiiJisiAhiry Copper Coins. — The amount issued since 1871 is 1,887,500 
 dollars (nominal). 
 
 IV. GoreDtviriif Natl' Issue. — The amount in circulation on the 10th 
 of December, 1902, was 13,393,440 dollars. Against this 
 8,714,.")55.75 dollars was held in coin on the same date. 
 
 V Bank Notes. — The average monthly circulation in 1901 was r),473,7")5 
 dollars. The figure for 1902 is not yet available. 
 
 o-i 
 
 QrEsTiox OF A Chanck tx Curkency. 
 The history of the consideration of a gold standard for the Straits 
 Settlements need not be traced back furthei' than the year 1893. As a 
 result of the Report of the Indian Currenc}- Connnittec in that vear, the 
 Indian Mints were closed to the free coinage of silver, and later in the year a 
 Departmental Committee, presided over ])\ the late L(ird Herschell, was 
 .appointed to consider the currency questions in the Eastern Colonies. The 
 proceedings of that Committee were not pubhshed lait tliey have been laid 
 before the present Committee. 
 
 24. AVhilst the former Connnittee \\as sitting at the Colonial Ottice, 
 the Secretary of State telegraphed to the ({(jvernor of the Straits Settlements 
 asking for a full report as to the remedial measures suggested for securing 
 greater fixity in the rate of exchange. The Governor replied that great 
 difference of opinion existed, that it was impossilile to state remedial 
 measures which would he appr(n'ed l)y Europeans and nati\es, and tliat he 
 had appointed a local Committee to considei- the matter, consisting of 
 Government <JfHeials and Meml)ers of the Chamfier of Commerce. 
 
 2.">. The report of the local Committee is printed among the ApjDcndices 
 to our Kei)ort. It will be seen that half the members of that Committee, 
 including all the nati^'e members, were in favour of the maintenance of a 
 silver standard. The Aeting (T(.)vernor laid the Eeport before his Executive 
 Comicil and invited their opinions upon it, esjiecially regarding the question 
 whether the policy of the (iovernment should be to adopt a gold standard or 
 adhere to free silvei-. Opinions were equally divided. Tlie acting Governor's 
 own (jpinion in favour of a gold stanelard was conveye<l in the first section of 
 the Eeport, which he had signed as member of the Committee. 
 
 2t). The ( 'urrency Connnittee appointed liy the Secretary of State for 
 the Colonies issued no I'cport, and made no recommendation in regard toan\' 
 change in the standard of currency of tlie Straits .Settlements, l)ut advisell 
 that 'iwing to the scareity of Mexican dollars at that time a British dollar 
 should be issued for cireulation in the Straits Settlements and other Eastern 
 Colonies. This recommendation was adopted and the British dollar was 
 made legal tender in Hong Kong, the Straits Settlements and Labuan. 
 
 27. The amount of British dollars imported into the Straits Settlements 
 by the ))anks from istM (the year in which they were first coined) to 1901, 
 inclusi\e, was 119,224,442 dollars. During the same period 80,883,437 
 other dollars were imjiorted, making a total importation of 200,107, S79 
 dollars. The reconled exportations 189r)-1901 amounted to 170,732,1(58 
 dollars. This exportation of dollars is, of eourse, exclusi\e of the amount of 
 dollars taken out of the Colony by returning Chinese immigrants, an amount 
 which is impossi]>le to ascertain but which may be considerable. It is not 
 known what portion of the total amount exported consisted of British 
 dollars. 
 
 2s. The (pitstion of a gold standard for the Straits Settlements was 
 raised again in 1897. In that year a Sub-eonunittee was appointed by the 
 Committee of the Siiigapore Cham) )er of Commerce "'to empiire into theJocal 
 currency with the view of calling attention of (iovernment to the question of 
 convertitii.'. the 8traits cuirency to a (iold Standard," The Report of the 
 
L 7 ] 
 
 Sub-committee is printed among the Appendices. The Governor's despatch 
 of the 9th of March, sending home the Report, and criticising its proposals, 
 will be found among the Appendices to the Report of the Indian Currency 
 Committee of 1898, The statistics on which this Report was based will be 
 found (amended and brought up to date) in a recent letter from the Chamber 
 of Commerce which has been laid before us (Appendix l!-! {V2) ). A criticism 
 of the scheme as it affected the Federated Malay States, by the Resident 
 General, now the Governor of the Colony and High Commissioner of the 
 Federated States, will be foimd in Appendix 18 (4). 
 
