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Samoa

Political sketch

Formerly German Samoa and Western Samoa. Independent from New Zealand on 1 January 1962.

Samoa was settled by Polynesians about 1000 B.C. A short time before Europeans arrived, it had developed a stratified society with paramount chiefs and fortified settlements developed. The islands were probably sighted in 1722 by the Dutch navigator Jacob Roggeveen, but the French explorer Louis-Antoine de Bougainville was the first European visitor, in 1768. He named the group the Navigator Archipelago because of the Samoans' skill in handling canoes. Two members of the London Missionary Society members settled on the island of Savai'i in 1830 and, by 1834, put the Samoan language into writing. Armed and advised by foreigners, Samoan chiefs warred for supremacy from 1848 until U.S. agent Colonel A. B. Steinberger helped negotiate a peace in 1873. He helped draft a constitution in 1875 and, as premier, became virtual dictator until his arrest and deportation by the British in 1876. Warfare again broke out. Under the Treaty of Berlin of 1889, Germany, the United Kingdom, and the United States agreed to Samoa's independence and neutrality. However, after warfare between the Samoan king and chiefs resumed, the three powers in 1899 annulled the treaty. A new Treaty of Berlin, signed on 2 December 1899 and ratified on 16 February 1900, recognized a U.S. sphere of influence east of longitude 171 degrees West and a German sphere to the west, comprising Western Samoa.

New Zealand forces occupied Western Samoa without bloodshed on 29 August 1914, soon after the First World War began. In November 1918, the worldwide influenza epidemic reached Western Samoa. It was estimated that 22 percent of the population died from the epidemic. On 17 December 1920, Western Samoa became a League of Nations mandate of New Zealand, and in 1946 it became a United Nations mandate administered by New Zealand. Western Samoa became independent from New Zealand on 1 January 1962. Western Samoa changed its name to Samoa on 4 July 1997. The economy is based mainly on agriculture, with some light manufacturing, fishing, lumbering, and tourism. The government is democratic. The head of state is a traditional chief but political power lies with the prime minister.

Wars since 1500

Samoan Wars for Supremacy, 1848-1873; Samoan Civil War of 1898-1899; First World War, 1914-1918 (United Kingdom, British Empire, France, United States, Japan, and their allies against Germany and its allies).

Convertibility

German colonies in the Pacific:

The First World War began in Europe on 1 August 1914. By November 1914, all German colonies in the Pacific had been captured by opposing forces. In the meantime, communications with Germany, including financial transactions, were blocked.

The sterling area:

On 2 August 1914, soon after the First World War began, the United Kingdom issued a proclamation imposing a one-month moratorium of payment for bills of exchange accepted before 4 August; an act of 3 August 1914 gave legislative sanction to the proclamation. The moratorium was subsequently extended for a month and ended on 4 November 1914. Legally the pound sterling remained convertible into gold and could be exported, but the risk to shipping from German submarines made the cost of shipment prohibitive, so the United Kingdom was in effect off the gold standard. The British government refused to include private shipments of gold in its war-risk insurance scheme. After the war, the export of gold was prohibited from 1 April 1919 under regulations that were given statutory form in 1920. On 28 April 1925 the government announced that the act would not be renewed when it expired on 31 December 1925. On 13 May 1925 the United Kingdom resumed the gold standard.

The United Kingdom abandoned the gold standard on 21 September 1931. The currencies of British colonies were almost all linked to the pound sterling through currency boards; being on a sterling-exchange standard rather than a gold-exchange standard, they followed the pound sterling off gold. Over the next few years, some former British colonies (Australia, New Zealand, South Africa) and other countries that had important trade links with the United Kingdom switched from gold to the pound sterling as their official or actual anchor. The result was termed the sterling area. The United Kingdom imposed exchange controls on 4 September 1939, the day after entering the Second World War. Most countries that were not current or former British colonies soon left the sterling area. Among the remaining countries, both current- and capital-account transactions were free of restrictions within the sterling area, but were restricted in dealings with outside countries. After the Second World War, the United Kingdom returned to the gold standard under the Bretton Woods system. It removed exchange controls on 15 August 1947, but reimposed them on 20 August 1947 after suffering a large loss of foreign reserves. Sterling had a dual exchange rate from 1961 until the United Kingdom abolished exchange controls. The sterling area remained in existence because sterling was not fully convertible. It began to crumble after the United Kingdom again abandoned the gold standard on 23 June 1972. By January 1973 the sterling area had shrunk to the British Isles and a few small British colonies; even Hong Kong abandoned sterling as its anchor currency. The United Kingdom abolished exchange controls on 24 October 1979, ending the sterling area.

New Zealand:

On 5 August 1914, shortly after the First World War began, an amendment to the Banking Act empowered the Governor-General in Council (that is, the cabinet), to issue a proclamation declaring any banknotes to be forced tender. While any such proclamation was in effect, coined gold could not be exported without the consent of the minister of finance. From 5 August 1914-5 November 1919, it was also prohibited to export uncoined gold without his consent. Immediately after the amendment passed, the government issued a proclamation making bank notes forced tender from 6 August-6 September 1914. The government extended the proclamation from time to time (New Zealand official yearbook 1937: 572). New Zealand in effect resumed the gold standard when the United Kingdom resumed on 13 May 1925.

