Establishment of the West African Currency Board and East African Anomalies

Abstract

Chapter 3 indicated that, the during the latter half of the nineteenth century, the imperial authorities eliminated most international currencies and gold coins circulating in British West Africa, by undervaluation or demonetization, and, despite colonial opposition, replaced them with British silver tokens. Through an arrangement between the authorities and the Bank of British West Africa, the British silver tokens were landed at face value in the colonies, giving London the benefit of the seigniorage profits. The profits increased rapidly when silver depreciated following the 1871 metropolitan demonetization of silver, becoming more than a half of the face value of the coins, by the beginning of the twentieth century. A request from Lagos, that the seigniorage profits be used for colonial development, was rejected in 1897, although the Treasury suggested that they could have access to the seigniorage profits if they took complete responsibility for their own currency. ¹