 29. In view of the difference of opinion prevailing in the Colony, and 
 ■of the criticisms of the Governor and the Resident General, the <juestion of 
 
 a change in the standaixl was allowed to rest until last year. On the 9th 
 of June, 1902, a letter was addressed to the Colonial Government by the 
 Singapore Chamber of Commerce, asking whether " in view of the recent 
 serious decHne in the value of the dollar current here, the violent fluctua- 
 tions in the price of silver, and the extreme uncertainty as to the future of 
 this metal, all of which are not only causing great inconvenience to the 
 trade of the Colony but constitute grave obstacles to the development of its 
 natural resources by stopping the flow of capital from other parts of the 
 world " the Government were prepared, now that the question again pressed, 
 to make investigation into the feasibility and expediency of securing fixity 
 of exchange. 
 
 30. The Governor replied that before the receipt of their letter he had 
 decided to invite their views on the expediency of attempting to adopt an 
 arrangement with neighbouring countries for fixing an uniform relative value 
 between the local currency and gold. The Chamber of Commerce replied 
 that they did not think a scheme of co-operation with the neighbouring 
 countries possible of achievement but they deferred further comment till a 
 definite scheme was placed before them. They reiterated their request for 
 enquiry by an expert, not necessarily on the spot. 
 
 31. The Governor forwarded the correspondence to the Secretary of 
 State in a dispatch of the 16th of July, 1902, and asked that the general 
 question might be referred to an expert, preferably with Indian experience. 
 He added that it did not appear that whoever was appointed to conduct 
 this investigation should necessarily do so on the spot. As a result of this 
 despatch from the Governor the present Committee were appointed with 
 the terms of reference already stated. 
 
 Expediency of a Change. 
 
 32. In considering the expediency of the proposed change in the stan- 
 dard of value of the Straits Settlements the Committee have not thought 
 it necessary to enter at any length into an examination of the many vexed 
 questions, of a somewhat abstract and theoretical nature, which present 
 themselves when a proposal is made for a change of the standard of value 
 in any country. These questions have been dealt with by many writers 
 
 . during the last thirty years, and they have been very fully examined by a 
 series of Committees and Koyal Commissions, beginning with the Parlia- 
 mentai-y Committee of 1876, of which ]Mr. Goschen (now Lord Goschen) 
 was Chairman, and ending with the Committee on the Indian currency 
 presided over by Sir Henry Fowler in 1898-9. 
 
 33. The question at issue is whether it is better for the Straits Settlements 
 and the neighbouring 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 
 
 of the commercial and financial 
 
 position of the Straits Settlements, as well as 
 relations of that Colony with the neighbouriuj 
 
 g 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 generally. These witnesses are not unani- 
 mous, but the majority of them are in favour of the establishment of a gold 
 standard. The Committee have tried to make their list of witnesses fairly 
 representative of the different interests concerned, but from the nature of 
 the case the witnesses we have examined have represented rather the 
 classes v.dio are in close connection with this and other European countries, 
 than the natives of the Straits Settlements and tlie adjoining_ Mala)' States, 
 or the Chinese who form so large a proportion of the population. 
 
 35. We see no reason, however, to think that the establishment of a 
 gold standard could directly affect in an injurious manner the wage-earning 
 classes in the Straits Settlements and the Federated Malay States, and we are 
 disposed to think that such a change would, at any rate for a time, have the 
 opposite effect. These classes constitute the majority of the persons 
 interested in the matter who have not been fully represented before us. 
 
 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 a change to a gold standard. The 
 Committee have received a representation 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 India and L'eylon, but also by a 
 number of wealthy and influential Chinese, the revenue farmers, ship- 
 masters, 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 extremely desirable that the legal currency of the Colony 
 and of the Federated Malay States should have a fixed relative value to the 
 British sterling sovereign. The petition represents 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 prejudicially affected by the 
 severe fall in silver which has recently taken place, and that it is the 
 opinion of those of the petitioners, who desire a 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. 
 
 37. The Singapore and Penang Chambers of Commerce and the 
 Municipality of Singajoore favour a gold standard. In regard to the 
 Federated Malay States opinion seems more divided. It is stated in the 
 Governor's telegram 1 if the '25th of December* that the planters favour a 
 gold standard and the Perak miners also. Other miners in the Federated 
 Malay States prefer the existing silver standanl of value. A petition, very 
 numerously signed 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. 
 