On 20 January 1933, the exchange rate was depreciated. Exporters received the new rate, which was more favorable to them, while exporters of capital continued to receive the old rate (New Zealand official yearbook 1937: 575). The dual rate ended on 1 August 1934. On 5 December 1938, New Zealand's government authorized the central bank not to convert notes into pounds sterling at the official exchange rate, thereby introducing exchange controls that became effective on 7 December 1938. In July 1939, the central bank introduced regulations that deferred remittances on all overseas funds except those for the national government and payment of foreign debt owed by local governments. (Local governments, as elsewhere in British colonies and former colonies, often issued securities in London.) Before July 1939, a system of permits for foreign exchange existed, but they did not limit the period during which remittances could be made. The Finance Emergency Regulations, April 1940, eliminated the free exchange market and forbade transactions at other than official rates. They were replaced by the Finance Emergency Regulations (No. 2), June 1940. Amendments introduced on 9 March 1950 greatly loosened controls as they applied to the sterling area.

Samoa alone:

Under Western Samoa, Currency and Exchange Control Ordinance 1961, the administration of exchange control was the responsibility of the Minister of Finance through 31 December 1975. Thereafter it became the responsibility of the Monetary Board of Western Samoa and later the Central Bank of Samoa.

Western Samoa, as it was called at the time, left the sterling area on 23 June 1972. Exchange controls that had originated during the period of the sterling area remained, in modified form. Western Samoa dismantled its foreign-exchange allocation system on 1 July 1984, although other exchange controls remained.

Other

Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): None.

Banking crises (data since 1970s mainly from Caprio and Klingebiel 1999 and Frydl 1999): None.

Frankel and Rose (1996) list of currency crashes: None.

No exchange rate data in Reinhart and Rogoff (2003).

References

Primary sources:

--Laws and decrees:

Germany. Overseas gazette. 1890-1921. Deutsches Kolonialblatt. Issued by Kolonial-Abtheilung des Auswärtigen Amts (1890-1907); Reichs-Kolonialamt (1907-1919); Reichskolonialministerium (1919-1920); Kolonialzentralverwaltung, Reichsministerium für Wiederaufbau (1920-1921). Berlin: Ernst Siegfried Mittler und Sohn.

Germany. 1892-1910. Die deutsche Kolonialgesetzgebung. Sammlung der auf die deutschen Schutzgebiete bezüüglichen Gesetze, Verordnungen, Erlasse, und internationale Vereinbarungen mit Anmerkungen und Sachregister. Edited by various persons. Berlin: D. Reimer, later Ernst Siegfried Mittler und Sohn, later Alfred Zimmermann. (The first volume was published in 1898 but covers the period starting in 1892.)

Samoa. Gazette. 1892-present. Samoa Royal Gazette (1892-1900?); Samoanisches Gouvenementsblatt (1900-1914); Western Samoa Gazette (1920-1997); Samoa Gazette (1997-present). In Samoan, there is O Le Savali (1905-present?).The unofficial Samoanische Zeitung (founded 1901) published government proclamations during the First World War. All published in Apia.

--Publications of monetary authorities:

Bank of Western Samoa. Annual report. 1960-1984. Annual Report for the Year Ended .... Apia: Bank of Western Samoa.

Central Bank of Samoa. Annual report. 1984-present. Annual Report. Apia: Central Bank of Samoa.

Monetary Board of Western Samoa. Annua report. 1975 and 1976-1983?. Annual Report. Apia: Monetary Board of Western Samoa.

Neu Guinea Compagnie. 1979. German New Guinea: The Annual Reports. Edited and translated by Peter Sack and Dymphna Clark. Canberra: Australian National University Press. (The name of this company was sometimes spelled with hyphens between the first two words or between all three words, and the last word was sometimes spelled as beginning with a K.)

--Web site of the current monetary authority (viewed January 2005):

<http://www.cbs.gov.ws>

--Other publications or Web sites:

New Zealand. Report on Western Samoa. Department of Island Territories. 1923/1924-1961? Territory of Western Samoa. Wellington: Government Printer. (The 1949 issue is entitled simply Western Samoa; also appeared as Report on the Administration of the Territory of Western Samoa for the Year Ended....)

New Zealand. External report on Western Samoa. 1920/1921-1960? Report of the Government of the Dominion of New Zealand on the Administration of the Mandated Territory of Western Samoa (1920/1921); Mandated Territory of Western Samoa (1921/1922); Department of External Afairs, Mandated Territory of Western Samoa (1923/1924-1939?); Report by the New Zealand Government to the Trusteeship Council of the United Nations on the Administration of Western Samoa for the Year Ending 31st March ... (1949 only?); Report by the New Zealand Government to the General Assembly of the United Nations on the Administration of Western Samoa for the Calendar Year ... (1951?-1960?). Geneva: League of Nations (1920/1921); Wellington: Prime Minister (1921/1922); Wellington: Government Printer (1923/1924-1960?).

Western Samoa. 1925. Handbook of Western Samoa. Wellington: W. A. G. Skinner, Government Printer. (I have not seen this.)

Main secondary sources:

Chappell, N. M. 1961. New Zealand Banker's Hundred: A History of the Bank of New Zealand, 1861-1961. Wellington: Bank of New Zealand.

Davidson, J[ames] W[ightman]. 1967. Samoa mo Samoa: The Emergence of the Independent State of Western Samoa. Melbourne: Oxford University Press.

Deeken, Matthias. 1913. Das Geldwesen der deutschen Kolonien. Münster in Westfalen, Germany: Druck der Westfälischen Vereinsdruckerei.

Griffiin, R[obert] H[enry]. 1987. Bank of New Zealand Banknotes 1861-1934: Produced to Celebrate the 125^th Anniversary of the Bank. Wellington: Bank of New Zealand. (I have not seen this.)

IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies.)

Monetary authorities: Samoa

Exchange rate arrangements: Samoa