PUBLIC RECORD OFFICE
Reference :-
TILI C.O.885
19 PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
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22 Jour 1908)
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 as the Civil Service Commissioners, and by competitive examination, or would you prefer, supposing you were organising a fresh departinent, zo live a more hap- hazard method such as prevailed before?---Well, I should certainly say that on the whole the recruiting from the Civil Service Commissioners is the best. Ï perhaps may have had unusual opportunities of judg- ing, because the old East Aulia" Company's servants were nominated, and for the first 20 years I was in the odlice 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 (I 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 SË vice Commission are certainly higher than the average that prevaries 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 once à Treasury officer, and from the first we have as closely as possible followed the Treasury practice.
6965. Does the same thing apply to rates of pension} Y...
97. (Sir Francis Mooraff.). You have no professional officers in your department? I mean men appointed for special duties like engineers-Not in my depart
rent.
698. So that the whole of your staff falls under the ordinary Civil Service examination ?—The whole.
609. (Chairman.) Now with regard to the organisa- tion. how do you divide up your work: how many visions have you in your office-I have four main divisions 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 fair main divisions. The last is the one you would naturally turn 10 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
stablishment, 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? -I am speaking now of all the railways that are worked by companies. We have many great systems such as the East Indian, the Bombay and Barola. the Great Indian Peninsula, the Bengal and Nagpur rail- ways, on 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 bane- tion.
702. Can you tell us about your mode of issuing these loans, apart from railways, because that in ä similar thing to what has to be done by the Crown Agents into whose department we are enquiring?—W@ issue through the agency of the Bank of England.
703. Tớt us begin at the beginning; tell us how the thing arises-take a concrete case.-It arises in this
way.
We borrow almost entirely now for railway construction. We have a railway programme of 10 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 I have to decide in consulta. tion with the Financial Secretary for submission to the Secretary of State how much should be raised 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.
+911, Jæt us suppose you want to raise how much -- You might tak whint we raisesi in January last 5 million India 32 per cent. Stock. W have one ewn official broker to the Secretary of State, and the Finance Committee of the India Council are in close touch with the Bank of England and the money market. Representatives 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. When the date and the various terms of issue are finally settled. They have been, of course, provisionally settled befor 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 em only be fixed at the last moment, but subject fo that, the details an practically arranged beforehand. They are finally settled at the last moment in conference at the Bank of England, and the Bank of England print our pro spectus and issue it there and the-n- as à rule the same evening. It is all in type ready, and just the one ar two particulars fixed at the last minute and the issue price are entered then.
W.
705. (Sir Francis Moratt.) Are applications for the Iean addressed to the Bank of England?—Yes, pay the Bank of England on a fixed "seale for managing anting.
We pay them a different price who
We issue at a fixed price from that which we pay whort we isone by tend r; we pay just twice as much for the former as for the latter.
706. (3. Bailey.) About how much do you pay? We pay £1,250 per million for the issue of à fivil price loan, because that condition brings in a large number of private tenders, but where it is a tender lean, as a rule tewlers 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 tim clerical work.
708, (Sir Ralph Moar.). As to your fired rate loans. you do not fix the rates according to your require nais arbitrarily and wait for the money market 1 meet that, but when your requirements press, adjust according to the market in your issue?— Wa watch the market and exercise our discretion.
709. (M. Bailey.) Are the stocks registered at the Bank of England? - Yes.
710. Vid they register all the transfers ?--Yes, w» pay them en a fixel scale for that.
711. What do you pay -Our scale of payment to the Bank of England, when once the stock is issued. is £300 per million for a minimum of 125 millions, and thereafter we pay £300 per million. These par- ticulars are in the Home Accounts presented to l'arlia
ment. 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.
712. That is on the whole of the Indian Government Stork ?.... On the whole of our sterling stock, but wo have other debt which we have taken over from railway companies, purchased railways, and we have a scalo for that. The Bank of Ireland manage a part of our
MINUTES OF EVIDENCE.
Mr. H. W. BADOCK.
stock, and we pay them £300 per million. It is such a small amount that they cannot do it at the same price as the Bank of England. The whoto of our India Sterling Stock, amounting to about 150 millions, is managed at those prices.
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713. (Chairman.) What about underwriting?-We never underwrite the India sterling loans, but the railway companies' stock loans are, as a rule, unter- written. They pay 1 per cent. for underwriting and å per cent. for arranging the underwriting, and a brokerage of 58, per cent, to brokers and financial İLUB.
714. (Mr. Bailey.) That is like 13 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 our 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.