 3S. It is a matter of course that the innnense majority of the people 
 concerned in this enquiry are unable to support any opinion on the com- 
 plicated (juestion of the best standard of value by reasons which would stand 
 examination. The fjxct remains that the majority of those able to form an 
 opinion appear to be in favour of a change to a gold standard, the chief 
 exceptions being the l^anking commvmity and the mining community. 
 The latter, if we except those in receipt of money wages, have probably been 
 the principal gainers from the C(jntinuous decline in the gold value of the 
 dollar. 
 
 Appendix 18 (6). See also despatches of 29th ;uid 30th December, Appendix 18 (13), (14). 
 
[ ^' ] 
 
 39. There is no question that the Straits Settlements and the adjoining 
 Malay States have prospered under a silver standard. Trade has grown 
 largely. The values of the imports and exports and the growth of trade 
 during the last twenty years are shewn in the following figures : — 
 
 Straits Settlements. 
 
 Imports. 
 
 Exports. 
 
 Dollars. 
 1881 - 84,599,397 
 1891 135,886,217 
 1901 310,381,094 
 
 Dollars. 
 
 77,925,962 
 
 125,805,772 
 
 266,553,270 
 
 Federated Malay States. 
 
 Imports. 
 
 1882 
 1892 
 1901 
 
 *5,669,078 
 19,161,159 
 39,524,603 
 
 Exports. 
 
 5,538,641 
 22,662,359 
 63,107,177 
 
 These valuations are in silver, but even if the imports and exports for 
 these yeaio be valued in gold the increase is very great. Prosperity is every- 
 where apparent. 
 
 40. It is contended that there would have been the same or greater 
 growth of trade and prosperity if a gold standard had been in existence for 
 the last ten years. However that may be, we are of opinion that there must 
 be a point at which the advantages said to be derived from a low or falling 
 exchange cease, and distinct disadvantages are experienced. As the 
 dollar has now fallen in value from 48. 2d. to about Is. 7d., the time has 
 come at which those 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 generally. 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 transfer it from the trade 
 with gold countries, to the trade with silver countries. The trade withhold 
 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 addition of Siani 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 reLitions, and which now employ the silver standard, but 
 we see no prospect of any such change being made in China; and the 
 places immediately adjoining that country, which depend largely for their 
 prosperity on their trade with it, will consequently have a strong inducement 
 to maintain the same standard of value. 
 
 42. Althouoh the aggregate of the trade with China and other silver- 
 using countries fs smaller in amount than that with gold countries, it has 
 been represented to us that the number of transactions with the silver-using 
 
 6849. 
 
 *Excludiii'' Pahaug, tliu \a,lue of whose imports and exports is very 
 
 B 
 
 small. 
 
[ 10 ] 
 
 countries is larger, and that although the existing evils might he transferred 
 to a different class of operations by the adoption of a gold standard, their 
 magnitude would not really be reduced. 
 
 43. An important consideration is the difficulty under present 
 conditions of obtaining capital from gold countries. The Straits Govern- 
 ment have now no debt, and the Federated Malay States have no external 
 debt. We understand, however, that the Straits Government are 
 contemplating the raising of loans for important public w(jrks. This 
 capital cannot be found locally except at high rates of interest, and if a 
 gold loan be raised in 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 be fonnd by the JN [unicipality 
 of Singapore who are about to raise a loan of some £l!50,000. With rapidly 
 developing countries such as the Straits and the ^lalay States, it is highly 
 desirable to encourage the investment of European capital, and the absence 
 of fixity of exchange with Western coimtries undoubtedly discourages such 
 investment, and may also tend to exclude British and other European 
 traders. 
 
 44. The gold obligations of the Government are heavy in connection 
 with the pay of their staff They have now placed all the higher officials on 
 sterling salaries. The pensions of retired officers involve a further gold 
 obligation. 
 
 45. The recent fall in the gold value of silver, not only aggravates the 
 previously existing difficulties, hut may give rise to further difficulties of the 
 same class Iwth in tlic case of the Straits Government and of private persons. 
 As to the future gold \alue of silver we arc unwilling to express any 
 opinion. The evidence given bctVire us by Mr. IMxley is interesting and 
 shows that there aie no reasons to anticipate a further 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. 
 
