PUBLIC RECORD OFFICE
Reference :-
TLC.O. 882
10
24 June 1900
MAURITIUS ROYAL COMMISSION, 1900
Bir CAVENDISH BOYLE, KCM.O
httle lewe that ath-There, what I was trying to make clear comes in, because a good deal of this interest comes back
Box. From the loans to planters -From the loans planters It is not so great as it was, but I think the Outstanding capital is 188,0001. now, of the 600,000. which you will see there in Item 11
1509. That leads me naturally to ask you whether you consider that the loan has been and still is a good investment for the Government-that money raised at a low rate of interest and lent to the planters at a high
Has that been a good investment! rate f interest
It should have been a good investment.
10 H. it not been so -It has been a fair in- stmeal. It should have been so good an investment that at the end of the period for which the loan was raised the Government should have been in pocket by What happened was that at least half the amount. 400,INNI or thereabouts was lent to planters and other sufferers by the cyclone of 1892; 200,000l. was taken by the Government for certain works of restoration rendered necessary in consequence of the hurricane, and certain other works of utility then deemed to be necessary. The course which should have been adopted would have been to have provided sinking fund and interval out of revenue for the whole of that amount, but in place of that there was not a sufficiency set asile for reducing the 200,000., and at the end of the period, which is rapidly approaching, the interest obtained from the borrowers, namely the planters, will cease, and 3 per cent., plus sinking fund, will have to For all the be found on the whole of the 600,000L.
repayments which have been made on account of the advances to the planters, have not gone to reduce the capital expenditure; they have gone partly to swell the sinking fund and the profit has gone into revenue, so that the Colony, at the end of a certain period will find itself in the position of having to pay the whole However, I hope now that a service of the loan. sufficient sum of money is set aside annually, so that we shall not have to find more than is necessary for the service of the loan for the remainder of the years, but at the same time that necessity would not have arisen nt all if in the earlier years of the loan a sufficient sun of money had been put aside for the reduction of the amount borrowed for the Government, as distinguished from that borrowed for the planters. You asked me just now whether I regarded Rs. 1,500,000—the possible amount which we might have to pay annually were the public indebtedness increased a too large a burden. I do not think, if you look at the indebtedness of other Colonies, although it seems a large eum compared with Rs. 9,700,000, the gross revenue, that you will find that the whole indebtedness of Mauritius, namely 1,307,000, I very much out of proportion.
1511. I will only ask you one other question in that regard, and that is, do you consider the security for loans to planters is good and adequate P-I think so, quite. There has never been a failure, and I do not see why there should be. Only 188,0001. remains out. standing-I am not taking into consideration the Tramway Loan, which will be shortly repaid, and I think that there is every reason to suppose that the balance of the hurricane loan will so be repaid as it becomes due.
1512. Now I should like to ank some questions about the banka. There are two banks here, are there not -Yes, there is the Commercial Bank and the Bank of Mauritius
1513. Are they satisfactory institutions? Will you take the Bank of Mauritius first P-I think the Bank of Mauritius imtisfactory institution na far no its stability goes-I presume you mean that.
1514. Do you happen to know what the capital in ? -It is small. It is 125,5501.
1515. You say that is satisfactory ---As far as its stability goes.
1616. What does it do for the place ?-It lends money; it advances money on approved securities. I believe it does a certain amount of commercial bill business, and it acts as an ordinary Colonial Bank
would not.
[Continued
1517. In making advances have you any knowledge as to whether it charges fair rates of interest or not? -I think it charges what is the recognised rate here.
1518. What can you say, speaking generally, is the rate?-1 should say there is nothing under 10 per cont. I do not think they will look at anything under 10 per cent.
1519. If a depositor was to overdraw his account. what would they charge him?-I believe that over- drafts of that description are unheard of in the Bunk of Mauritius, and I am not sure that they are heard of in the other institution. I believe a note of hand is always given, and that has to be endorsed by a second party
I do not believe an overdraft is ever allowed Of course an overdraft would be, as a matter of course. allowed with security.
