CO882-(1-2) — Page 297

PUBLIC RECORD OFFICE

Reference :-

PEPELTIC.O. 882

1

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

PUBLIC RECORD OFFICE, LONDON

22

also add to the disadvantages of that attempted mode of escape.

46. No doubt this difficulty would have been met had a Treasury regulation, in principle such as was contemplated in 1825, being acted upon, and had the Colonial Government received British silver in moderate sums in exchange for drafts on London at par. But if the Commissariat thus received more coin than was required for local use, which under such circumstances it would, then the expense and inconvenience would only be transferred to the Government from the public. For example, in May 1843, when Treasury bills were 15 premium, the Government must have drawn at par, and the whole loss and responsibility of correcting adverse exchanges would in such cases devolve upon the Government, which I think highly objectionable in many ways. But as no such regulation existed, any argument which could be derived from it obviously falls to the ground.

47. It is thus evident that the only effect of the Mint regulations in the supply of silver coin would be, under the circumstance referred to, its being au unlimited tender, to enhance the cost at which an influx of bullion or rather coin, could be effected, but would not protect it from depreciation to the full extent of its deficiency of intrinsic value, either when in circulation, but more especially when the exchanges became adverse, and an exportation of coin was consequently necessary.

48. The only way by which these evils could have been avoided would have been to limit the tender of silver to a small sum, as in England. In the case the chief circulation would have been sovereigns in gold, and silver would only have been a subordinate coin, as here. But it would have been of no utility to have adopted this check in 1825, while the other part of the plan remained in force. It would obviously have been of no use to have imposed a limit of tender on British silver, while the tender of French silver, at a rate nearly as much below its intrinsic value remained unlimited : the result must equally have been depreciation. Gold must equally in both cases have been at a premium, and driven from circulation. It would have required a combination of both to have produced a perfect and certain success—a limit of tender to British ilver; and if foreign coins were to be rated at all,

!

1

23

-the policy of which I much doubt, especially of those of a different metal from that which formed the standard, then that such rating should be rather under, but certainly not above, their intrinsic value. In this case, and in this case alone, the integrity of the currency would have been preserved, and gold would have continued in circulation as freely as rupees do now.

49. In the recent correspondence between the Treasury and the Colonial Office, the fact of depre- ciation has been by implication denied, or, so far as it has at times been admitted, the admission has been confined to the period since the adoption of the Convention in 1843. Now, undoubtedly, I will admit, that had depreciation not existed from any other cause, that act, adopted voluntarily by the colony, was certain to have produced it. But I must admit, also, my great surprise to find a doubt exist- ing as to the fact of depreciation, when the only coin which represented the standard of the currency, namely, the sovereign, was at a premium. From 1825, when the proclamation making the pound sterling the standard money of the island, that pound sterling never ceased to command a premium.

·

It required no other fact than this single one to show that some great error had been committed in the regulations adopted. The Treasury, in one of their letters, speak of the premium on the sovereign as an absurdity, as it is the same as saying that the sovereign bears a premium on itself; that is no doubt true where the currency has its full value ; in that case a premiums on the standard coin is impossible; and the simple fact that it did bear a premium should have been accepted as incontro- vertible evidence of depreciation. During the war in this country, and the Bank restriction, the pre- mium on gold is taken both as the best evidence of depreciation and as the exact measure of it from time to time. Now, when the integrity of the currency is secured by convertibility and by a limited tender of silver, it would be simply absurd to talk of the possibility of a premium on gold. It would be equal to saying that one sovereign would com- mund a premium on another.

50. Bus depreciation was a certain consequence of the plans adopted. Suppose the host favourable oase for the opposite view. A contract is made ip pounds sterling --but that pound was declared to be