Federated Malay States - Economy

Economy

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See also: Straits dollar, Malayan dollar, and Rubber

From the earlier period of the federation the currency in used was the Straits dollar issued by the Board of Commissioners of Currency. As the currency depreciated over time, it was pegged at two shillings four sterling pence in 1906. In 1939, the British government introduced a new currency, Malayan dollar (ringgit in Malay) for used in Malaya and Brunei replacing the Straits dollar at par value. It had the smallest denominations of 1 cent to a highest of 1000 Malayan dollar and retained the exchange rate as was from the Straits dollar.

The Federated Malay States main economic activity was mostly focused on agriculture and mining with emphasis on rubber and tin. FMS and Malaya as a whole was the main supplier of these two commodities for the British industrial need. Rubber estates or plantations were established in all four states and tin was mined primarily in the Klang valley in Selangor and the Kinta valley in Perak. This labor intensive economic activities prompted the British to bring in immigrant workers from Southern India to work at the plantations and workers from Southern China to mine the tin.

The economic condition in the period can be viewed as self-sustainable, as the income of the federation was more than what was expended in terms of maintaining the administration and economic activities. In the later period, a lot of resources was poured into the development of the city of Kuala Lumpur, as the capital of the federation. This period also saw rapid growth in terms of communications infrastructure such as interstate roads, a narrow gauge railway line from Penang to Singapore, and the Port Swettenham (present day Port Klang). Public schools and academic institutions were also opened along with an improvement in public health. An area in the city was also gazetted as a settlement for the Malay called Kampung Baru. Public buildings were also constructed such as the Kuala Lumpur railway station, the Bangunan Sultan Abdul Samad complex and Masjid Jamek.

The table and section below illustrated the economic growth of the federation and its member states.

Growth of trade and government revenue and expenditure (1875–1922)

Year	Revenue	Expenditure	Import	Export
1875	$409,394	$436,872	$831,375	$739,972
1880	$881,910	$794,944	$2,231,048	$1,906,952
1885	$2,208,709	$2,261,954	$8,667,425	$9,961,786
1890	$4,840,065	$5,237,275	$15,443,809	$17,602,093
1895	$8,481,007	$7,582,553	$22,653,271	$31,622,805
1900	$15,609,807	$12,728,930	$38,402,581	$60,361,045
1905	$23,964,593	$20,750,395	$50,575,455	$80,057,654
1910	$26,553,018	$23,598,610	$53,255,151	$102,851,990
1915	$40,774,984	$42,838,631	$61,343,935	$162,429,254
1920	$72,277,146	$100,433,471	$175,916,712	$289,112,016
1921	$54,449,568	$114,386,546	$102,914,877	$134,955,549
1922	$52,494,110	$49,811,007	$78,822,349	$140,429,775

Note: All values are in Straits Dollar (One dollar fixed at two shillings and four pence sterling). Data for Pahang included only from 1890 onwards

Ref: Harrison, Cuthbert Woodville. An Illustrated Guide to the Federated Malay States. 1923