1520. I meant just in the ordinary way ?-Yes, in the ordinary way I believe that that is not done, and I should my that if that were done at least 10 per cent.. or probably more, would be charged, I believe an ordinary charge for an ordinary commercial bill is 10 per cent., and it goes beyond that, because there are cases in which 24 per cent. brokerage is added, and sometimes there would be further charges; there would be cases in which 17 or 18 per cent, would be charged.
1521. Can you give us any idea of what extravagant usurers would charge P-1 am sorry to say that cases have come to my notice of impecunious civil servanta having recourse to extravagant usurers, and in some cases the rate of interest has reached 15 or even 20 per cent. per month.
The Bank of 1522. That is 180 or 240 per cent. Mauritius, 1 imagine, is governed from England?— Chiefly there is a London Board and a Local Board.
1523. In the Local Board composed of Mauritius people F-Yes.
1524. Then Mauritius people are interested in the bank -Oh, yes.
1525. Shareholdere P-Yee.
1526. Have you any idea what is the dividend paid on the shares of that bank P-I think the last dividend they paid was 6 per cent. I can check that in the Report. They furnish me with their Report.
1527. And you say that as regards stability it is good I have never heard any question as to ita stability. But I think during the crisis of last year that it found itself in a position to act carefully in its business, and I have very little doubt that if the sister bank had gone, it would have gone very hard with the Mauritius Bark.
1528. Do you know what other bank backs it, if any -In London!
1529. Yes! - They correspond with Barclay, Bevan's.
1530. Has it got any bank in India? The Chartered Bank.
1531. Those are two very sound institutions cer. tainly P-I think it is an institution run on sound business principles, and it is well conducted in every
Willy
1532. Does the Government deal with it P-Con- currently with the other bank.
1533. You divide your custom between them ?—A■ nearly as possible.
1534. Now with regard to the other bank?—The Commercial Bank has a capital of Rs. 2,000,000. It adopts a very much more forward policy with regard to its local dealings; it lends freely.
1835. It is mainly a lending bank then ?—I should It does a certain amount of business with say so. commercial bills, of course.
1536. It is a local bank P-It is a local bank. 1537. Formed with local capital P-Formed with local capital.
1588. And with local management ?—Yes. 1539. And local direction ?—Yen.
1540. Have you any idea what rates are charged by that bank!--I should say the same as I have given. Öf course it is impossible to say in some cases.
1841. Have you any reason to be dissatisfied with it p-On two occasions it has had to come to the Government for assistance, once during my time and once previously. It was so low in March, 1908, that ■
21 June 1909
MINUTES OF EVIDENCE.
Sir CAVENDISH BOYLE, K.C.MG.
deputation of the directors came to me after having given me warning previously that there was danger. and stated that unless a certain amount of money was places at their disposal within 24 hours they would have shut their doors. I am speaking froin imemory, but they said they had on that day less than Rs. 300,000 in their offers. I thin eventually it turned out to be considerably less than that, and there had been a run n the bank there was a panic and that run was con- fimul After mature consideration I helped them to the extent of Rs. 1,000,000, by a process which doubt- less you gentlemen are aware of. That amount of money was repaid before the end of May in the same year, and, by the direction of the Secretary of State, was charged them for the 10 per cent. interest accommodation,
1542. That is to say, the ordinary rate here?—The I ventured to represent that the rate Ordinary rate. <hould not be so high, because I wished very much to h, that the local Government, at any rate, were opposed to such a high rate of interest; but, knyhow, the money has been paid. We are now informed that they are in a very much more solvent position, and they have a comparatively large sum available for advances, which is not fully applied for.
1543. Has it come to your knowledge why, in a pliwe where we are told by such witnesses as we have heard already the crying want of the place is money. they do not apply for it-I have been greatly astonished at the result of the last nine months, and it is a wonder to me that so much money is available, but both banks inform me that they have more money than they know what to do with. I think the cause of this is that the borrower found out that he must draw in his horns; that he must economise in every possible way. Then there came a very much better crop than was anticipated with very fair prices, and I think that the extravagant man has learned a lesson; 1 am sure he has. I can see that in the results in the revenue, the railways and elsewhere. The man who formerly travelled first class invariably travels third now he reduces his expenditure in every possible
Whether that will last or not I do not know.. He did not want half as much money during this entre-coupe as he wanted on previous occasions; there was no climatic disturbance of any sort or kind, and he found that he could arrange for his entre-coupe business very much more easily than he had done in previous years. The result is that there is a large sum of money in the banks. Where that money came from in the case of the Commercial Bank, it is im possible for me to say, but there is no doubt that it is there, and I have no doubt also that the borrower has learned that if he can do without borrowing money at 10 per cent. he is strengthening his position.
way.
