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time by the Governor in Council, shall be the only legal tender" with the exception of certain subsidiary coins. Since 1871 subsidiary coins for the Straits Settlements have been struck by the royal mint. An order in council dated October 21, 1890, repealed all previous laws with reference to legal tender in the colony and declared the Mexican dollar the standard of value, at the same time giving unlimited legal tender to the Japanese yen, the Hongkong dollar and half-dollar and the American trade dollar. Prior to the passage of the currency law of 1903 two subsequent orders in council of importance, relative to the currency, were passed under dates of February 2, 1895, and October 20, 1898. These orders taken together removed the legal tender quality from the American trade dollar and the Japanese yen, reaffirmed the law making the Mexican dollar the standard coin and declared that the Hongkong dollar and the recently coined British dollar should be legal tender and be treated as equal to the standard dollar. The Straits currency thus established was, with a slight modification, adopted by the Federated Malay States.

About the beginning of the calendar year 1903 the actual currency of the Straits Settlements, the Federated Malay States and Johore was roughly estimated as follows: 2

(1) About thirty million British and Mexican dollars, of which by far the larger part was British dollars, and of which nearly a third represented coin held in reserve against the government's note issue.

(2) Nearly seven million dollars of Straits Settlements subsidiary coins, of which it was officially estimated that something like $300,000 had been shipped out of the country.

(3) An unknown amount of copper coins, the remainder of a total coinage since 1871 officially stated at 1,887,500 dollars (nominal), of which large quantities had been shipped out of the country.

(4) About thirteen million dollars of government notes.

The effect of the fall in the gold price of silver was similar in the Straits Settlements to what it was in India, Mexico and the other silver standard countries of the world which had extensive

1 Report of the Straits Settlements Currency Committee, London, May, 1903. pp. 4 and 5.

Ibid., pp. 5 and 6.

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trade relations with gold standard countries. The evils resulting to local business from the rapidly falling and fluctuating exchange with gold standard countries finally became so serious in 1893, after the closing of the Indian mints and the calling of the extra session of the Congress of the United States to consider the repeal of the Sherman law, that the British colonial secretary telegraphed to the governor of the Straits Settlements for a report as to possible remedial measures in the direction of securing for the colony greater stability of exchange. In response to this telegram a special committee was appointed by the governor to investigate local monetary conditions and to suggest remedial measures. The committee examined a considerable number of witnesses, whom they considered "fair representatives of the thinking men of the colony of all classes," and found that, with the exception of the majority of the Chinese traders, the witnesses examined were “mostly in accord in declaring that the fall in exchange has been disadvantageous to these Settlements.” In spite of this fact, however, the committee was unable to agree upon any proposition favoring the introduction of the gold standard, and their report was divided. Half of the twelve members of the committee favored a gold standard, five of them advocating the introduction of the rupee, upon the plan which had at that time but recently been adopted by India, provided, however, that that plan should prove a success in India. The other half of the committee, including all the native members, favored a continuation of the silver standard.

From 1893 to 1897 there was considerable agitation and newspaper discussion in the Straits Settlements concerning the advisability of adopting a gold standard, but nothing came of it until 1897, when on August 25 the committee of the Singapore chamber of commerce, by a unanimous vote, adopted a resolution favoring the establishment of a fixed par of exchange with gold countries, and appointed a committee “to enquire into the local currency with the view of calling attention of government to the question of converting the Straits currency to a gold standard."

A copy of the report of this committee is given in Appendix xvi of the Minutes of Evidence and Appendices of the Straits Settlements Currency Committee, London, May, 1903.

The essence of the recommendations of this sub-committee may be summed up as follows: 1

(a) The adoption of the English sovereign as the basis of the new currency "with a Straits dollar fixed at the value of 25. subsidiary to it.” The existing subsidiary silver coinage to con

. tinue unchanged except for being placed upon a gold basis.

(b) The government

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not to let its intention be known, and, when a decision is arrived at, to pass a law at one sitting of the legislative council, and immediately thereafter issue a notification to the effect that during a term sufficiently brief to prevent importation, all dollar coins then legally current in the colony would be received at certain specified places and government currency notes given in exchange; and that, after the expiry of such term, the British, Mexican, and other dollars in circulation would be demonetized;

the Federated Malay States to promulgate the same law simultaneously.

