Article

Money

From Munshipedia, the MBRAS digital historical encyclopedia

Money

Money in the Malay Peninsula and Borneo has a history shaped by the interplay of global silver flows, colonial administrative reform, and indigenous linguistic traditions. The region’s monetary system was defined by the Spanish and Mexican silver dollars that circulated from the seventeenth century onward, the gradual establishment of a sterling-backed exchange standard in the Straits Settlements, and the eventual adoption of the Malay word ringgit—meaning “jagged” or “serrated”—as the official name of the currency. These developments, documented across more than a century of scholarship, reveal a monetary culture in which European coinage, Chinese commercial practice, and local nomenclature converged to produce a system that persisted, in modified form, well into the late twentieth century.

The Dollar as Unit of Account

The formal establishment of the dollar as the unit of money in the Straits Settlements dates to 1867, when the colony was transferred from the India Office to the Colonial Office and immediately repealed all Indian currency legislation, recognising the Spanish and Mexican dollars already in circulation as legal tender [1, p. 2]. For the next two decades, the colony’s currency problems centred on the chronic scarcity of silver coin and the insecurity of private bank note issues. Recorded treasure exports exceeded imports by $54 million between 1870 and 1893, confirming that the outflow of silver was a structural problem rather than a temporary one [1, p. 4]. The British government’s long-standing refusal to strike a trade dollar finally reversed in 1893, when the closure of the Indian Mints to silver coinage and the repeal of the Sherman Act in the United States threatened to cut off the supply of Mexican dollars; over 150 million British trade dollars were subsequently struck, ending the scarcity problem [1, pp. 4–5].

Despite the official recognition of the dollar in 1867, the colony had no coin of its own until 35 million Straits dollars were struck in 1903 [1, pp. 2]. The final phase of monetary reform addressed the depreciation of silver. Between 1873 and 1897 the gold value of the dollar fell 55 per cent, but this was largely offset by a concurrent 40 per cent fall in Western wholesale prices, so that the colony’s trade was not seriously affected until after 1897, when Western prices began to rise while silver stagnated [1, pp. 10–11]. The Barbour Committee of 1903 recommended a gold exchange standard, and the colony implemented it by demonetising all other dollars in 1904 and pegging the Straits dollar at 2s. 4d. in January 1906 [1, pp. 14–15]. Amendments to the Currency Note Ordinance in 1904 and 1906 then established the mechanism of automatic expansion and contraction: notes could be issued against gold deposited in Singapore or London, and redeemed in gold on demand [1, p. 15]. This rate remained unchanged through 1966 and beyond [1, pp. 15–16].

Paper Currency and Emergency Measures

The second major reform concerned paper currency. The failure of the Oriental Bank in 1884 established the principle of ultimate state liability for private note issues, and by 1893 the acute scarcity of silver dollars during Chinese New Year made a government note issue unavoidable [1, pp. 6–7]. The Currency Note Ordinance of 1899, modelled on the British Honduras Ordinance, created a Note Guarantee Fund with a two-thirds specie reserve and a one-third investment reserve, backed ultimately by the colony’s general revenues—a security arrangement the local government initially protested as too stringent [1, pp. 7–9]. By 1902 the government note issue had surpassed private bank circulation, reaching over $13 million against the two remaining banks’ combined $5½ million [1, p. 9].

The post-First World War period presented a different crisis. Bucknill traced the long decline in silver prices from 1870 to 1910 and explained how the post-war appreciation rendered Malayan silver coins worth more as bullion than at face value, prompting their export and melting [2, p. 125]. Despite legislative attempts to curb export and hoarding, the dollar and subsidiary silver coins rapidly disappeared from circulation by 1917, and even the bronze coinage began to vanish [2, p. 125]. The Government faced a difficult situation: the Indian Mints were overburdened and the Royal Siamese Mint at Bangkok could not assist for technical reasons, so it was nearly three years before replacement coins appeared [2, p. 125].

In the interim, the first emergency measure was the issue of a locally printed 10 cent note produced at the Government Printing Works, Singapore. Bucknill described these notes as being printed on thick, coarse, open-textured paper that tore easily and absorbed dirt, making them unpopular. He provided detailed physical specifications: approximately 117 × 76 mm in size, coloured yellow, green, and black on the face and red on the reverse, with a simple design consisting of a yellow background bearing the words “Ten Cents” in repeated horizontal lines, overprinted with a green border containing a small representation of the Royal Arms and associated phrasing [2, p. 125].

