International bimetallism and silver absorption in Singapore, 1840–73

Abstract This study reveals the mechanism underlying the silver trade in Singapore during the third quarter of the nineteenth century by analysing banking business and bullion arbitrage. After 1849, the California Gold Rush induced gold depreciation and silver appreciation in Singapore’s bullion market, and arbitrage profits for silver imports from Britain emerged. At the same time, the expansion of banking business by eastern exchange banks enhanced the connectivity of Singapore’s exchange market with London, and enabled bullion arbitrage between the two distant cities. As a result, there was an influx of silver from Britain. In addition, Dutch silver, which was exported to Java by the Netherlands after 1854, flowed into Singapore due to the unfavourable exchange policy of the Dutch government.