1544. I was going to ask you whether it was possible that at last the worm had turned, and the necessitous people had determined that they would not borrow money at that rate of interest P-I think that may be so. Further than that, during the panic. both banks refused largely the advances which had been made before as a matter of course, and I think if a man was affected by that refusal he said, Well, I will see if I can do without it in future. I think the matter of pride has affected him and the matter of economy, too.
1545. You told us that there was a run on the Commercial Bank. Was there any evidence of that ? -Qh, yes, I checked it very carefully, and there was no doubt about it. Deposits were largely withdrawn. In fact the accounts na between the two banks day by day were put before me, and there was no doubt that considerable amount of money was withdrawn, and that was going on, and had the panic continued; of course, with the remaining balance every depositor with the Commercial Bank would have lost.
1548. I mean was there the nsual evidence of a run: was the street crammed, and were people clamouring at the doors of the bank ?—That I did not see, but I think there was every reason to suppose that there was I do not think the anxious depositor would go to the extent of going himself. Probably he would
מטר .
u 27001, &c.
[Continued.
17
send somebody and withdraw his money, and he did it in that way.
1547. Then there is the Crédit Foncier; what do they do P-I suppose they were started originally, us far as I can make ont, to make agricultural advances I do not think they were estate owners originally: I think they have now become estate owners, and. 1 think. if they do anything at all, their business is confined to looking after those estates that practically belong to them; that is to say, that the money they have advanced not having been repaid, they have becoine practically owners of the estates to which they have advanced the money, and the estates are called Crédit Foncier estates.
1548. I should not have left the matter of the other bank for a moment. You told us that on two occasions they had come to the Government. Is there any security that that will not happen again P-I should say that there was no security that they will not come, but I should say that there is every security that they would not get anything.
1549. I notice in a despatch of yours that you said that it would be necessary to have some kind of better supervision ----I think that was if they came for more money. At the time of writing that I was in great anxiety that they were going to sak for another
similar amount.
1550. But as things stand at present there is no need to do anything-I spoke to the Secretary of State personally on this subject before you came, and I said that I thought any public examination of the affairs of the Bank, such as an enquiry on your part, would not have a good effect; that power existed under the Charter for an examination wore it necessary. and that I did not think it was quite right, and further than that I thought it was not equitable that it should take place in this form.
1551. That is why the object of my questions is nothing to do with that; it is only as to the position of the Bank as it stands now. That is all P-OÏ course one can never tell what may happen, but at the same time I think they have had such a lesson, both from the action of the public and from what was said with regard to their borrowing from Government, that generally they will be very much more careful in their future negotiations and future actions; and I think it is being run now on very much sounder principles than it used to be I hope so.
1552. I think you will understand my question better when I say that I am asking these questions with reference to banks mainly with the object of asking you, in a moment, your opinion of an Agricul tural Bank P-Quite so.
1553. And it is necessary to know, as there is a certain number of people here who seem to think that an Agricultural Bank is advisable, if the present banking facilities are not sufficient for the place, whether that might be a good reason. That is why! have been asking those questions. With regard to the Crédit Foncier, there is nothing really to be said?- They are not an active factor in the public financial situation; they are employed in looking after their own affairs, and I should say that gave them fall occupation.
1554. They are mainly catate owners?-They have become so.
•
1555. And they advance money also P-I do not think they advance money outside the estatec in which they are interested.
15-56. Is that a local institution P-Purely, with a London Board and London shareholders and Parisian shareholders too.
1557. (Mr. Woodcock.) In it a registered company This book does not may, in London P-I think so. however
1558. (Chairman.) They do not affect the public in fact !--No, I fancy that it formerly had a quotation on the Stock Exchange.
1559. I asked you what you thought had been the last dividend of the Bank of Mauritius and you told us. Can you tell us at all what have been the dividends paid by the Commercial Bank P-I think the last
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