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PUBLIC RECORD OFFICE
Reference :-
ICO.885/25
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
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53. I maintain that if, say, our palm kernels industry had ever been subject to the local control of any foreign nation, it would be possible to make out a case that would justify the Government of the Colony in taking action to put an end to so undesirable a position of affairs. In the Gold Coast, however, such a situation has never arisen, nor has it ever shown any signs of arising; and the fact that Hamburg absorbed before the war over 65% of our palm kernels is to be attributed solely to the better prices that were obtain- able in Germany for this particular class of produce. The trade was, and always remained, mainly in the hands of British merchants; and so far as this Colony was concerned, it had never passed from British control.
54. Such "foreign control" as had been secured by the Germans was not in the sphere of production but in that of manufacture; and so long as this continues to be the case, I submit that any action which is designed to break up that control should be taken by the legislature of the country whose factories suffer therefrom, and not by the producing Colony, whose interests have been in no wise affected by the "control" in question, and are bound to be seriously injured by any artificial restriction of its markets, and by the consequent and inevitable depression of the prices which the producing population can obtain for their raw material.
55. The second question addressed to the Commercial and Industrial Policy Committee is as follows:-
"(b) What steps should be taken to recover home and foreign trade lost during the war, and to secure
new markets?”
56. In this connection I would point out that the war has tended to expand our markets in certain directions, but to a degree that has failed altogether to compensate us for the much more important market that we haye lost by our closing of enemy ports, or of the ports of neutral countries whence produce might be imported into Germany, which has resulted from the British blockade. Judging the matter from the point of view of a Tropical Colony, which has no manufactures, but which is a large producer of raw material, the answer to this question is that every effort should be made to recover those lost markets, and that no steps should be taken the effect of which will be to limit or to restrict any that were open to our produce before the outbreak of war. Whether we shall be able simultaneously to retain some of the new customers to whom we have supplied raw material since August, 1914, will depend, I think, upon whether, after the cessation of hostilities, considerations with regard to geographical situation and con- venience, which the war has temporarily set at nought, will so reassert themselves that we shall find it impossible successfully to compete with more accessible riva's. This, however, is a matter of small moment to the commerce of the Gold Coast compared with the retention by us of our export trade to all the large markets which the Continent of Europe naturally affords for our raw material.
57. The third question is as follows:-
*(c) To what extent and by what means the resources of the Empire should, and can be developed ?".
+
And in conjunction with this I should like to consider the following extracts from the Recom- mendations of the Paris Conference under the Heading "C"
C
They (the Allies) may have recourse either to enterprises subsidised, directed or controlled by the Govern- ments themselves, or to the grant of financial assistance for the encouragement of scientific and "technical research and the development of national industries and resources."
I
X
X
X
X
"In order to permit the interchange of their products, the Allies undertake to adopt measures for facili- tating their mutual trade relations both by the establishment of direct and rapid land and sea transport services at low rates, and by the extension and improvement of postal, telegraphic and "other communications.'
"5
58. In this connection I have one or two suggestions to make to which I attach considerable import- ance. So far as a Colonial Administration is concerned, the development of the resources of the territory under its charge should not, as a rule, I consider, be attempted by it directly, nor should it seek to apply artificial stimulants to private enterprise by the granting of subsidies or the like. Experiments of this kind, which have been made from time to time in the Colonial Possessions of other European nations, have not been attended by results of a kind to encourage a departure from the British policy of non- interference under which our own Crown Colonies have thriven and flourished.
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59. The contribution to the work of development which can be made by a Colonial Government in the Tropics should take the form, I submit, of the construction of railways, roads, harbour-works, the provision of such works of public utility as pipe-borne water-supplies, drainage-systems etc., to improve the health conditions of important centres of commerce and population, and in some Colonies, but not in the Gold Coast, schemes of irrigation and the like, Some of these works, such as a railway for instance, can usually be made to be directly remunerative. Many others, on the other hand,-e.g. roads cannot be expected to yield a direct revenue; but even these, as an extended experience proves, will eventually produce a substantial return upon the capital expended, in the shape of stimulated production, increased local prosperity, the consequent favourable reaction upon the colonial revenue, and the expansion of trade in imported articles. The great bulk of the latter is supplied by the United Kingdom, which thereby benefits in her turn by the stimulation of the producing power of a Colony, which is at once reflected in an increased demand for imported articles.
