V. 1904-1936. INTRODUCTION OF NICKEL. DEMONETIZATION OF THE COPPER FIVE CENT AND QUARTER CENT PIECES AND THE SOVEREIGN. REDUCTION IN FINENESS OF SUBSIDIARY SILVER COINAGE.
34. A nickel coinage proposed.
In 1904 the Legislative Council raised the question whether a nickel coinage should not be substituted for the existing copper coinage. The Government of India was consulted and, as it stated that a nickel coinage for India was under consideration, the matter was put off to be taken up later. In 1907 the question was resuscitated with the introduction of the nickel anna in India, and it was proposed that, in lieu of the inconvenient and cumbersome copper five cent piece of 291.6 grs., Ceylon too should have a nickel coin of the same size and shape as the Indian anna. The proposal, however, was not approved by the Home Government owing to a strong protest by the Government of India that Ceylon should not be allowed to issue a coin resembling the Indian coins; and since it had already been decided not to adopt perforated coins for India, the Mint recommended the adoption of a square coin with rounded corners. The Secretary of State approved this recommendation.
A Proclamation dated December 13, 1909 (Appendix I), declared the cupro-nickel five cent piece legal tender in Ceylon with effect from January 1, 1910. The Secretary of State for the Colonies and the Lords of the Treasury were agreed that no Order in Council was necessary for the purpose in view of section 3 of the Ceylon Coinage Order of February 6, 1892. The new coin contains 25 per cent. nickel and 75 per cent. copper and weighs 60 grains (= 3.888 grames), the remedy allowance being a weight not exceeding the weight of one piece in every 40 pieces. A proposal to use a pure nickel coin-for the introduction of which fresh legislation was considered necessary-was abandoned on the advice, in January 1926 of Sir Thomas Rose, Chemist and Assessor of the Royal Mint. .,.
36. Copper five cent and quarter cent pieces demonetized.
The Proclamation of December 13, 1909, also promulgated an Order in Council dated October 18, 1909, demonetizing the copper five cent coin as from July 1, 1910 (Appendix H). It also removed from Ceylon currency the quarter cent piece of copper with effect from the same date as it was pointed out by the Treasury that it had ceased to circulate. Although the copper five cent piece was not legal tender after June 30, 1910, an extension was allowed so that it could be exchanged for the nickel coin up to December 31, 1910, at the Treasury and the Kachcheries, and also received at Post Offices in payment for stamps, telegrams, &c.
37. Subsidiary Silver Coinage. Millesimal fineness reduced from 800 to 550.
When the price of silver which, in normal times, was about 29d. an ounce, rose to 47td. in 1918, there was a great scarcity of small silver in actual circulation due to hoarding and melting, and complaints were received that it was causing much hardship in the villages. Two remedies were proposed to meet the situation: (1) to issue small currency notes as in the Straits Settlements; or (2) to mint a stock of new coins. The first proposal was dropped as it was considered that such notes would be most in sanitary after, a short time and very costly owing to their short life and the considerable staff that would be required in connection with their registration and destruction. The objection to the second proposal was that, if coins of the millesimal fineness of 800 prescribed by the Ceylon Coinage Order of 1892 were to be minted, the cost would exceed the face value of the coins due to the prevailing high price of silver which at the time-January 1919-had risen to 49d. an ounce. At this rate, it was observed that, exclusive of freight from Calcutta to Colombo, a. piece of
| 50 | would cost Government | 62.7 cents |
| 25 | . . . . . . . . | 26.3 cents |
| 10 | . . . . . . . . | 10.5 cents |
whereas with silver at 29d. an ounce, the cost exclusive of freight, was
| 37.1 | cents for a | 50 piece |
| 15.6 | . . . . . | 25 piece |
| 6.4 | . . . . . | 10 piece |
In these circumstances, the Government approached the Secretary' of State with a view to getting the Coinage Order of 1892 amended to permit the issue of small silver with a reduced fineness of 500, which would leave a fair margin of profit, though not so large as formerly.
38. Secretary of State agrees to a fineness of 550.
The Secretary of State had no objection to a reduction, but did not favour the lowering of the fineness below 550. This was agreed to and an Amending Order in Council dated May 8, 1919, was issued declaring (section 1) that" 550 shall be substituted for 800 " as millesimal fineness and" 5 shall be substituted for 3" as the corresponding remedy allowance for Ceylon fifty cent, twenty-five cent, and ten cent pieces, coined after such date as may be fixed by the Governor by Proclamation. Proclamation dated August 29, 1919, fixed September 1, 1919, as the date on which this section shall come into force (Appendix J).
