PUBLIC RECORD UPFILE | Reference :-
C.O.885
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-
19 PUBLIC RECORD OFFICE, LONDON
E 2
34
с
22 Jour 1908)
f
CROWN AGENTS ENQUIRY COMMITTEE:
Mr. H. W. BADOCK.
692. There was at one time a different system of recruiting people more or less anyhow-Yes, under the old East, India Company every man was first temporarily employed as a hired writer, and then he was ultimately established, if approved; none are left of the old East India Company's servants, but for many years after 1860 we had a small staff of hired writers. I think we have only two of these left now, and they will be replaced by second-class clerks.
693. What is your view as to the best method? Do you approve of the present plan-You are speaking of open competition?
694. No, I mean do you think it is better for a staff like yours to be recruited strictly by reference to the Civil Service Commissioners and by competitive examination, or would you prefer, supposing you were organising a fresh department, to have a more hap- hazard method such as prevailed_before?—Well, I should certainly say that on the whole the rerniting from the Civil Service Commissioners is the best. I perhaps may have had unusual opportunities of judg- Ping, because the old East India Company's servants were nominated, and for the first 20 years I was in the office a very large proportion of the staff consisted of men originally nominated. Of course, now those men have all disappeared, but I should say, compar ing the two sets (1 am not speaking now of qualifica- tions for any one particular post), that the average qualifications of the men sent to us by the Civil Ser- vice Commission are certainly higher than the average that prevailed before.
695. As to their tenure: of course that is the same as in the rest of the Civil Service?--Yes. I may say with regard to all our arrangements that we follow as closely as possible Treasury practice. Sir Arthur Godley, the Permanent Under-Secretary of State, was oner à Treasury officer, and from the first we have as closely as possible fallowed the Treasury practice.
696. Des the same thing apply to rates of pension ? --Y.
107. (Sir Francis Moratt,) You have no professional officers in your department? I mean men appointed for special duties like engineers ?-Not in my depart
rent.
098. So that the whole of your staff falls under the ordinary Civil Service examination ?—The whole.
699). (('hairman.) Now with regard to the organisa- tion, how do you divide up your work: how many
·livisions have you in your office?--I have four main hvision and you will find if you will turn to the paper that is underneath the one I have just handed you, that, whereas the top paper gives you the scale and the description of the general establishment. in the lower paper you will find these same figures arranged in four main divisions. The last is the one you would naturally turn to first-the accounts and The estimates and loans That is one large division. Then the examination of stores and miscellaneous claims is another; the pay and pension division is an- other, and the railway audit and railway work is the fourth. I have a large amount of detail here I can give you as to the work of each, because I have a large
tablishment, but those are the main divisions.
700. What is your method of issuing loans? That is a thing you often do?—Yes, the India Office not only issues loans for the Indian Government, but we are responsible for sanctioning in every detail the issue of all loans by guaranteed and subsidised. Indian rail- way companies, so that we get the two methods.
701. That is a private railway, not a State railway? - an speaking now of all the railways that are worked by companies. We have many great systems such as the East Indian, the Bombay and Baroda, thus Great Indian Peninsula, the Bengal and Nagpur rail- ways, which a capital expenditure of about 193 millions sterling has been incurred, and all the altera- tions of the forms and the divisions of capital come up to the Secretary of State in Council" for sane- tion. The details go first of all to the Railway Department of the India Office, and then they are usually referred to the Financial Secretary and the Accountant-General for report. That is one aspect of our work. The other is the issue of the sterling loans of the Indian Government.
702. Can you tell us about your mode of issuing these loans, apart from railways, because that is a similar thing to what has to be done by the Crown Agents into whose department we are enquiring ?-We issue through the agency of the Bank of England.
703. Let us begin at the beginning; tell us how the thing arises take a concrete case.—lt arises in this way. We borrow almost entirely now for railway construction. We have a railway programme of 19 millions or so every year, the greater part of which has to be provided by loans of the Secretary of State and loans of the railway companies. It is my duty to pre pare the estimates, and 1 have to decide in consulta- tion with the Financial Secretary for submission to fle Secretary of State how much should be raise by the Secretary of State and how much by the agency of the companies. Those estimates go before the Finance- Committee of the India Council and afterwards before the Council, and when they are approved we watch the market.