60. However buoyant the revenue of a Tropical Colony may be, however, it cannot hope to defray the cost of development for any very protracted period out of its ordinary income. Until recently, the Federated Malay States might have been quoted as furnishing an exception to this rule. In spite, however, of the peculiar circumstances which so long enabled it to be financially self-sufficing, the Federation has now found itself compelled to join the ranks of the borrowers. This is normally the position in which every progressive Colony must expect to find itself; and it may indeed be said that the necessity to borrow money wherewith to pay for its development is most urgent and insistent in the case of those Colonies which are making the most rapid and satisfactory progress.
61. This being so, I submit, in answer to the third question addressed to the Committee presided over by Lord Balfour of Burleigh, that the first and most important step that should and can be taken to develop the resources of the Tropical Colonies of the Empire is to facilitate the flotation of the loans, upon the issue of which on reasonable terms that development must be seen mainly to depend.
62. No loan can, of course, be floated by the Government of a Crown Colony without the approval of the Secretary of State for the Colonies having been first obtained. Unless the financial position of the Colony which desires to float such a loan be sound, and unless the security which it has to offer be ample, the approval of the Secretary of State will necessarily be withheld. If, therefore, the issue of such a loan has received his sanction, it may be accepted as proved that the security offered to investors is of a character calculated to satisfy the most exacting demands. None the less, as matters at present stand, the prospectus form, which it is the practice of the Crown Agents to issue when subcriptions are invited to any loan about to be floated on behalf of a Crown Colony, contains the following clause :-
44
"The revenues of the Colony alone are liable in respect of the above stock and the dividends thereon, and the Consolidated Funds of the United Kingdom and the Commissioners of His Majesty's Treasury are not directly or indirectly liable or responsible for the payment of the Stock or of the dividends thereon, or for any matter relating thereto,"
I think there can be no doubt that the inclusion of this clause has resulted in many Colonial Govern- ments paying higher rates of interest, and obtaining their loans on less favourable terms than was in any wise necessary. I believe that I am correct in saying that no Crown Colony has ever failed to meet its loan engagements; and it is fairly certain that were some local disaster-such as the earthquake at Kingston in Jamaica in January, 1907,-to render & Colony temporarily insolvent, His Majesty's Government would come to its rescue either with a grant-in-aid, or a loan, or with both. In the case above cited, Parliament voted a free grant of £150,000, and a loan of £800,000 was authorised by His Majesty's Treasury. Though the guarantee of the Imperial Government is thus formally withheld, it may none the less be said, therefore, to exist, and the only effect of the inclusion of this clause in the prospectus is needlessly to depreciate the value of Crown Colony securities.
63. In these circumstances, therefore, I venture to suggest that steps be taken to enable loans raised by Crown Colonies and Protectorates on the security of their revenue, which have been duly approved by the Secretary of State for the Colonies, to be issued under the formal guarantee of the Commissioners of His Majesty's Treasury. If it be found possible to give effect to this proposal a new buoyancy and elasticity will, I think, be imparted to the public finance of the Crown Colonies, and the development of the'r resources will be proportionately stimulated.
64. The only other suggestion which I have to make in connection with the third question addressed to the Committee, and to the extracts from the Recommendations of the Paris Conference quoted in
para- raph 57 of this Despatch, is in connection with shipping. The main communications of all the Crown Colonies of the Empire are sea-routes, and one and all of them are at the mercy of monopolists and of monopolistic combines. Even when lines belonging to foreign nationalities ply regularly between a British