Monetary institutions in newly independent countries: the experience of Malaya, Ghana and Nigeria in the 1950s1

² Walters, A., ‘A hard ruble for the new republics’, National Review, 44 (1992), pp. 34–6; Walters, A. and Hanke, S. H., ‘Currency boards’, in Newman, P., Mulgate, M. and Eatwell, J. (eds), The New Palgrave Dictionary of Money and Finance (London, 1992), pp. 560–2; and Hanke, S. and Schuler, K., ‘Ruble reform: a lesson from Keynes’, The Cato Journal, 10 (1991).

³ Walters, and Hanke, , ‘Currency boards’, p. 560.

⁴ Osband, K. and Villanueva, D., ‘Independent currency authorities: an analytic primer’, IMF Working Paper, WP/92/50 (07 1992), p. iii. The obstacles to introducing currency boards during the 1990s are surveyed in Schwartz, A. J., Do Currency Boards Have a Future? (London, 1992).

⁵ Hazlewood, A., ‘Sterling balances and the colonial currency system’, Economic Journal, 62 (1952), pp. 942–5. Other contemporary critics include Polk, J., Sterling: Its Meaning in International Finance (London, 1956).

⁶ Greaves, I., ‘The sterling balances of colonial territories’, Economic Joumal, 61 (1951), p. 434.

⁷ For a version of this argument, see also Newlyn, W. T. and Rowan, D. C., Money and Banking in British Colonial Africa: A Study of the Monetary and Banking Systems of Eight British African Territories (Oxford, 1954), pp. 201–4.

⁸ Currency reserves accounted for about one-third of total colonial sterling balances during the 1950s. For a more detailed assessment of sterling balances in the 1950s, see Schenk, C. R., Britain and the Sterling Area: From Devaluation to Convertibility in the 1950s (London, 1994), pp. 17–53.

⁹ Collyns, C., Alternatives to the Central Bank in the Developing World, IMF Occasional Paper no. 20 (07 1983), p. 10.

¹⁰ Bangura, Y., Britain and Commonwealth Africa: The Politics of Economic Relations 1951–75 (Manchester, 1983), pp. 47–8.

¹¹ Walters, and Hanke, , ‘Currency boards’, p. 560.

¹² Jucker-Fleetwood, E. E., Money and Finance in Africa (London, 1964), p. 42.

¹³ Bangura, , Britain and Commonwealth Africa, p. 47.

¹⁴ For a more detailed study of the evolution of Malayan central banking, see Schenk, C. R., ‘The origins of a central bank in Malaya and the transition to independence, 1954–59’, Journal of Imperial and Commonwealth History, 21 (1993), pp. 409–31.

¹⁵ For more detail on the Fisher mission, see Uche, C. U., ‘Bank of England vs the IBRD: did the Nigerian colony deserve a central bank?’, Explorations in Economic History, 34 (1997), pp. 220–41.

¹⁶ The Economic Development of Nigeria (Baltimore, 1955), p. 150.

¹⁷ Bank of England, London, Archives [hereafter BoE]: OV68/2, note by A. L. Ryan to Fisher, 4 05 1954. See also Uche, , ‘Bank of England’, pp. 231–4.

¹⁸ BoE: OV68/3, letter from A. M. Stamp to Ryan, 13 11 1954.

¹⁹ BoE: OV68/3, note of a meeting of Colonial Office and Bank of England in London with Carlyle (Nigerian finance minister), 22 05 1956. The introduction of a local currency was expected to be especially costly because of the large circulation of coin in Nigeria.

²⁰ ibid.

²¹ BoE: OV68/3, letter from Loynes, J. B. in Nigeria to Hawker (BoE), 16 03 1956.

²² The report was published in 11 1957.

²³ BoE: OV68/4, letter from Loynes, J. B. to Jenkyns (BoE), 18 02 1958.

²⁴ Jucker-Fleetwood, , Money and Finance in Africa, p. 42.

²⁵ Trevor, C., Report on Banking Conditions in the Gold Coast and on the Question of Setting up a National Bank (Accra, 1951). Trevor was a retired deputy governor of the Reserve Bank of India. He was accompanied by Payton, S. W. of the Bank of England on his mission to the Gold Coast in 1951.

²⁶ BoE: OV69/1, report by Paton, G. D., 4 12 1948.

²⁷ For later criticisms, see the extracts from Parliamentary Debates in Accra in Jucker-Fleetwood, , Money and Finance in Africa, Appendix II.

²⁸ Eggleston had previously been with the Reserve Bank of India.

²⁹ BoE: OV69/3, memo by Fisher, for the Governor, 11 02 1955.

³⁰ BoE: OV69/3, letter from Loynes to Fisher (BoE), 12 02 1956.

³¹ For some case studies which assess the usefulness of central banks, see Capie, F. and Wood, G. E. (eds), Unregulated Banking: Chaos or Order? (London, 1991).