(c) From the stock of silver obtained by the government from its exchange of notes for British and Mexican dollars a limited supply of the new two-shilling dollars to be coined, these dollars to contain an amount of silver of from sixty to seventy per cent of that contained in the British and Mexican dollars, the seigniorage to accrue to the gold reserve.

Nothing of any consequence in the way of monetary reform developed from the above plan. It was severely criticised by the governor, by the president general of the Federated Malay States, and by many others in high position. This criticism was based on the following grounds:

(1) The expense involved in maintaining such a token coin at a two-shilling value and in exchanging the new dollar for the

old one.

(2) The danger of counterfeiting, which in the Orient would be great in the case of coins, like the ones proposed, whose nominal value was so far above their bullion value. · Ibid., Appendix xvii.

Ibid., Appendi xxviii, no. 12. See also Appendix no. 54 of the Index and Appendices to the Evidence Taken before the Committee Appointed to Enquire into the Indian Currency, London, 1889.

(3) The difficulty of the government's keeping its intentions secret until the final passage of the law; and on the other hand, if the public were notified in advance, the danger of an inundation of British and Mexican dollars, to take advantage, either legally or illegally, of the two-shilling dollar exchange offered.

(4) The difficulty of inducing the natives, who were accustomed to judge the value of a coin by its weight, to take, at a higher value, a coin of a little more than half the weight they were accustomed to.

(5) The difficulty of inducing the native holders of the old dollars, especially those of the Federated Malay States, to exchange them for a paper currency with which they were not familiar.

As a result of these and other similar objections, nothing came of the plan proposed.

The rejection of this plan gave a quietus to the subject of a gold standard for the Straits Settlements, as far as any official action was concerned, until the middle of 1902. On June 9, 1902, the Singapore chamber of commerce again addressed a letter to the colonial government asking whether

in view of the recent serious decline in the value of the dollar current here, the violent fluctuations 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,

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the government were prepared to investigate into "the feasibility and expediency of securing fixity of exchange."! This letter, together with certain subsequent communications upon the subject, was forwarded to the colonial secretary in July.

The result of these communications was that a committee composed of Sir David Barbour, Mr. W. Adamson, Mr. G. W. Johnson and Mr. W. Blaine were appointed by the secretary of state for the colonies to consider:

Report of the Straits Settlements Currency Committee, p. 7.

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Ibid., p. 3.

(1) The expediency or otherwise of introducing a gold standard of currency in the Straits Settlements and the neighboring Malay States.

(2) The practicability of making the change and the steps which in the opinion of the committee should be taken to effect this object if the change should be decided upon.

The committee began its hearing in London, November 13, 1902, and continued taking testimony until about February 1, 1903. During that time a mass of testimony both verbal and written was taken. The committee's sittings having been in London, it was necessary that the greater part of the testimony should be that of English merchants having trade experience with the Straits Settlements or with the East generally — the class of persons who, it will be noted, naturally would have been most favorable to the establishment of a gold standard. The masses of the population, represented by the natives, and by the Chinese, who do a large part of the business of the Straits Settlements and of the Federated Malay States, could not be heard directly; while through petitions and resolutions they took comparatively little part in the controversy – in fact they were for the most part ignorant of the entire matter. On the whole the evidence seems to show that the weight of opinion among the more intelligent of these classes was on the side of maintaining the status quo. The European community, with the exception of the bankers and of a few exporters, were almost a unit in favor of a gold standard.

A detailed discussion of the evidence brought forth in this testimony and published in the minutes of the committee's report is not necessary. The exhaustive discussion during the last decade or more of the effects of a fluctuating standard of value has made knowledge of the evils connected therewith general. The report of the local committee appointed in 1893 to consider the subject of the Straits currency declared that “all the effects remarked on in paragraphs 21-28 of the report of Lord Herschell's committee are in operation in the Straits." This statement was nearly as true in 1903 as in 1893. A few salient features of the conditions leading to the legislation of 1903 may, however, be briefly referred to.

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