CO882-(1-2) — Page 484

PUBLIC RECORD OFFICE

Reference :-

C.O.882

2 PUBLIC RECORD OFFICE. LONDON ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

2

I do not gather from the correspondence that either side positively agrees with, or dissents from, the proposals of the other.

Referring to the request of the banks, that the rupee should be declared legal tender, without limit, at 28., the Governor, without taking excep- tion to the violation of principle that such a change would involve, states "that it practically bears that value in all the ordinary transactions of the community," and that "it is a matter of grave inconvenience that the value of the rupee should not be identical in both places" (India and Mauritius.)

The banks, in support of their own proposal, commence by stating that "not only the colony at large, but also the Colonial Government, would benefit by the value of the rupee being declared at 28., like the florin;" that by making the rupee 28. the course of exchange with India might induce individuals, or the banks, to import rupees.'

""

That "the few rupees to be found in the Island are generally held at a premium

not possible for the banks to import it."

"The

result is the exportation of speciu (rupees ?) to such an extent that the community suffers incon- venience."

And again, "Specie can only be imported from England at a loss, whereas it can very often be introduced almost without loss from India."

That "India has always been the cheapest source from which to import silver specie; at present it is more so than ever."

Such vague and contradictory statements as those made by the banks, unsupported, as they are, by any argument whatever, would scarcely Beem to call for notice but from the fact that they may help to keep alive certain strange delu- sions which appear to prevail with regard to this currency question, and which it would be as

well, if possible, to dispel.

The banks, it will be observed, confine them- selves almost entirely to that view of the question which bears more directly on their own interests, viz., with regard to foreign exchanges; but there is another side to the question, in which the com- munity at large are equally, if not still more

1

3

deeply, interested, and that is, the depreciation of the local currency.

To make myself understood in the matter, it will be necessary that I should, even at the risk of becoming tedious, set forth the leading prin- ciples which govern foreign exchanges, and which ought also to regulate the currency of all countries.

Had the banks simply requested that the rupee might be declared a legal tender, according to its intrinsic worth, measured by the gold standard of the Colony, that request would have been per- fectly sound and reasonable; or had they sup ported their proposal to make it 28. by pointing to the still more depreciated silver coins of England, which had, in defiance of the law, prac- tically become the ruling currency of the Island, they would have directed attention to the real, instead of the imaginary, blots in the system, and the Government would have been morally bound to find a speedy remedy for them.

With regard to foreign exchange, it need hardly be said that no nominal alteration in the value of coins will affect it in the slightest degree, and nothing will prevent its oscillations but the existence of a perfect equilibrium between the value of imports and exports; and as such a state of things has not existed in Mauritius for many years past, and is not likely to be brought about, the people of that Island must be content to allow exchange to fluctuate in response to the When- ebb and flow of their foreign commerce. ever the balance of trade is against them, that balance must, in some shape or other, be paid in coin; and, provided that coin be not depreciated, the cost of freight, insurance, and loss of time involved in its transport to the creditor, forms the limit of fluctuation. Actual inequalities will always have a tendency to correct themselves, but a mere device of calling a rupee 2s., instead

of 18. 10 d., can be productive of no advantage to either debtor or creditor in the long-run.

Happily for the Island, the balance of trade has hitherto been considerably in its favour. According to official returns of the last seven years, to an average extent of about 400,000), a-year, and except in so far as this balance may