The Government of the Straits Settlements became authorized to issue paper money under Ordinance VIII of 1897. The newly constituted Board of Commissioners of Currency was to commence operations on 31 August 1898. Accordingly its first notes were dated 1st September 1898, though it was not until May of 1899 that notes were actually issued.
While collectors in the Straits tend to think of their paper money as a distinct concept, in fact the nationalization of the Straits currency was one of a series of similar colonial enactments which had the effect of gradually taking note issue out of the hands of private or commercial institutions and placing it in the hands of government.
Apart from a variety of temporary 18th Century and early 19th Century government note issues in various locations such as Ceylon and South Africa, these frequently occasioned by money shortages during and subsequent to hostilities, the beginnings of a government monopoly system is first seen with the establishment of the Currency Commissioners of Mauritius in 1848, this after the failure of the Mauritius Bank.
In 1850, after a crisis, the Government of New Zealand set up what turned out to be a short lived central note issuing authority. In 1861 the Government of India established its own currency under the administration of Commissioners, while in 1885 we see the establishment of a Government of Ceylon issue, under the Commissioners of Currency, this occasioned by the failure of the Oriental Bank in 1883. Late in 1894 the Government of British Honduras commenced a coin and note issue under Commissioners of Currency, this following a worldwide banking crisis earlier in the decade.
Thus the establishment of the Board of Commissioners of Currency of the Straits Settlements in 1898 was not an isolated event; the near-failure and subsequent reorganization of the Chartered Mercantile Bank of India, London & China in 1892 had shaken confidence in commercial bank note issues, and while all the Chartered Mercantile’s banknotes were redeemed without loss to note holders, and the Bank was reorganized into the Mercantile Bank of India, a long considered Government note issue was eventually implemented.
While there was a grace period for the remaining two note-issuing banks, the Chartered Bank of India, Australia & China — today’s Standard Chartered — and the Hong Kong & Shanghai Banking Corporation — now HSBC — within ten years of 1898 their note issues had been fully withdrawn.
On 1st May 1899 the first Straits Settlements notes were placed into circulation. The initial issue comprised $5, $10, $50, and $100 denominations all dated 1898. At least two notes of the $5 denomination were saved as souvenirs at the time of issue, these being numbered 00001 and 00002 and now in collectors hands.
In 1906, to round out the initial circulation a $1 note was introduced and was highly successful. This note in fact took the place of the newly-minted Straits silver dollar coin first introduced in 1903, after a second issue in 1904, due to fluctuations in the price of silver the silver dollar was only to reappear in 1907 in reduced format.
The success of the Straits issues can be seen by the circulation at year-end 1906; the Government note issue then totalled $21,866,142, while the commercial banknote issue had fallen from $8,082,210 in 1899 — its peak — to $4,966,518 in 1902, then to $1,329,052 at the end of 1906.
Source: Heritage auction