 46. It has been argued that, as the Sti'aits is a collecting and distributing 
 centre for purposes of trade, and as many of the countries with ^hich it has 
 commercial relations have hitherto had a silver standard and have used the 
 same coins, tlie adoption of a gold standard may seriously affect its prosperity. 
 We are not prepared to say tliat tliei'r is no force in this argument, but we 
 think that too great weight may easily l)c attached to it. Singapore is a 
 great centre of trade by reason of its natural advantages, and its freedom 
 from Customs duties. In these respects the adoption of a gold standard 
 will not make any change. 
 
 47. In trade between silver countries and gold countries the difficulties 
 of a Huctuating exchange must Ijc encountered at some stage, and the 
 evidence Iteforc us justifies the lielief that the Chinese merchants Avho chiefly 
 manage the trade between the Straits and the adjoining .silver-using countries 
 are as well fitted to deal \\'ith difficulties of that nature as merchants of any 
 other nationaht)'. Moreover, in any case where the countries adjoining the 
 Straits Settlements now use, or may hereafter adopt, a gold standard the 
 difficulties of a fluctuating exchange so far as they arise from a ditterence of 
 standard will be not transferred but wholly removed. 
 
 4«. Our attention has also l)een called to the prol»al)le further fall in the 
 value of sihcr which )nay follow the adoption of a gold standard by the 
 Straits Settlements. We do not think that such a change would in itself 
 have any considerable efl'eel on tlu^ price of silver, but it would undoubtedly 
 have some weight in indticini; other countries to follow the same eour.se and 
 the cunui]ati\(' eflect of , such changes might be considerable. On the other 
 hand it can hardly be expt't-ted that the Straits Settlements, if it should 
 apjiear a(hantageous to a(lo])tthe gold standard, should sacrifice their own 
 interests out of eousidei'ation for other countries, 
 
 o 
 
L H ] 
 
 4l». There is a further objection to the estabHshment of a gold standard 
 in the Straits Settlements which applies also to other Eastern countries such 
 as India, Java, Siam and the Thilippines. In such countries, although the 
 standard may be gold, the coins in actual use must continue, for an indefinite 
 period, to be mainly sih er coins, and such coins must be of unlimited legal 
 tender. With a sufficient gold reserve these coins can be maintained at their 
 legal value, so long as a settled Government exists which is able to enforce 
 its laws. If the Government were destroyed and anarchy prevailed in any 
 of these countries the gold standard would disappear, and "the holders of the 
 over-valued silver coins would suffer serious loss. The contingency is a 
 remote one and we do not think that in the case of the Straits Settlements 
 greater weight need V)e attached to this objection than in the case of India, 
 Java or any other Eastern country under a civilised Government. 
 
 r>0. It will be seen that, apart altogether from the (luestion of practica- 
 bility, there are arguments both for and against the expediency of establishing 
 a gold standard in the Straits Settlements. We haw tried to set out 
 these arguments with impartialit}', and while we do not think a gold 
 standard should be pressed on the Straits Settlements against the wishes of 
 the Government and the people, we are equally of opinion that no objection 
 should be raised on the part of His Majesty's Government to the principle 
 of the change, if the Government of the Straits Settlements, after considering 
 all sides of the question, should decide finally in favour of an alteration i 
 from the silver to the gold standard. 
 
 PRACTIC.A.BILITY OF A ChANGE. 
 
 51. If it is decided that the gold standard ought to be substituted in the 
 Straits for the present silver standard we are of opinion that such a change is 
 practicable. Sj^ecial difficulties are no doubt presented by the fact that at 
 present the countries in question do not make use of standard coins which are 
 peculiar to them. They employ the British and Mexican dollars which are 
 current in the East generally, of which enormous quantities exist, and which 
 may be indefinitely increased in number. Under these conditions it appears to 
 us to be an indispensable part of any scheme for the establishment of a gold 
 standard that there should be substituted for the Mexican and British 
 dollars now in use a currency special to the Straits Settlements and under 
 the control of its Government, unless it should be decided to make use of 
 the Indian rupee in somewhat the same manner as is followed in Ceylon and 
 ^lauritius. 
 
 52. The extension of the currency of India to the Straits Settlements 
 was advocated by five of the members of the Committee appointed in the 
 Colony in 189:3, and it has been advocated by others. Supposing that the 
 Government of India would consent to such an extension of its currency — and 
 we assume that in this matter the Government of India would be consulted — 
 we should still consider that the balance of advantage is against the proposal. 
 It could scarcely be expected that the Indian Government would, except 
 possibly for the initial supply, issue rupees to the Straits on more favourable 
 terms than to others, i.e., at the rate of 15 rupees to the pound sterling. 
 If therefore the Government of India did not make special arrangements the 
 cost to the community would be just the same as if 15 rupees were actually 
 worth a sovereign. In any case the Indian Government should, we think, 
 enjoy the profit on future issues of rupees and in return they would of course 
 be responsible for maintaining the gold value of the rupees suppHed, as at 
 present. 
 