716. Are these railway loans underwritten in any way? Do you invariably have them 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 stock or preference stock (I do not speak of the share capital of which there have not been many issues lately) or by short-terud debentures, of which we have something like 18 millions on the market. Those are not under- written in the ordinary sense of the term. As a rule they are taken up by syndicates,
717. (Sir Francis Moratt) 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 guarantee, either as regards principal or interest by The Secretary of State, but in most cases we give them assistance in some form which is almost the equivalent of a guarantee.
718. (Sir Albert Spicer.) May we know what that is? -Yes, one way is to give a rebate out of interchanged tratic with the State lines surrounding them, but that rebate, being a percentage of the earnings of that traffic. is ductuating, and therefore is not a firm guarantee.
719. (Chairman.) There is one other question I wanted to ask you_from_my_notes, and it is rather hard to answer straight off 1 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 figures. sum 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 1905-8 £160,000,000 sterling, in 1908-7 £142,000,000, and in 1907-8 £120,000,000,
720. Why such a great drop ?--I will explain. These ate gross figures, a very lurge proportion of them being an transactions, that is to say, we lend attr money. out on short temporary loans. This is a very important part of our business, The Secretary of State Carnei in those three years as interest on his current balances. by lending on the London ninrket, in 1905-41, £217,000, more than the equivalent of the whole cost of the establishment of the Secretary of State; he earned in the next year £210,000, and in, the next year £112,000, The stringency of the money market was not so great during part of the year, and so rates were lower; also there was less lent, and so the receipts won, smaller. The handling of cash balances is managed entirely by my department.
721. You have to a certain extent ausweived the last question, what is the maximum flucination? It is always well to know what the reason of the question 15. In the case of the Crown Agents Office they have a fetuating staff ton certain extent, whereas you have pite a permanent staff? Yes,
722. You do not engage extra men?-Very occasion- ally; the only extra men we ever get are temporary
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22 de 1940s.
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 class of pay which were formerly only paid in India are now paid in this country, and although the gross receipts and payments fell last year. the actual clerical labour of the department mcreased greatly.
724. Does it fluctuate much-from those figures we see that it dues, but does the work fluctuate very greatly The work steadily increases.
725. It is not the case that one year you have very much less to do than the year before, and the next year a great deal more?No. Cur net receipts and payments which we present to Parliament, you can 1948- from the Home Accounta amount gehernily £40,000,000 received and £40,000,000 jmd. Those are de amounts presentes1 to Parlament. ansh The figures above that are. 2.8 អ rule- gave you the gross figures to show you the volume- due to our lending out many millions on the London market. That goes out and Collies 11. I place it out as long as I can spare it, and † place it to dates when 1 knów it will be wanted. When it
comes back, if it is not wanted. I lend it, but I always have money coming in every day, generally about £100,000 về £150,000, sometitnes very much inore.
726. (Su Fruncis Muwatt.) Do you lend it on short loans in the open market! Not in the open market. The Secretary of State has an approved borrowing Hist. Any financial 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 one a quarter I submit that borrowing fist to the Finance Committee in Council and it is formally approved 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 Eug- lish law, and in case of anything going wrong we can protect ourselves to the full) we reject the applica- Lion, but if it is satisfactory in every way wʊ pùi that name on the list.
727. That being 80, supposing you have £100.000 you want to put on a short loan. is it put to tender Our broker among the firms upon your list --No. has every incentive to get the best possible rate, because he 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 to, that is to say, we only lend on the securities of the British Government, which you will finl is the first list in the Official Stock Exchange list - everything there which is guaranteed by the British Government, and we add to them th- London County Council La atis and the Metropolitan Water Board B Stock, and the short-term debentures of guarante Indian railway companies,
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728. Not trustee stocks as a whole?--No.
740 Your broker ascertains for you the leat terms? Yes, he sounds the market and fini who wants the money and who is prepared to pay the best price for That is practically being put to tender, because, supposing some firm has held the money for a month (we lend generally for three to five weeks) and wants to continue the ban, if they are not prepared to give as good terins as the best terms that can be got else- where, the money is called in and given where better terms can be obtained.
780, (Sir Albert Spicer.) Do you feel justified in tel- ling us whe was the highest price in the fast -wolves months and what was the lowest-I am not autho- rised to lend below is. per cent. We have had s much as 5 and 6 per cent, for short times, and recently we have had to lend at 1 per cent
781. (N Francis Muratt.) In the last twelve mouths? Yes, and we had 5 or 6 per cent.. but that period does not last very long as a rule. Of course, it fluctuntes very much with the Bank rate.
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