39. Demonetization of small silver coined prior to September 1, 1919, provided for.
Section 2 of the Order in Council of 1919, further ordained that" the Governor may, by Proclamation made with the approval of the Commissioners of the Treasury and one of His Majesty's Principal Secretaries of State, declare that Ceylon fifty cent, twenty-five cent, and ten cent pieces, coined up to and including such date as may have been fixed by Proclamation under section 1 of the Order, shall cease to be legal tender notwithstanding anything in the Coinage Order, 1892, and the Orders amending that Order".
40. A Post-war Silver Crisis-Effects of the Indian embargo on export of silver rupees.
In 1919 the Colombo Banks ran short of currency and experienced considerable inconvenience in financing local exports owing to the embargo on the export of silver rupees from India. This led to a serious setback in the export trade and a fall in the price of copra. The Government of India was appealed to and it granted permission to the Bank of Madras (now the Imperial Bank) to export 3 million silver rupees. The Government of Ceylon also undertook to issue to the Bank of Madras currency notes in Colombo against currency notes in Madras. The approval of the Secretary of State was obtained to invest the sum so received in currency notes in Madras in Indian 5 per cent. War Loan. Towards the end of the same year, after a Conference at Madras and discussion with the Government of India, currency notes amounting to 30 lakhs of rupees were issued to the Bank of Madras against a sterling credit in London.
41. Lowering of legal tender rate of a sovereign in India from Rs. 1510 Rs. 10 due to rise in price of silver and exchange fluctuations.
Since 1893 the Government of India had succeeded in maintaining the gold value of the rupee at Is. 4d. In 1899 an Act was passed declaring the British sovereign legal tender at this rate. The price of silver rose in 1918 to. 47½d. an ounce and in 1919 to 57d. Thereupon the Indian Exchange and Currency Committee recommended that the value of the rupee should be fixed at 1/10 of the gold content of a sovereign, i.e., Re. 1 for 11.30016 grains of fine gold; and in February, 1920, the Indian Government fixed a rate of 2s. to the rupee for the conversion of sterling into rupees and vice versa. By June 1920 it was found that the market rates of exchange had not only departed from the parity of gold but also, through lack of support from the export market, had fallen below the parity of 2 shillings,. the price of silver having soared to 61 9/16d. an ounce. The Government of India therefore decided to remove as from June 21 the restrictions over import of gold bullion and coins and to declare that the sovereign and half sovereign should cease to be legal tender until further notice, but that the sovereign should be received at the existing ratio of Rs. 15 during a moratorium expiring on July 12 when it would again be legal tender at a new ratio of Rs. 10.
42. Ceylon proposes similar action but the Secretary of State decides. permanent demonetization of the sovereign in Ceylon.
In these circumstances, the Government of Ceylon proposed to the Secretary of State in June 1920, (a) the further amendment of the Ceylon Coinage Amendment. Order in Council of 1901, which legalized the sovereign so that sovereigns. in Ceylon too should cease to be legal tender from the date of such amendment and should again be legal tender on October 1, 1920, at the new rate of Rs. 10; (b) to allow a moratorium of 14 days from the date of the further amendment of the Coinage Order during which sovereigns would be received by the Government at Rs. 15; and (c) the removal of the embargo. on melting of sovereigns. 1 The Secretary of State had no objection to the removal of the prohibition against melting of sovereigns but preferred the entire repeal of the Coinage Amendment Order in Council of 1901, so that sovereigns might cease to be legal tender in Ceylon. He did~ not see. sufficient reason why the Ceylon Government should give exchange of Rs. 15 to the sovereign for gold which might be left to find its own market on the basis of its intrinsic value. He was informed that, while there was. no vital objection to permanent demonetization, such a course was opposed. to local sentiment and would also inconvenience tourists, and it was suggested that the matter be reconsidered. He however, held that permanent demonetization was the best course and replied that the Amending Order in Council of 1901, would be repealed in toto. An Order in Council dated. August 13, 1920, was accordingly issued directing that as from August 7 1920, sovereigns should cease to be legal tender in Ceylon (Appendix K)
43. Import and export of sovereigns.
The Proclamation dated April 28, 1920, published in the Gazette of the 30th idem, prohibited the exportation from Ceylon of sovereigns and half-sovereigns. This prohibition was withdrawn by Proclamation dated July 30, 1920, and a general licence was issued by the Principal Collector of Customs for the importation of gold coins. When the sovereign ceased to be legal tender in Ceylon the prohibition against melting of sovereigns was withdrawn with the approval ()f the Secretary of State in order to encourage the flow of gold coins from the Treasury for local industrial purposes.
