PUBLIC RECORD OFFICE
Reference :--
C.O. 882
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PUBLIC RECORD OFFICE, LONDON
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be said exactly to correspond. No system could be more convenient or perfect.
of
109. (S.) In order to maintain the currency a country always as perfect as possible, and to make the exchanges with other countries as easy as pos- sible, it is essential that the coin in circulation should be such as can at all times be most easily exported and imported as the state of the exchanger may render desirable. For this purpose an open Mint, where bullion can be coined, is almost neces- for the perfect working of the currency and the exchanges. But where that advantage cannot be had on the spot, then undoubtedly the loss will be less by having access to a near Mint than to a very distant one.
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110. (4.) There is a very powerful reason in favour of the present system, in the peculiarity of the trade of the island, to which I have already referred. Their average exports to Europe, nearly all to England, in the last five years; have amounted to 1,211,000l.; their average imports from Europe have been 586,0001.; thus leaving an average annual balance in their favour of 625,0001.
111. Their average exports to India have been 5,8601., their average imports from India 509,5602.; leaving a balance against them of 503,7001., besides the coin annually carried to India by the Coolies að part of their wages. In short, the whole of the produce of the island is shipped to England, while all the food and labour are imported from India.
112. In average years, the bills drawn against the yigar pay not only for the supplies from Europe, but bills on London being always in great demand in India, they are the best means of also paying for the rice from India.
113. The only occasions on which the coin of the island will be exported to an inconvenient extent, are when the crop falls, as in 1842–43, and when, accordingly, the bills drawn against it are not sufficient to cover the payments due to Europe and to India also. But as the crop itself goes to Europe, and generally into the hands of those who send out supplies to the island, the Euro- pean liabilities are first satisfied. The deficiency is felt chiefly in the transactions with India. At such times bills rise to a very high premium, and a draip of coin ensues. The dennd is chießy from India.
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No doubt that could be satisfied by sovereigns shipped to India or shipped to London, the bills drawn against the gold being remitted to India. But the expense would be greater, chiefly in the much longer time occupied in the transaction with England, which would be represented by the more disadvantageous rate at which the bill on Lon- don would be drawn or negotiated in India. To India the payment must be made, and as silver is there the standard of value, and rupees are a legal tender to any amount, and as 2 per cent, seignorage
is charged on the coinage of rupees, it is plain that the cheapest way in which the payment could be made to India would be in rupees. The ship- ment of British gold coins would be less profitable.
14. But the circulation must be again restored
as soon as a better crop turns the exchanges in favour of the island. This, undoubtedly, could be accomplished at less cost and in much less time, from the Mint in Madras, than from the Mint in London; and the bills drawn against the sugar, or against any credit which might be opened in London, for example, for an advance of capital by the corres- pondents of the planters to help them over a difficult period, would be as available to buy rupees in India as sovereigns in London. There can be no doubt, then, that the loss by an adverse exchange would be less with a Rupee circulation than with a Sterling circulation, and that the facilities of restoring the circulation would be greater from India than from England. The fact that the balance is due to India at such times, and the difference of the distance support this view.
116. (5.) The labourers being Indians who come for limited periods, are said to have a great predilection for rupees in preference to other coins, because they are familiar with them and understand them. But
I do not attach much importance to that fact, as I think they would soon learn to value British sovereigns as much, and British silver also, when they found that for each 20s, they could receive a sovereign. But they carry out of the island large sums every year, besides hoarding still larger mums, all of which coin must be replaced by importation from time to time. And it is certain, for the passa I have given, that this importation can be ejend more easily from India than from England.
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116. (6.) But lastly, the great advantages of the present system over a new one are, that it is the established currency of the island; that the people are accustomed to it and understand it; that it would be infinitely easier for the Government to conform to the established custom of the community, than for the community to conform to the plan of the Government, in itself an inferior one; that uniformity between the two can only be looked for at a very remote period in the one case, and immediately in the other; and lastly, that the one system would be certain to give universal satisfac- tion to all classes in the colony, official and unofficial, while the adoption of the other will be assented to only with the greatest reluctance, and will, what- ever may be its ultimate effects, entirely fail in the meantime to satisfy the inhabitants in their fair demand for a remedy to the anomalies and incon- veniencies to which they are at present exposed.
I have said nothing about the banks and a paper currency; the first thing to be settled is plainly the With regard to a paper question of the standard.
circulation, I will only at present say, that if it is determined to introduce a gold standard, then the notes should be in British money; but if, on the contrary, a silver standard is continued, then they should obviously be in rupees.
November 1851.
JAMES WILSON.
If the Silver standard is adopted, and the Rupee circulation, there would be no objection to allow British coins to circulate at their relative value to the rupee; that is, British silver at about 24. to the rupes, and British gold sovereigns at the rate of 10 rupees each, such being as nearly as possible the intrinsic relative value of each. Practically they would not circulate; but the permission, against which no reason on principle can be assigned, would facilitate the arrangement, and allow the British silver now in the island gradually to be absorbed, ciroulating in the meantime at its proper value.
J. W.