The Etymology and Nomenclature of Ringgit

The word ringgit derives from the root meaning “jagged” or “serrated,” cognate with gerigi (saw-teeth), and was originally applied to silver coins with milled or serrated edges that distinguished them from the earlier crude “cob” Spanish pieces of eight, which were called real batu (stone real) for their irregular shape [3, p. 58]. The historical narrative explains why European mints introduced serrated edges in the first place: to combat the widespread practices of clipping and sweating, which had degraded the metal content of hammered coins in circulation. As mechanical minting replaced hand-striking, various edge treatments—floral, incuse, beaded, and serrated—were adopted as anti-tampering measures [3, p. 59]. By the nineteenth century, the term ringgit had broadened to encompass all silver coins of equivalent size and fineness regardless of edge type [3, p. 59].

Sim Ewe Eong catalogued the rich local nomenclature that developed to distinguish the various silver coins in circulation: ringgit meriam (Pillar Dollar, with the Pillars of Hercules mistaken for cannons), ringgit geroda (Mexican eagle coin), ringgit tongkat (British Trade Dollar with Britannia’s trident), and ringgit tengkorak (Dutch 2½ guilder with William II’s bald head) [3, p. 60]. A notable regional distinction was drawn between ringgit and rial: in Kedah, Kelantan, and Thailand, the Spanish Pillar Dollar was known as rial (a word introduced by early Arab traders), and when serrated-edge coins later arrived, they were labelled rial beringgit to differentiate them [3, p. 65].

The word ringgit appears in Marsden’s Dictionary of the Malayan Language (1812) and in Abbot Favre’s Malais-Français Dictionnaire, confirming its use as a monetary term by the early nineteenth century [3, p. 58]. The Oriental Banking Corporation of Singapore used “Lima Ringgit” on its $5 notes in 1849, providing documentary evidence of the term’s official assimilation by the mid-nineteenth century [3, p. 61]. The Jawi script “Satu Ringgit” first appeared on the reverse of the British Trade Dollar in 1895, followed by the Straits Settlements dollar coin of King Edward VII in 1903 and King George V in 1919 [3, p. 61]. The British Trade Dollar was struck between 1895 and 1935 for the Chartered Bank and the Hongkong & Shanghai Bank, making it the first coin to bear “Satu Ringgit” in Jawi alongside “One Dollar” in English [3, p. 60].

Research and Documentation

The Society’s literature on money spans more than five decades and reflects shifting priorities in Malayan economic and cultural history. Bucknill’s 1922 note in the Journal of the Straits Branch of the Royal Asiatic Society was a practical numismatic observation, written in the immediate aftermath of the post-war currency crisis, and its value lies in the physical description of emergency paper issues that might otherwise have been lost [2]. Chiang Hai-ding’s 1966 article represented a more ambitious historiographical undertaking, tracing the institutional architecture of the Malaysian currency system from 1867 to 1906 through legislative proceedings, chamber of commerce reports, and colonial blue books [1]. The article was published in the same year that the Malaya British Borneo Currency Agreement was still in force, and the author’s post-script noted the imminent dissolution of the common currency system on 12 June 1967, when Malaysia, Singapore, and Brunei each adopted separate currencies [1, p. 16].

Sim Ewe Eong’s 1974 article on ringgit responded to a different stimulus: the termination of currency interchangeability between Malaysia and Singapore in 1973, which prompted public curiosity about why the native term had supplanted “dollar” in official usage [3, p. 58]. The article’s contribution was primarily etymological and numismatic rather than historiographical, drawing on early lexicographic sources and numismatic illustrations rather than archival collections [3]. Together, these three works trace a progression from immediate practical documentation, through institutional economic history, to linguistic and cultural analysis—a sequence that mirrors the broader evolution of the Society’s scholarly interests in Malayan economic life.

MBRAS Sources

References

  1. Chiang Hai-ding (1966). The origin of the Malaysian currency system (1867–1906 JMBRAS 39(1): 1–18.
  2. J.A.S. Bucknill (1922). Remarks upon certain currency notes, coins and tokens emanating from Malaya during and after the war JSBRAS 85: 124–134. Read on JSTOR
  3. Sim Ewe Eong (1974). Ringgit JMBRAS 47(1): 58–65.