44. Minting of subsidiary coins.
With the exception of the 1912 nickel coins which came from Birmingham, the subsidiary coinage was obtained from the Royal Mint, London, until the year 1913. Thereafter, with the ;approval of the Secretary of State for the Colonies, the Calcutta Mint supplied small silver and copper, and the Bombay Mint the nickel coins. The latter also supplied the subsidiary silver coins of 550 fineness ordered in 1919, as the Calcutta Mint was pressed with work at the time. From 1922, all coinage was supplied by the Calcutta Mint. The change from London to Calcutta was due to considerations of cost and quicker delivery. In 1924 the Deputy Master of the Royal Mint suggested that the Ceylon coins should again be obtained from London, as the mechanical equipment and plant at the Royal Mint had been considerably extended and it was able to execute orders with greater rapidity and dispatch, and was also in a position to supply the silver bullion from surplus stock at the net price of :silver (i.e., without the costs incurred by the Crown Agents in purchasing the metal). Accordingly, in 1p26, the work was again transferred to the Royal Mint.
The cost to Government in 1926 per piece of .each denomination, including metal, manufacture, freight, landing charges, .&c. (at Re. 1.=1s. 6d.) was
| Denomination. | Cost. Cts. | |
| Silver 2 | .50 | 20.48 |
| .25 | 10.64 | |
| .10 | 4.78 | |
| Nickel | .05 | 1.01 |
| Copper | .01 | .83 |
| .0½ | .48 |
The average annual profit derived by the Government from the issue of its subsidiary coinage for the 10 years 1900-1909 amounted to Rs. 84,800. .
46. Design of Subsidiary coinage.-
The silver and copper coins now current are of the common "round" type, but the nickel piece is square with rounded corners. On the obverse the sovereign's name, title and crowned effigy are shown facing right or left, there being a change at each accession; e.g. Queen Victoria faces the left, King Edward VII. the right, and King George V. the left. On the reverse, a talipot palm (except in the nickel five cent piece), the value of the coin in Sinhalese, Tamil, and English characters and in Arabic numerals (except in copper coins), the date of minting and the word "Ceylon" are impressed.
46A. 3. The following table giving the Sinhalese and Tamil names for various obsolete coins may be of interest, as they are still applied to various numbers of cents :
|
The fanam equals 61 cents, but since the introduction of the decimal system is reckoned at 6; the quarters of the rupee, however, retain their true values. Thus, 2 and 3 fanams are reckoned at 12 and is instead of 12½ and 18¾ cents. To reduce to cents according to the vulgar computation any number of fanams over 4, add 6 or a multiple of 6 to the value of the last quarter rupee; e.g., for 6 fanams, add 12 to 25, result 37 cents,. the true calculation, of course, being 37½ cents.
The number of subsidiary coins minted from 1904-1929 inclusive are shown below. No coins were minted from 1930-1936.
| Denomination | No. of Pieces. | |
| Silver | .50 | 9,568,000 |
| .25 | 11,343,000 | |
| .10 | 25,182,116 | |
| Nickel. | .05 | 19,000,000 |
| Copper. | .01 | 66,847,095 |
| .0½ | 29,225,704 |
48. Circulation of subsidiary coinage.
The estimated gross circulation .{)f subsidiary coins at December 31, 1914, 1924, 1934, and 1936 and the per capita circulation in respect of these years stood as follows :
| Small Silver. 4. | Nickel. | Copper. | Total. | Per capita. | |
| Year | Rs. | Rs. | Rs. | Rs. | Rs. |
| 1914 | 5,907,000 | 386,000 | 996,305 | 7,289,305 | 1.74 |
| 1924 | 10,216,211 | 659,300 | 1,189,705 | 12,015,216 | 2.51 |
| 1934 | 9,714,961 | 700,200 | 1,474,005 | 11,889,166 | 2.14 |
| 1936 | 9,549,951 | 730,100 | 1,508,555 | 11,788,616 | 2.09 |
Ceylon having accepted the rupee of British India :as her standard
coin accepted also the Indian rate of exchange as her .own official
rate; and when the Government of India raised it from Is. 4d. to
2s. to the rupee Ceylon Government too adopted the 2s. rate as from
October 1, 1920. When India lowered the rate to Is. 4d. on April 1,
1923, -Ceylon followed suit with effect from October 1 of the same
year. The rate was again changed to 1s. 6d. with. effect
from October 1, 1928, and it ,remains the official rate of exchange to
this day.
Ceylon Currency British Period 1796-1936 By B. W. Fernando, Chapter V.
1939, Ceylon Government Press p.18-24
Contents Next Chapter VI