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under consideration) its value seems to have settled in the neighbour- hood of 3-: thirdly, that the opinion of the experts probably was that, there being still a marked downward tendency in the silver market, it was hardly likely that the dollar would recover beyond this figure. ✅. Sterling salaries were adopted in 1904 on the basis of the 3/- dollar. It was optional for existing officers, but the general condition being decidedly unfavourable, not more than 3 or 4 officers accepted them. The dollar continued to fall, reaching the lowest point of 1/63 on 1st December, 1902. The lowest yearly average was reached in the years 1902 and 1903, when it was 1/8.
e.
Meanwhile it was inevitable that the price of commodities and the cost of living should rise. It is an undoubted fact that the rate of wages, rent, and of all household goods rose as the dollar fell, and were deter- mined on the basis of a 1/8 dollar. This rate has been practically maintained up to the present day.
Attached to the Memorial addressed to the Secretary of State by the Heads and Assistant Heads of Departments in (or about) 1898, will be found a comparative statement of the prices ruling for rents and commodities between that time and the time when the dollar was at 4/2. The experience of those who have long been resident in the Colony is that there has been a further rise in prices consequent on the continued fall of the dollar to 1/8.
It therefore appears that the conversion from silver to sterling on a 3/- dollar basis was made at a time when a 3/- dollar had become a thing of the past: when experience had shewn that a 1/8 dollar was possible and even probable, and when the price of commodities had adjusted itself to this low rate:-The sterling salaries therefore, as well as the adjustment of the silver salaries, are based on a value of the dollar. which has no longer any place in commercial transactions: and they have therefore no longer any recognised relation to the cost of living.
5. The Secretary of State in his despatch says that "a reduction in the dollar value, of imported articles must presumably be only a matter of time if exchange continues to rule high". We venture with great respect to point out that, although in the opinion of the experts it is probable that the dollar may rise to 2/6, there is no certainty of the continuance of this high rate. The price of silver is affected by so many considerations which it is im- possible to foresce, that no business transactions could be with safety based on the assump- tion of a continued high rate. In the meantime the present high prices of commodities must still prevail and the hardship from which officers are suffering will be continued indefinitely. Looking at the question from the point of view of the tradesman the presump- tion, we venture to think, cannot be supported. For in the first place no change could be expected in the price of goods until the stocks in hand, paid for when the dollar was low, has been exhausted. Secondly, the fluctuations in exchange have been so violent, the recent rise in the dollar has been so sudden, that there is no security against an equally sudden fall, and tradesmen would be bound, in order to protect themselves against a fall, to fix their prices for new goods on the low dollar basis. The uncertainty of com- mercial dealings, caused by the rapid fluctuations of the dollar, can best be tested by a simple illustration.
Case 1. If a tradesman order £100 worth of goods when the exchange is at 2/6,
and sends a draft with the order he will pay $800.
If he pays by Bill of Exchange drawn on him at sight and the dollar has meanwhile fallen to 2/-, he will pay $1,000.
Case 2. If for the same goods the rate is 2/6 at the date of payment he will pay $800. If he proposes to make $200 profit he will ultimately receive $1,000. But if before he sells the goods the rate has fallen to 2/-, if he maintains his prices, the $1,000 will only represent £100, and his intended profit will be lost.
Experience shows that although the dollar has risen more than 6d. in 18 months, the utmost concession that a few tradesmen have made is a reduction of 5% on their prices.