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6. Another scheme would be to fix a range within which sterling salaries and exchange compensation would be paid at the average rate of exchange of the preceding month and beyond which they would be paid at the rate of the limits of the range. Thus if the range was 1/8 to 2/- and the dollar was above 2/- they would be paid at 2/- and if the dollar was below 1/8 at 1/8. The objection to this system is that if the range is small, as it would be with the above limits, the scheme would practically be the same as converting all sterling salaries into dollar salaries for local payments and if large say 1/6 to 2/2 would not remove the present difficulties.
Taking the same concrete instance as before the salary in dollars would be liable to Huetuate from $5,000 to $6,000 or 1th of its lowest amount with the smaller range suggested or from $4,616 to $6,660 or 4th of its lowest amount with the wider range.
7. A third scheme would be to fix upon some rate and if the dollar goes above it to pay the dollar equivalent at that rate and if it goes below it to pay at the average rate of the preceding month. If for instance a 2- rate is fixed upon then when the dollar is above 2 officers drawing sterling salaries would receive 10 dollars to the £ and if below 2-some greater number according to the exchange of the previous month. 2/- would be an arbitary but convenient rate to fix. It is considerably higher than the rate current at the time of the fixing of the sterling salaries by Mr. CHAMBERLAIN'S despatch of the 13th June, 1906, but since that date officers have on the whole gained by the low exchange and they would again profit if the gold value of silver fell, while they would not lose if it rose. The practical effect of this scheme, if carried out, would be to convert sterling salaries into dollar salaries for local payments if the dollar value rose above 2/-.
The disadvantage of this scheme is the loss that would fall on the Treasury with a very low dollar; but a low dollar is generally good for trade and consequently when the dollar falls the revenue tends to rise and to be in a position to meet the additional expenditure dne to increase in the number of dollars paid on account of sterling salaries and home payments.
Taking the same concrete instance as before the salary in dollars would be liable to fluctuate from $5,000 to $6,666 or one third of its lower amount.
S. A fourth scheme would be to revert to dollar salaries entirely, fixing a rate for conver- sion of sterling with dollar salaries. Such a rate might for the reasons already given be 2/-. The advantage of this scheme would be to do away with all fluctuations in the local values of salaries. The objection to this scheme would be that if the dollar fell to say 1/6 or less the whole question first of exchange compensation and then of sterling salaries would come up de noro.
9. Other schemes will doubtless suggest themselves to anyone considering this intricate subject, but they will probably only be variations of those I have set forth as possible means of solving this problem. On the whole I am now disposed to consider the third scheme by which, if the dollar goes above 2-, payments will be made at that rate and if it goes below at the average rate of the preceding month is the one which offers the most permanent and equitable solution.
10. Your Lordship's telegram of the 19th May debars me from making any recom- mendation in this matter but I have nevertheless thought it advisable to write fully with regard to it, and I shall be greatly obliged if I could be furnished with an expression of Your Lordship's views that I can put before the Legislative Council of the Colony. I would add that the subject was brought before the meeting of the Executive Council on the 10th of May last, when Sir PAUL CHATER, the Senior Unofficial Member, asked me to appoint a Committee to enquire into it; a course which did not appear to me to be advisable. To a question as to whether the Government would consider the advisability of granting relief to those Civil Servants who were drawing their pay on a sterling basis, put by Mr. H. E. POLLOCK, K.C., representative of the rate-payers in the Legislative Council, at their meeting