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PUBLK RECORD OFFICE
Reference —
C.O.882/12
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open to very strong objection. The case of the 1930 loan from the Improvement and Development Fund may be cited in illustration. By the terms of the Ordinance (No. 24 of 1930), under which it was made, every sugar manufacturer in the Colony became entitled on application to receive the rupee equivalent of £1 sterling for each ton of sugar produced by him from the 1930-31 crop. Thi- right was subject to the liability on the part of the manufacturer to pass on a proportionate part of the loan to the planters from whom the canes had been purchased. The whole amount of the loan was then made repayable by an export duty (at a rate not yet fixed) on the whole sugar exports of the Colony. The repayment being thus made to fall upon all sugar producers, it naturally followed that every producer demanded his share of the loan irrespective of his actual needs. Some frankly admitted that they did not stand in need of assistance, but claimed that as they were bound to the re- payment they had no option but to take the loan. It is difficult to deny the force of this argument, but, with the rate of the repay- ment duty not yet fixed, the eventual incidence of the repayment becomes a matter of increasing uncertainty. If, as is possible, a number of estates change hands before the duty is levied, the new owner will have to bear the liability to repay even although the money borrowed may not have been expended on the estate. In the meantime the assistance has been conferred upon the prosperous and needy alike and the general taxpayer of Mauritius has to meet the bill.
10. It is true that in the case of the further loan which we were asked to recommend it was proposed that the obligation to repay should be made personal to the borrower, and that the loan should be subject to the condition that the money was used to pay off existing debt charges. This undoubtedly would be a preferable method on which to proceed if new government loans were to be made, but we are unable to agree that a loan policy would be justi- fiable even on this basis. We see no reason to think that the result would be any different from that of the previous loans, which has been merely to enable the heavily mortgaged estates to prolong their existence on the brink of insolvency. The fundamental fact which such estates must sooner or later be compelled to face is that they are carrying too heavy a load of capital and that, even with reduced rates of interest, the load will still be too heavy. With prices at their present level no Mauritian sugar estate can reasonably expect to bring a profit to its owners after it has already paid a profit in the shape of interest even at 5 or 6 per cent. on the whole or on the greater part of its current expenditure on labour, material, and other means of production. What is required is not further loans but a capital reconstruction of the embarrassed estates which will effect an equitable distribution of the loss among the various interests concerned. We see no ground either. of equity
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or of common sense for affording State assistance to enable the estates to continue to sustain a burden of debt charges which it is So long as those charges beyond their own capacity to bear. remain in their present disproportionate extent any assistance in the way of government loans enures to the benefit of the mortgagee rather than of the planter. The effective remedy for the industry is not the temporary palliative of further credit, but a reduction of the excessive load of debt, and this will come through the operation of ordinary economic laws when the creditors are brought to recog- nize that government funds will no longer be made available as a Source to which they can look for recovery of their money. Whether the excessive debt charges derive their origin from sales faisance of the land itself at inflated purchase prices, or from valoir advances made to avert immediate insolvency, they are not factor which enters into the normal cost of the cultivation and manufacture of sugar. They are the personal concern of indi- viduals, and no public or government issue is involved in the question of their repayment.
11. Although the number of Mauritian sugar estates which suc- reed, even in the existing adverse circumstances, in paying their way, or at least in avoiding serious loss, would undoubtedly be mcreased if the debt-burdened estates, which while yielding no profit to their owners, contrive to pay large sums in mortgage interest, were placed on a sounder commercial footing, there would still remain a certain number, amounting perhaps to a considerable minority of the whole, which cannot hope to make both ends meet at the present point of export prices. As it is unlikely that the near future will see any appreciable further decrease in the cost of production of Mauritian sugar, the greater part of the recent decrease having been effected at the expense of wages, which have now been driven down to an irreducible minimum, it would appear that the only means whereby such estates can again be brought permanently within the margin of profitable cultivation is an in- crease in the export price of sugar, whether such increase is part of a general upward movement of world prices or is brought about by an increased preference duty at the expense of the British con- sumer. A gradual improvement in world prices may reasonably be expected in the course of the next few years as a result of the international agreement known as the Chadbourne Plan, which was concluded at The Hague on the 9th May, 1931, and provides for a mutual restriction of output on the part of the largest sugar- exporting countries of the world, viz., Cuba, Java, Germany, Czechoslovakia, Poland, Hungary, and Belgium. In the preamble to this agreement it is stated that :-
"the parties are acting in the interest of the sugar indus- tries of their respective countries, which are the principal ex- porting countries of the world. As a result of the great in- crease of production and the accumulation of large surplus
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