 53. There would be much inconvenience in placing the currency and the i 
 system of accounts in the Straits on a rupee basis. The East India Company ' 
 in 1855 adopted measures for forcing the rupee (which had previously been j 
 legal tender) into general circulation in the Straits and making it the only 
 legal tender. Great inconvenience was experienced and public demonstra- 
 tions took place, resulting in the project being countermanded. The dollar 
 continued in general circulation without being legal tender, and Sir Hercules 
 
 6849. C 
 
[ 12 ] 
 
 Eobinsoii in 1S63 pDiiited out the absurdities of a systciii l»y wliich rupees 
 were used for Government accounts, whilst the real nn-ictary transactions of 
 both the Clovernment and the public were conducted in dollars. We do not 
 think that the community would take to the rupee much more kindly now than 
 they have done in the past, and if the dollar and cents system is continued, 
 as we !\'Commend, it is obviously more convenient that rupees sliould not be 
 in circulation and that the dollar should bear a fixed ratio t(t the sovereign, 
 and should not be quoted in terms of the rupee. 
 
 5i. If the cost of a change to a gold standard is to be faced we consider 
 it advisable that the Straits Government should maintain a gold standard 
 themselves, incurring the initial cost and receiving any profit which rnay 
 ultimately ensue from their own currency. We belie\e that the flourishing 
 condition of the Setthniients and the Malay States, and the profit on over- 
 valued coins will, with careful management, enable them to maintain it. It 
 is true that the trade returns (see Appendix 18 (12), Eeturn Xo. 19), 
 shew" a large excess of imports over exports in the case of the Settlements, 
 but it is agreed that those returns are only partial, and we do not believe 
 that there is anything in the trade balance of the Colony to make the 
 maintenance of a gold standard specially difficult. 
 
 i)o. There are various methods which might be adojiteil for the establish- 
 ment of an independent gold standard in the .Straits Settlements. The first 
 which we wish to mention is that of which the leading idea originated 
 with a Sub-Committee of the Singapore Chamber of Commerce, and is 
 explained in its Eeport of 6th November, 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 dollars circulat- 
 ing 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 on, to exchange these notes for coins of a 
 new currency special to the Straits 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 recommending 
 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 introducing a gold standai^d into the Straits Settlements would be 
 solved in the speediest way, and solved in a form wdiich Avould 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 pei'sons who 
 have practical experience of the country, we consider that the risk of its 
 failure owing to the possil )le suspicion and opposition on the part of the 
 general native population is so gi'eat that on the evidence before us we 
 cannot recommend its adoption. 
 
 57. The plan which we recommend is gradually 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 dollars, 
 the latter dollars being demonetized as soon as the supply of new^ dollars is 
 sufficient to permit of this btsing done with safety. lender this plan it will be 
 necessary for the Straits to obtain a considerable supply of the new dollars, 
 and as soon as this is received, the new dollars should "be made full legal 
 tender concurrently with the Mexican and British dollars, and steps should 
 be taken to put them into circulation. The first supply of new dollars might 
 be obtained (with the consent of the Indian Governmeiit) by remitting to one 
 of the Indian Mints a portion of the coin reserve of the Currency Commis- 
 sioners to be melted down and converted into the new Straits dollars, and 
 
[ 13 ] 
 
 this process might be continued until practically the whole of the coin 
 reserve is converted into new dollars. If it Avas found that this was a slower 
 process than was desirable the Government could consider the expediency 
 of purchasing silver for coining purposes. 
 
 58. Simultaneously with the arrival of the first supply of the new dollars, 
 and with the making of them legal tender, the import of Mexican and British 
 dollars should be temporarily prohibited and the export of tlie new dollars 
 should also be prohibited. As there is ordinarily a large import of Mexican 
 and British dollars into the Straits, and subsequent export of them, we think 
 it likely that when their import is prohibited there would be a tendency 
 towards a considerable drain of these coins from the Straits Settlements, 
 and if the new dollars are freely supplied, the change of currency might be 
 completed without any great delay. 
 