³² Collyns, , Alternatives, p. 22.

³³ Fry, M. J., Money, Interest and Banking in Economic Development (Baltimore, 1988), p. 14.

³⁴ Collyns, , Alternatives, p. 11.

³⁵ Olakanapo, J. O. W., ‘Monetary management in dependent economies’, Economica (1961), pp. 395–408, quoted in Jucker-Fleetwood, , Money and Finance in Africa, p. 52.

³⁶ Ayatey, S. B. Y., Central Banking, International Law and Economic Development: Studies on West Africa (Dubuque, 1968), p. 28.

³⁷ The Malayan central bank did help to encourage a market in Treasury Bills during the early 1960s: Degani, A. H., ‘The monetary system of Malaysia and Singapore: an analytical description’, in Purcal, J. (ed.), The Monetary System of Singapore and Malaysia: Implications of the Split Currency (Singapore, 1967), pp. 17–33.

³⁸ Bank Negara Tanah Melayu, Annual Report (1959), p. 5.

³⁹ Public Records Office, London [hereafter PRO]: T236/4797, report by Tampton, J. L., Office of the High Commissioner in Kuala Lumpur to Alistair McKay, HMT, 1 02 1960.

⁴⁰ Bank Negara Tanah Melayu, Annual Report (1959), p. 5.

⁴¹ Lock, Lee Hock, Central Banking in Malaysia (Singapore, 1987), p. 159.

⁴² Brown, C. V., The Nigerian Banking System (London, 1966), p. 179.

⁴³ Loynes, J. B., On the Establishment of a Nigerian Central Bank, the Introduction of a Nigerian Currency and other Related Matters (Lagos, 1957).

⁴⁴ Gold Coast Legislative Assembly Debates, 5 02 1957, p. 702.

⁴⁵ Bank Negara Tanah Melayu, Annual Report (1959), p. 12.

⁴⁶ Lock, , Central Banking, p. 324.

⁴⁷ IBRD, The Economic Development of Malaya (Baltimore, 1955), p. 472.

⁴⁸ Lock, , Central Banking, Table 8.3., p. 332. Assets of domestic banks totalled M$551.4m. and those of foreign banks totalled M$1585m.

⁴⁹ BoE: OV68/2, report by Levy, Banking Officer in Nigeria, 21 12 1953.

⁵⁰ IBRD, The Economic Development of Nigeria (Baltimore, 1955), p. 157.

⁵¹ Loynes, , On the Establishment of a Nigerian Central Bank, Annex I. The London banks were dominated by Barclays (DCO) and BBWA.

⁵² Onoh, J. K., ‘Commercial banks' deposit liabilities and credit generation’, in idem (ed.), The Foundations of Nigeria's Financial Infrastructure (London, 1980), p. 85.

⁵³ Trevor, , Report on Banking Conditions, para 34.

⁵⁴ IBRD, Economic Development in Nigeria, pp. 156–7.

⁵⁵ IBRD, Economic Development of Malaya, p. 472.

⁵⁶ IBRD, Economic Development of Nigeria, p. 152.

⁵⁷ For an account of Barclay's efforts to increase local lending in Africa, see Bostock, F., ‘The British overseas banks and development finance in Africa after 1945’, in Jones, G. (ed.), Banks and Money: International and Comparative Finance in History (London, 1991), pp. 157–76.

⁵⁸ Lewis, W. A., Report on Industrialisation and the Gold Coast (06 1953), quoted in Metcalfe, G. E. (ed.), Great Britain and Ghana: Documents of Ghana History 1807–1957 (Ghana, 1964), pp. 706–7.

⁵⁹ BoE: OV69/5, telegram from Colonial Office to Snelling (UK High Commissioner, Accra), 8 09 1960.

⁶⁰ BoE: OV69/6, note by Loynes, 7 10 1960.

⁶¹ See for example, Wood, G. E., ‘Comment’, in Capie and Wood, Unregulated Banking, pp. 29–35; and, also, Cameron, R. (ed.), Banking and Economic Development: Some Lessons of History (Oxford, 1972), p. 25.

⁶² Fry, , Money, Interest and Banking, pp. 429–30.

⁶³ The minimum amounts of paid-up capital necessary to establish a bank were £12,500 for indigenous banks and £0.1m. for foreign banks.

⁶⁴ Fry, , Money, Interest and Banking, p. 315.

⁶⁵ This is noted in Newlyn and Rowan, Money and Banking, p. 272.

⁶⁶ Bangura, , Britain and Commonwealth Africa, p. 49.

⁶⁷ Sayers, R. S., Central Banking after Bagehot (Oxford, 1957), p. 109.

⁶⁸ Huq, M. M., The Economy of Ghana (London, 1989), p. 216.

¹ The author would like to thank two anonymous referees for their comments and (without implication) Sarah Stockwell and Forrest Capie for reading earlier versions of this manuscript.