Mr. Shannon, Assistant Chief of the British Commonwealth Division, is a graduate of the University of Belfast and the London School of Economics. He was formerly Senior Lecturer in the University of the Witwatersrand and in the University of Bristol and Assistant Secretary, the British Board of Trade. He is the author of articles in various economic journals.
For further details, see James Pennington, Currency of the British Colonies (London, 1848); Robert (Lord) Chalmers, History of Currency in the British Colonies (London, 1893); Sir Gerard Clauson, “British Colonial Currency System,” Economic Journal (1944); “Monetary Systems of the Colonies,” Banker (1948-49); Statutory Rules and Orders (Revised, 1904 and 1950), s.v. “Coin” and “Coin, Colonies”; Colonial Office List and Annual Reports on the various Colonial Territories (H.M.S.O.).
The full text is given in Pennington, op. cit., pp. 182-99, and in Chalmers, op. cit., pp. 417-24. Extracts from the minute are given in the Appendix below. The next official survey is Goschen’s brief account to the International Monetary Conference of 1878, printed as U.S. Senate Document 58, 45th Congress, 3rd Session.
Chalmers, op. cit., would have us believe that the Treasury was actuated by imperialistic motives unconsciously (p. 24) or consciously (p. 23: “The shilling was to circulate wherever the British drum was heard”). But this seems reading history backward. The Colonies were not so esteemed in the days of Huskisson as in the time of Joseph Chamberlain. They were a drain on the Mother Country and their military defense and its expense were resented and under constant criticism. It seems clear that the Treasury was here concerned with justice to the troops and with tidiness of administration. Cf. its plaintive statement: “[Some military dollar] rates are of long standing and many of them founded upon authorities of the origin of which there are no distinct records in this office.”
This seems clear for the reforms of 1825; motives may have been more mixed in 1838-44. But even then, Pennington—author of the later reforms—was no advocate of only British coins. Quite the contrary: he declared, “To this [mixed coinage] no reasonable objection could be made .... England and Prance have maintained the exclusive system; but Holland, Hamburg, Genoa, and the United States have, with greater or less freedom, received and permitted the circulation of the coins of mints of established reputation at rates corresponding to their intrinsic values without suffering from this practice any detriment or inconvenience” (op. cit., p. 2). The same tolerance was shown later in the 1850’s when U.S. gold coins were made legal tender in some colonies and so remained until 1912 in British West Africa and until 1935 in the West Indies. The United States withdrew legal tender from British gold coins (and the Spanish dollar) and went over to the exclusive system only in 1857.
The same mint indenture price of 1601 persisted as the basis for the New York commercial quotations of sterling until 1873 with, however, the appropriate premiums and discounts.
Those with experience in World War II of the issue of military currencies and their rate-fixing may have some sympathy with the inexpert British Treasury in its post-Napoleonic bimetallic attempt. In Europe after World War II, British personnel are said to have made £60 million illicitly out of the British Treasury (see H.C. 115 of 1946-47; Hansard, July 21, 1947).
It partly depended on the presence of troops. In the Virgin Islands there were no troops and the Islands, linked in trade with the adjacent Danish island of St. Thomas, mainly used Danish coins to the end of the 19th century. With the same trade link, but with St. Thomas now owned by the United States, the Virgin Islands frequently use dollars today. Cf. the use of dollars in Canton Island (in the Gilbert Islands) arising out of present-day air traffic.
Although the adoption of sterling units was part of the intent of Pennington’s reforms in 1838, he expressly states: “It is certainly desirable when a change is made in the currency of any country to consult, as much as possible, the accustomed habits and even the prejudices of the people when that can be done without the neglect or violation of any important principle” (op. cit., p. 48). In fact there seem to be only two instances where central action has overriden local views: St. Lucia (1841) and British Honduras (1949).
The art is not lost. When Italy increased the value of the Maria Theresa dollar in Ethiopia in the mid-1930’s, enterprising British merchants made a profit by shipping an equivalent there (Arthur Nussbaum, Money in the Law, National and International, New York, 1950, p. 315).
The gold doubloon was demonetized in Bermuda by local Act in 1882, in Jamaica by proclamation in 1901 and, more widely, in 1907-08. Its various subdivisions were finally demonetized only in 1935.
See Report on Closer Association of the British West Indian Colonies, 1947 (Cmd. 7291), p. 26: “It was recognized by delegates that the issue of any new West Indian coinage would necessarily depend on the repatriation of British coinage in this area. It was therefore assumed that it would be possible for the new (Currency) Board to come to an equitable agreement with the Colonial Office and British Treasury authorities in this matter.”
The U.S. trade dollar was also a failure.
Legal tender privileges were frequently extended in the 19th century to foreign gold and even token silver coins in the Empire as additions to the ancient doubloon and silver dollars and their derivatives. West Africa is a complicated case, with foreign additions being made as late as 1875.
For the full text, see Chalmers, op. cit., pp. 429-34. But chartering ceased to be so important when general incorporation became easier.
For India’s “drift” to a proper solution, see J. M. Keynes, Indian Currency and Finance (London, 1913, p. 4); for “the logic of events” in Singapore, see E. W. Kemmerer, Modern Currency Reforms (New York, 1916), p. 450.
Perhaps the quaintest examples of this kind of thing are found in the West Indies. Some of the salt-producing islands in the Bahamas sold mainly to French islands; to protect their trade, French coins were given legal tender in part of the Bahamas (1850). About 1820, St. Vincent’s currency was partly determined by the trade winds and the ability of open boats to tack and veer.
In Ethiopia in World War II the heavy weight of Maria Theresa dollars hampered the war effort. A ton was worth only £3,000 and there were difficulties in dropping supplies to partisans behind the Italian lines. This was one reason for introducing the East African bank note. See Lord Rennell, British Military Administration in Africa (London, 1947), pp. 366-71.
Perhaps the research needed for this, and Britain’s departure from gold, were what led to some minor tidying up in the 1930’s and the repeal or other annulment of some old laws. Although Bermuda had demonetized the doubloon in 1882 and Jamaica in 1901, the general demonetization of the old doubloon and of U.S. and other foreign gold coins took place only in 1935. Perhaps, too, the same research showed that Fiji’s special legal problems had been missed in the 1920’s. See Clauson, op. cit.
This is the expression used in the Report on Closer Association of the British West Indian Colonies, 1947 (Cmd. 7291), p. 27.
The expression, “colonial territories,” is more and more officially displacing older ones, like “the Colonial Empire” or “the Colonies.”
Fiji and Hong Kong still have some anomalies in these matters.
The 110 per cent cover does not appear, as yet, to have been reached in Malta, and, owing to the war, it has been disturbed in Hong Kong.