PUBLIC RECORD OFFICE
Reference :--
C.O. 882
6
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE COPYRIGHT PHOTOGRAPH-NOT TO BE REPRODUCED PHOTOGRAPHIC-
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and continuing withdrawals from the bank. Arrangements had to be sought for financing a number of the estates operated or owned by the firm last mentioned, and some of the properties were forced into sequestration. On the 1st current I received confidential information that on several of the estates, especially in the district of Flacq, no provision had been made for issuing rations to the labourers under indenture, and that a demand on my Government for food was anticipated. I took steps to warn the Protector of Iminigrants of this possibility; and on the 2nd I received another visit from Mr Leclézio, when he informed me that the directors of the bank would appeal for assistance on the following (Monday) morning, as a run had again taken place, leaving the cash in hand at about Rs. 380,000 Mr. Leclézio added that he was authorized to state that if the panic continued and assistance was not forthcoming, the bank would be compelled to close its doors. I told him that whatever happened arrangements should be made for feeding the labourers, and I am glad to say that, so far, there have been no further complaints from the estates in that connexion. After my interview with Mr. Leclézió I addressed your Lordship by telegram on the same day; and on the 3rd current a delegation of the Board, consisting of the President, Mr. H. G. Ducray, Mr. Læclézio, and Mr. G. Ritter, waited on me and formally asked for an immediate loan of one million rupees. The position, as stated by them, convinced me that unless the run was stayed the bank would have to suspend payment at an early hour on the following morning, and that a serious crisis, affecting the whole of the community and leading to a general catastrophe, would ensue.
6. After full consideration I thought it to be my duty to promise that the assistance sought would be rendered, and that at the opening of the bank on the morning of the 4th, currency notes to the amount mentioned would be issued as an advance on the security of Dock warrants to be transferred to my Government. The effect of the promise was made known on the afternoon of the 3rd, and the panic was stayed.
7. On the morning of the 4th I sent for the President of the bank and for Mr. Leclézio, and communicated to them the detailed terms under which the advance would be made, and I secured from the former a letter accepting those terms for, and in the name of, the Corporation. A copy of that document has already been transmitted to your Lordship, and it would be found embodied in the Deed of Agree- ment enclosed herein. The Dook warrants have all been formally transferred, and are held by the Commissioners of Currency against the issue of the notes and as security for repayment of the loan.
8. On the 5th reported to your Lordship by telegraph† the course which had been followed, and I referred to the necessity for passing a measure containing a clause somewhat similar to Article 2 of Ordinance No. 1 of 1898, and validating the action already taken. For that purpose the Legislature was summoned to meet in special session on the 7th current.
9. I append copies of the record of the remarkst which I addressed to the Council at its opening and of the observations of Mr. Leclézio, who seconded the The measure passed motion for the first and subsequent readings of the Bill. through all its stages without further comment or dissent, and I assented to it on the same day.
10. The Ordinance will be submitted to your Lordship under cover of a eparate despatch, § for the signification of His Majesty's pleasure; a copy of it is, however, enclosed herein for facility of reference.
11. I am informed that confidence has been generally restored by the measures taken, and I have no reason to doubt the accuracy of such information. I have, moreover, received the assurance of the directors of the bank that it is their desire, and that it will continue to be their endeavour, to avoid any application for further assistance. I trust that no such application will be made.
12. That the position was critical I felt convinced, and the necessity for excep- tional measures had, in my opinion, clearly arisen, if a general catastrophe conse- quent on the suspension of the bank and the inevitable and disastrous effect upon the Government and upon the community of the sudden and wholesale abandonment of estates, which must have followed such suspension, were to be prevented. In these circumstances, therefore, I oonceived it to be my duty to afford assistance to the bank at the moment and in the manner herein reported, and I trust that the result will justify the action taken.
• See No. 32. ↑ No. 28.
‡ Not printed.
§ 10017: not printed. | Not printed.
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13. It is impossible to state that the community has been extricated as yet from all its financial difficulties, or to assume that for some time to come there can The be any general relief from the financial depression under which it is suffering. strictest economy in the public expenditure of the Colony is more than ever requisite, whilst to many of those who are engaged in its commerce and in its staple industry there have been brought home lessons of necessity for restricting their ventures and for limiting their obligations and undertakings to the means at their disposal. But there is, on the other hand, promise of a more than usually abundant crop during the coming season, and in the absence of any serious atmospheric disturb ance or consequent disaster the realisation of such promise will tend to the re-estab- lishment of commercial stability and to the restoration of normal conditions in the earnings of the people and in their ability to contribute to the public revenue.
I have, &c.,
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Enclosure 6 in No. 39.
COUNCIL OF GOVERNMENT.
EXTRACT FROM DEBATES.
CAVENDISH BOYLE.
Meeting of Friday, 7th February, 1908.
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Motion of the Procureur-General that the Standing Orders be suspended in order that an Ordinance "To amend Ordinance No. 28 of 1876 (Paper Currency)' may be introduced and passed through all its stages.
Mr. LECLÉZIO: I shall second the motion of my honourable friend the Procureur- General. Before he proceeds with the motion I beg leave to tender to Your Excellency, in the name of the Council and in the name of the whole community, our heartfelt thanks for the prompt action which you have atken in order to bring about a relief to the principal financial institution of the Colony. You have grasped the situation so admirably that you have been able to secure for this Colony what I shall call a very great boon. There is no discussion to be had on this question. It is a well known fact that for the last two months the Commercial Bank had been labouring under very great difficulties, difficulties which were brought about not by the administration of that institution but by successive panics that were caused by suspensions of payment on the part of two of the principal brokers of the Colony. The first one occurred in the month of December. It was thought then that the bank could face easily any loss which might proceed from that suspension of payment. I shall not say that a run was made on the bank, but drawings on the bank were accentuated to a pretty large extent. After a few days the state of matters appeared to cease-at all events there was a lull. The panic began again when it was reported that a number of Chinese merchants had failed. Strange to say, the Commercial Bank was not concerned in the least with the affairs of these Chinese merchants nor of any Chinese merchants. It is known, it should be known at all events, that the Commercial Bank has no direct dealings with Chinese However, there was again another panic; and after the merchants of this Colony. second broker had suspended his payments--although if there is a loss by that suspen- sion of payment the loss would be a mere trifle-but there was another panic, and it increased day by day to such an extent that at a given moment the directors of the bank thought it their duty to warn you, Sir, of what was going on so that you might be in a situation, if the emergency occurred, to come to the assistance of the bank. That you did, and I know all the trouble that you have taken. I know how clearly you put the position before the Secretary of State for the Colonies When at the last and I know what success attended your intelligent efforts.
moment, on Monday last, a delegation of the Commercial Bank came to you, you were ready to receive them and you then gave them the assurance that by the very next day one million of rupees would be paid by the Government into the Commercial Bank. When that piece of news was spread in the Colony it procured an immense relief; everybody from that moment knew that whatever took place the Government was at the back of the Commercial Bank. It would have been indeed a most awful catastrophe if the Commercial Bank had not found with you that assistance which it met with at your hands. The Commercial Bank is the heart of the Colony, and if