PUBLIC RECORD OFFICE
Reference :-
C.O. 882
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-
PUBLIC RECORD OFFICE, LONDON
COPYRIGHT PHOTOGRAPH-NOT TO
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6. The first of these conditions may be regarded as being fulfilled in the present instance. The case as presented to me is largely based on the argument that, as you expressed it in the Council of Government, the sugar industry at the present moment is the Colony," and I am not concerned to dispute the accuracy of this view.
7. With regard to the remaining conditions, I am compelled to point out that my information is extremely defective. In the first place, I have found it impossible to arrive at a clear idea of the actual position of the sugar industry. It is alleged that the existing depression is due partly to drought and partly to the low price of sugar. In your despatch of the 12th November you state that "this shortage in the crop is due entirely to the unprecedented drought under which the island has suffered for many months past, which, if further prolonged, may also affect the crop of 1908"; but I have learned from unofficial sources that, a few days after that despatch was written, the drought was succeeded by copious rains, and that the price of sugar has since risen notably. There is therefore ground for hoping that you would now regard the situation as less alarming that at the time of writing your despatch.
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8. In this connexion I may observe that it has been my duty to study the circumstances in which similar loans have been authorised on two previous occasions, in 1898 and 1902. On each occasion the sanction of the Secretary of State was given as the result of telegraphic communications from the Governor of an extremely alarmist nature. Thus in 1898 your predecessor telegraphed that the Executive Council were firmly convinced that the Colony was at the last extremity short of actual shipwreck, and considered the proposed measure absolutely necessary; and he added that the loan could not be reduced to a sum less than £200,000. A loan of this amount was accordingly sanctioned; but I gather from the correspondence that less than half that sum was advanced, that only seven applicants four com- panies and three planters-received advances, and that three of the companies received Rs. 1,425,000 out of the total, Rs. 1,491,000, advanced. The actual assist- ance to individual planters is represented by the three sums of Rs. 13,206, Rs. 10,000, and Rs. 3,000 less than £1,750 in all.
9. You will, I think, agree with me that this comparison is instructive, and that in view of it the Secretary of State would be compelled to enquire narrowly into the position before taking the responsibility of sanctioning such a loan.
10. For present purposes it is unnecessary-and in any case it would be undesirable in a public despatch-to discuss the question of the normal position of the sugar industry; but it appears to me that the speeches of the mover and seconder of the resolution in the Council of Government prove too much. They argued that the operations of the industry in the last year are likely to result in a net deficiency, on working expenses alone, of Rs. 9,000,000; the proposed loan of Rs. 3,000,000 was intended to enable planters to carry on their operations till the end of the hurricane season, when they would endeavour to obtain once more from the ordinary sources the large sums of money which they are accustomed to borrow, at high rates of interest, for the working of the year's crop. Their position would thus be sensibly worse; they would have increased their indebtedness and have incurred prior charges on the security which they have to offer to their creditors; and if the circumstances were as bad as they have been painted, I cannot but feel that the effect of the loan would merely be to postpone for a few months the financial crisis which would then arise in an even worse form.
11. You will also, I am sure, not fail to see the bearing of the fourth condi- tion which I have mentioned above on the consideration of the question. I am without official information as to the extent to which individual planters have been affected, but from the correspondence as a whole I gather that the effect has been very unequal. I am under the impression that some at least (though I have no means of knowing how many) have been able to preserve their business in a sound condition, in spite of recent adverse circumstances, and would be under no necessity for applying for assistance from public funds. I apprehend that these results have been attained by the employment of sufficient working capital, by averaging profits over a series of years, and by careful and thrifty administration. If this is so, and if there is any appreciable proportion of planters in this fortunate position, I feel that there would be much difficulty in justifying the raising of a loan, at the risk of the more energetic and successful planters, to finance the business of their less successful competitors.
12. I should have had more definite information on this head if you had seen
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your way to furnish me with the particulars, as asked for in my telegram of the 2nd November,* respecting the financial position of those whom it was proposed to assist. You replied, however, that it would not be practicable to obtain such information until power had been created to entertain such applications. I, of course, accept your assurance, but I must express my surprise that there should have been any difficulty in the matter. Applicants would in any case have had to make a full disclosure of their position to the Colonial Government before they received advances, and it might reasonably have been expected that if they were so urgently in need of assistance they would not be unwilling to disclose the same facts confidentially to the Governor in order that he might be in a position accurately to inform the Secretary of State as to the extent of the assistance which he con sidered necessary. The debate itself showed that even in the Colony the views held on this matter were somewhat vague. The motion before the Council was that a sum of £400,000 should be borrowed repayable in ten equal instalments. In rising to propose his resolution the mover altered the amount to a sum of £250,000, repay- able in five instalments, and at the end of the discussion he accepted without comment a suggestion that the sum be reduced to £200,000. Neither of the two members who alone took part in the debate offered any explanation to show how these figures were arrived at.
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13. There are two other points which I feel constrained to notice, though they are not of the practical importance which they would have assumed if I had otherwise been able to sanction your proposals.
14. The resolution adopted by the votes of the Unofficial Members recom- mended that the Government should make these advances for the purpose of assist- ing owners and others "to carry on the cultivation of, and for other purposes connected with, their estates." I have no doubt that the words which I have under- lined were inserted after due consideration, but I am unaware of the significance to be attached to them, and I should have required full explanations before I could have agreed to the insertion of such a provision in the Ordinance.
15. The resolution further recommended that advances should be made to owners of sugar estates and "Bailleurs de fonds." I am aware that this course was followed in 1902, but it is not one which I could have sanctioned. If it were right for the Government to advance money to individuals, such advances should be made direct, and I should have regarded it as altogether inadmissible that the Govern- ment should provide financial institutions or agents with funds in order that they might re-lend such funds at their own risk and profit to persons requiring
assistance.
16. If I have succeeded in making clear to you the views which I hold on the proposal submitted to me, you will realise that, the several difficulties and objections that I have pointed out are cumulative, and that their effect has been to prevent me from giving my approval to your recommendation. I have not arrived at this conclusion without due consideration and an earnest desire to meet, if possible, the wish expressed by the unanimous voice of the Unofficial Members as well as by various public bodies, and so strongly supported by yourself. I would ask the members of the Council of Government and the community generally to believe that I unreservedly sympathise with them in the difficult position that has been created for the planters by circumstances beyond their control, and it would have afforded me the greatest satisfaction if I could, consistently with my duty, have assisted them in the manner which they suggest. For the reasons which I have indicated above, I am not without hope that the stress of the situation may shortly be relieved, and that the planters (or at any rate the great majority of them) may be able by their own efforts to extricate themselves from their temporary embarrassments. If, as I earnestly trust, this result can be attained, the position of the Colony will be materially strengthened by the fact that it has abstained from raising the sug gested loan, and it will be in a much better position to approach the solution of other pressing questions which may make a heavy demand upon its financial credit and resources.
I have, &c..
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