 59. When the currency is so largely composed of the new dollars as to 
 justify the measure, the Mexican and British dollars should be finally 
 demonetized and the Straits Settlements would then be in the position in 
 which India was Avhen the chauge of standard was undertaken in that 
 country, with, however, the very important advantage that there would not 
 be an enormous proportion of the new coins either hoarded or circulating 
 in foreign countries, which might, by being thrown into circulation, 
 indefinitely delay the establishment of the gold standard. 
 
 60. After the Straits Settlements had arrived at this stage, the 
 procedure might be exactly the same as it was in the case of India, i.e., after 
 sufficient Straits dollars had been coined to meet the requirements of business 
 in the Colony and the adjoining States, the coinage of dollars would cease 
 until the exchange value of the dollar had reached whatever value in relation 
 to the sovereign might be decided on by the Government as the future value 
 of the Straits dollar. After this stage is reached the Straits Government 
 would issue the new dollars in exchange for gold, and at the fixed rate. 
 
 61. When the gold standard is estabhshed, it would not be indispensable 
 that any gold coins should be made legal t Lender in the Colony and the 
 States. " But the Government should be prepared not only to give in 
 exchange for a sovereign such number of dollars as are hereafter declared 
 equivalent to a sovereign, but also to give sovereigns in exchange for dollars 
 at the same rate so long as gold is available, or to give bills on the Crown 
 Agents in London based on the fixed rate of exchange. 
 
 62. The above method would be rather slow in operation and would 
 involve some, though not very great, expenditure, but it would be a perfectly 
 safe, and, we beheve, sure method of estabUshing a gold standard involving 
 no risk and creating the minimun of disturbance, while we do not anticipate 
 that any very serious delay would occur before the gold standard became 
 effective. If the time within which the gold standard becomes effective is 
 unduly prolonged, the matter might be expedited by establishing a gold 
 reserve, and in any case A\e think that the profit made on the coinage of 
 dollars after the estal)lishment of a gold standard should be set aside as a 
 gold reserve, the whole or any portion of it being, if thought desirable, 
 invested in gold securities. 
 
 63. There remain two matters on which we think it expedient to offer 
 some observations. It has been represented to us that the trade of the Straits 
 Settlements is accompanied and facilitated by a large import and re-export 
 of silver dollars, and it is feared that that trade might be injured if either 
 the import ofMexican and British dollars were prohibited, or if Mexican and 
 British dollars ceased to be the legal currency. As regards this matter Ave 
 desire to point out that the prohibition of the import ofMexican and British 
 dollars would only be a temporary measure and that simultaneously the 
 exchange of the new special Straits dollar for the existing currency Avould 
 provide a supply of Mexican and British dollars more than sufficient to meet 
 the wants of trade, while after the completion of the exchange, and on the 
 demonetisation of the British and Mexican dollar, the prohibition of impor- 
 tation would be withdrawn and Mexican and British dollars might continue 
 
[ 14 ] 
 
 to be imported and exported as merchandise in any quantities that the trade 
 of the Straits Settlements with foreign countries might require. To allay 
 possible apprehension, however, it might be well to provide when the general 
 import of Mexican and British dollars is prohibited that such dollars might 
 be imported fo/- purposes of re-p.Tpori , with the sanction in each case of the 
 Straits Government and on such conditions as that Government might 
 prescribe. 
 
 64. A large amount of subsidiary silver coins has been issued in the 
 Straits, and a portion of it, approximately estimated by the Colonial 
 Treasurer at 300,000 dollars, is in circulation outside the Straits Settlements, 
 the Federated Malay States and Johore. Some, if not all, of these coins will 
 be returned to the Straits Settlements when a gold standard is established. 
 But we do not anticipate any serious trouble from this cause. If they are 
 returned and put into circulation in such quantities as do not cause the 
 subsidiary coinage to fall below it-; face value no harm will be done, and if 
 the subsidiary coin falls below its face value the tendency of such coin to 
 return would bo checked. Undei' the most unfavourable circumstances the 
 difficulty could be met by the Straits Government withdrawing a portion of 
 the subsidiary coins. 
 
 65. Before closing this Report, we desire to express our high apprecia- 
 tion of the able and willing assistance which the Secretary, Mr. A. E. 
 Collins, has rendered throughout the enquiry. 
 
 D. BAEBOUR. 
 Wm. ADAMSOX. 
 GEORGE W J(3HNS0N. 
 W. BLAIN. 
 
 A. E. Collins, Secretaru. 
 
 17th March, 1903. 
 

 
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