401. Let us suppose you want to raise- how much ' -- You might take what we raised in Jannary last-
5 million "India 35 per cent. Stock. We have our
ewn official broker ni the Secretary of State, and the Finance Comtnittee of the India Council aro in ekso touch with the Bank of England and the money market. Hepresentatives of the Secretary of State in Council meet the governor and other directors of the Bank of England; as a rule their brokers are present and our broker is present. Then the date and the various terms of issue an finally settled. They have been, of course, provisionally settled before. hand. but they are liable to variation at the last moment. because the money market changes very rapidly sometimes. For instance, if it is a question of a fixed price you can well under- stand that that can only be fixed at the last moment, but subject to that, the details re practically arranged beforehand. They are finally settled'nt the last moment in conference at the Bank of England, and the Bank of England print our pro sportus and issue it there and then as a rule the same
evening. It is all in type ready, are just the one or two particulars fixed at the last minute and the issue price are entered then.
Wa
705, (Sir Francis Mowatt.) Are applications for the Ioan aldresses) to the Bank of England?—Yes. pay the Bank of England on a fixed senle for managing and issuing. We pay them a different price whea we issue at a fixed price from that which we pay when we issue by tender; we pay just twice as much for the former as for the latter.
706. (Mr. Bailey,). About how much do you pay 1-- W pas £1,250 per million for the issue of a fixed prire loan, because that condition brings in a large number of private tenders, but where it is a tender loan, as a rule tenders only come from syndicates, and the work of the Bank is smaller, and we pay them £625 per million.
707. They do the clerical work? The whole of thes clerical work.
708, (Sir Ralph Moor.). As to your fixed rate loans, you do not fix the rates according to your require nants arbitrarily and wait for the money market to med that, but when your requirements press, you adjust according to the market in your issue?—-Wo watch the market and exercise our discretion.
709, (Mr. Bailey,) Are these stocks registered at the Bank of England?-- Yes.
710. And they register all the transfers?-- Yes, we pay them on a fixed scale for that.
711. What do you pay?—Our wale of payment to the Bank of England, when once the stock is issued. is £300 per mission for a minimum of 125 millions, and thereafter we pay £300 per million. These par- ticulars are in the Home Accounts presented to Parlia
ment.
712. That is on the whole of the Indian Government. Stock)--On the whole of our sterling stock, but we have other debt which we have taken over from railway companies, purchased railways, and we have a scale for that. The Bank of Ireland manage a part of our
MINUTES OF EVIDENCE.
Mr. H. W. Badock.
stock, and we pay them £360 per million. It is such a small amount that they cannot do it at the same price as the Bank of England. The whole of our ludia Sterling Stock, amounting to about 150 millions, is managed at those prices.
713. (Chairman.) What about underwriting?-W« never underwrite the India sterling loans, but the railway companies' stock loans ore, as a rule, under- written. They pay 1 per cent. for underwriting and per cent. for arranging the underwriting, and a brokerage of 5s, per cent, to brokers and financial
houses.
714. (Mr. Bailey.) That is like 1 per cent. alto- gether?-Yes,
715. Who arranges your underwriting or how do you arrange it -Almost every railway company has its own broker, and we leave them, subject to
Gllr
approval, to make arrangements for the underwriting. Over all charges in connection with the borrowing by railway companies, where we guarantee principal and interest. the Secretary of State exercises a very close watch.
718. Are these railway loans underwritten in any way? Do you invariably have then underwritten? I am speaking now of registered stock; we should be very glad not to pay underwriting charges if we were sure of a successful issue without. The railway com- panies borrow in two forms, either by debenture stuck or preference stock (I do not speak of the share capital of which there have not been many issues lately) or by short-termed debentures, of which we have something ke 18 millions on the market. Those are not under written in the ordinary sense of the term. they are taken up by syndicates.
As a rule
£717. (Sir Francis Moraft.) Are there any railroads in India absolutely independent of the Government ? Are there any railway companies as there are in this country who manage their own financo absolutely them- selves ?—There are some companies which are not guaranteed, either as regants principal or interest by the Secretary of State, but in most cases we give them assistance in some forin which is almost the equivalent of a guarantees
718. (Sir Albert Spicer.) May we know what that is? Yes, one way is to give a rebate out of interchanged trate with the State lines surrounding them, but that rebate, being a percentage of the earnings of that traffic, is fluctuating, and therefore is not a tirne guarantee.
one
719. (Chairman.) There is
other question I wanted to ask you from my notes, and it is rather hard to answer straight off I daresay unless you have prepared it. What is approximately the volume of your business-As to the volume of the business of The my Department, I will give you a few tigures. Bum of the gross receipts and payments of the Accountant-General in each of the past three years (I have figures here for the past 13 years) is as follows: In 1905-6 £180,000,000 sterling, in 1908-7 £142,000,000, and in 1907-8 £120,000,000.
