CO882-(1-2) — Page 485

PUBLIC RECORD OFFICE

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Reference -

C.O.882

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PUBLIC RECORD OFFICE, LONDON

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

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be invested in foreign countries, it ought, by the ordinary laws of commerce, to return to the island in the shape of specie.

Now, although no part of this difference is due by India, who, on the contrary, is a creditor for a large amount, yet it is through that country that it is found most advantageous to remit it; and if the gain in the first stage of the operation, between the debtor country and India, be not sufficient to cover the expense of transferring the money from India to Mauritius, including bankers' profit, it is common to say " there has been a loss on exchange," whereas it is really nothing more than the cost of carrying home specie instead of calico, or some other commodlity, in payment for sugar, and such cost just as surely formed an element in determining the price of the sugar as insurance or any other charge did.

If, by declaring the rupee in Mauritius a legal tender for 28., its purchasing power were made equal to one-tenth of a sovereign, there would then be no doubt of the banks being able to import it at a profit; but no such result would follow, because, in proclaiming it 28., it would simply become a legal substitute for a florin. Or, in other words, a rupee, containing 180 grains of standard silver, would be declared to possess same purchasing power as a florin containing but 174 grains of the same metal.

the

The consequence would be, as it is now, that whenever it became necessary to export specie to India, the rupee, as the more valuable coin, would be sent back to that country. Hence the reason, as stated by the banks, that the rupee generally commands what they term a premium. That premium is a mere fiction, and, in reality, only signifies that it commands something more than a florin. Whenever one-tenth of a sovereign can be purchased for a rupee, that rupee may justly be described as bearing a premium of 6 per cent.

This unsatisfactory state of things has been brought about by allowing English silver coins, never intended to be used other than as tokens, and paper currency, held to be redeemable only in such tokens, practically to usurp the entire functions of the metallic currency of the Island.

In this unfortunate course the Colonial Govern-

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ment itself seems to have been the prime offender, and have thus, I believe unwittingly, given rise to much of the dissatisfaction expressed by the banks, while at the same time it appears to have fallen lamentably short of its obligations to all public servants whose salaries were payable according to the currency laws of the Colony.

It is, I believe, a fact universally admitted by political economists that the selling price of all commodities is invariably fixed with reference to the most depreciated coin which can legally be tendered in payment. Now, if that be true, and if English silver and Mauritius paper based there- on, have, as stated, become the great medium of circulation, and are practically held to be legal tender to an unlimited extent, then such coins do, to all intents, form the measure of value for all This commodities in the Island of Mauritius. measure being depreciated, or deprived of its proper purchasing power, to the extent of something like 9 per cent.,-being the difference between its intrinsic and nominal value,-the prices of all commodities are necessarily exalted in proportion. Had the employés of the Civil Government received their salaries in gold or in foreign silver coins at their intrinsic value, as by the laws of the island they were entitled to receive them, those salaries would have possessed much greater purchasing power than they did when paid in currency notes For 18. 104d. due, they

every would have received a rupee, or some other coin of equal intrinsic worth; and as the banks state that a rupeo is generally current for something more than a florin, they would, for every 1s. 104d.

or English silver.

of salary received, have been able to purchase something more than a florin could command. To have issued the latter coin as one-tenth of a pound sterling, therefore, was equivalent to imposing a tax on such salaries at a rate upwards of 150 per cent. higher than the income-tax of England.

The difference between the purchasing power of gold and silver is believed to be still greater'; for although it is not stated what the premium on sovereigns usually is, we are told that it is so great that they disappear from the Island as fast as they are put into circulation.

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