720. Why such a great drop? I will explain. Those are gross figures, a very large proportion of them being oan transactions, that is to say, we lend our money out on short temporary loans. This is a very important part of our business." The Secretary of State earned in those three years as interest on his current balances by lending on the London market, in 1905-6, £217,000, more than the equivalent of the whole cost of the establishment of the Secretary of State; learned in the next year £210,000, and in the next year C142,000. The stringency of the money market was not so great during part of the year, and so ratecwere lower; also there was less lent, and so the receipts were smaller. The handling of cash balances is managed entirely by my department.
721. You have to a certain extent answerval the Inst question, what is the maximum fueruntion? It is always well to know what the reason of the questioni 18, In the case of the Crown Agents Office they have a fluctuating staff to a certain extent, whereas you have quite a permanent staff? Yes,
722. You do not engage extra men 7-Very occasion- ally; the only extra men we ever get are temporary
• 21
35
sh2 June 1905.
second-class clerks from the Commission for a few weeks or months if required.
723. That is rare?-It is not very rare, because the work of our department as a whole has been growing rapidly for years. Those figures I have given you show a drop, but per contra there has been a greater increase in the work of the pay and pensions which are pay able here. Large clasms of pay which were formerly only paid in tridia are now paid in this country, and although the gross receipts and payments fell last year, the actual elérical labour of the department increase I greatly.
724. Does it fluctuate much --from those figures we see that it does, but does the work fluctuate very greatly? The work steadily increases.
Th
725. It is not the case that one year you have very much less to dụ than the year la fore, and the next year a great deal more?--No. Our net receipts and payments which we present to Parlinment, you can me from the Home Accounts amount generally £40,000.000 received and £40,000,000 paid. The are the amounts presented to Parliament. andl the figures above that are, as £1 rule- gavė YOU the gross figures to show you the volume-- due to our lending out many millions on the London market. That goes out Am.] romes in. I place it out as long as I can spare it, and I place it to dates when I know it will be wanted. When it comes back, if it is not wanted, I relend it, but I always have money coming in every day, generally about £100,000 of £150,000, sometimes very much
more.
726. (Say Francis Mowalt.) Do you lend it on short loans in the open market !---Not in the open market. The Secretary of State has an approved borrowing list. Any nancial house or bank in the City wish- ing to be put on the Secretary of State's list sends in an application through our broker. The applicant's name, if approved, is then put on the borrowing list. but once a quarter I submit that borrowing list to the Finane Committee in Council and it is formally approval by them. Of course, if the firm is not a very first-class firm and its resources are not very ample tit must be domiciled in London, so that it is under Eng- lish law, and in case of anything going wrong we enti protect ourselves to the fully we reject the applica- tion, but if it is satisfactory in every way wo put that name on the list.
727. That being so, supposing you have £100,000 you want to put on a short loan. is it put to tender Our broker among the firmus upon your list No. has every incentive to get the best possible rate, because ho is paid a percentage upon the interest, and, although I have said that he has an approved list of borrowers, I ought to add that he has an approved list of securi- ties too, that is to say, we only lend on the securities of the British Government, which you will fin-l is the first list in the Official Stock Exeliange list — everything there which is guaranteed by the British Government, and we aid to them the London County Connoit Teans and the Metropolitan Water Bourd B Stock, and the short-term debentures of guarantes] Indian railway companies,
it
728. Not trustee stocks ns a whole?—No.
720. Your booker asceriaus for you the best terms? -Yes, he sounds the market and tinela wh- wants the money and who is prpard to pay the best price for That is practically being put to tender, because, suppsing some firm has held the money for a month (we lend generally for three to five weeks) and wants to continue the loan, if they are not propanal to give as good terms as the best terms that can be got else. where, the money is called in and given where better terms can be obtained.
730. (Sir Albert Spicer.) Do you feel justitied in tel- ling a wh was the highest price in the last wekker months and what was the lowest-1 am not autho rises to loud below 15s. per cent. We have had as much as 5 and 65 per cent. for short times, and recently we have had to lend at 1 per cent
731, (Sir Francis Muwatt.) Iu the last twelve months?--Yes, and we had 5 or 6 per cent., but that period does not last very long as a rule. Of course. it ductuales very much with the Bank rate.
PUBLIC RECORD OFFICE
Reference -
| COPYRIGHT PHOTOGRAPH-NOT TO
BE REPRODUCED PHOTOGRAPHIC-
A SZOMINCION OF THC |
PA, LA.