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PUBLIC RECORD OFFICE

Reference :--

C.O. 882

5 PUBLIC RECORD OFFICE, LONDO

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

The Colonies could coin a dollar of their own, but-it would be of advantage in many ways for India and these Colonies to have the same coinage, to say nothing of avoiding the risk there would be of a small dollar coinage being manipulated for exchange purposes.

Of course the native markets these Colonies trade with will probably remain on a silver basis; but thas really would not affect the question, sa they will not have to pay more in Mexican dollars for their European goods than they would have to do under the present system, while with produce grown out of the Colonies be result would be the same, as the price is now settled by the gold value in Europe, and the amount they would receive in Maxican dollars would vary with the price of silver.

Inside the Colonies the rupee currency would give a fixity of value, while dealing with ontside markets the Mexican dollar would be available na at present.

It may be said that a silver coin circulating at over ita market value would lead to sparious rupees being put on the market; but this is not found to be the case in Java, or the Straits and Hong Kong with the sub- sidiary coinage, which shows a large proût on ita face Talue.

There is much that can be said for and against such a scheme as the above, and what might suit one Colony might not suit the other; but it is time both looked the difficulty in the face, and made up their minds what course they intend to follow should India close her mints.

I remain, Sir, Your obedient servant,

W. G. GULLAND.

Nov. 22, 1892.

DEAR SIR,

No. 8.

[LETTE from Mr. 8. GILFILLAN.}

2. Billiter Avenue, London, E.C.,

July 13, 1893. I giving evidence yesterday before Lord Herschell's Committee, there was one point which I quite omitted to mention, and which, though suficiently obrious, is yet of such importance that it ought to occupy a prominent position when considering the differences between India and the Straits Settlements in the power of maintaining a silver coinage at an artificial value.

The Straits Settlements have nothing at all corre sponding to Council bills or rupee paper as a means of adjusting the balance of trade, and giving a stendi. ness to exobange, and to the gold value of silver coinage.

Under present conditions, should remittances have to be made to Indis beyond what can be supplied by Council bills and rupes paper, this would have to be done in gold, while silver could only be sent as an ordinary commodity. For a similar adjustment with the Straits, Mexican dollars would naturally be used, and to prohibit their import, or to penalise their use in the Colony would, I submit, be entirely inconsistent with the absolute freedom of trade existing in Singapore and Penang, and which forms the basis of the prosperity of both ports.

If it in agreeable to the Committee, perhaps this item might be added to the evidence I have to offer.

Yours faithfully,

8. GILFILLAN.

George W. Johnson, Esq.,

Colonial Office.

APPENDIX II.

APPENDIX II.

CORRESPONDENCE ARISING OUT OF THE PROCEEDINGS OF THE COLONIAL CURRENCY

COMMITTEE.

No. 1.

THE MARQUESS OF RIPON to Lizuz-GOVERNOR Biz E. WALKER (CEYLON).

(Ceylon, No. 187.)

SIB,

Downing Street, July 7, 1893. I HAVE the honour to soknowledge the receipt of your telegram of the 21st ultimo, requesting instruc. tions in connexion with the Report of the Committee on Indian Corrency.

2. This request may refer either to the effect of the new policy of India on the grievances of the civil servants, or to its effect on the trade and development of the Island.

3. As regards the first of these matters, I would point out that the notion of the Legislature of India in adopting the Report of the Committee has incidentally conferred a distinot, although not extensive, boon. The rupee has at present been raised from a little over la. 2d. to just under ls, 4d., and any substantial fall in the near future appears improbable. I do not, however, desire to be understood as committing myself to an opinion that a steadying of the exchange rate of the rapee at l. 4d. disposes entirely of the grievances of the public servants, which were brought under my consideration in Sir Arthur Havelock's Despatch, No. 363, of the 20th of September 1892. I do not consider the time is yet ripe for me to express any opinion on that subject one way or the other. I under- stand that the grievances of the Indian services in the matter of the fall in exchango are still under the con. sideration of the India Offloe and the Government of India, and it appears to me expedient, on many grounds, to wait and see what action is taken in India, before committing myself to any final opinion as to the grievances of the public servants in the Eastern Colonies. But in saying this I would not desire to be understood as implying that boon granted by India to its servanta need necessarily be extended in part or in full to Colonial servanta in the East. Before deciding the matter, it would be necessary for me to examine the evidence and arguments on which the Indian decision rested, and to consider how fur the Colonial servants have been already compensated by advantages which have not been extended to the Indian services.

4. As regards the commercial and economic aspect of the question, I may remark that the tea planter of Ceylon will, under the new currency system adopted by the Indian Governinent, be placed at no diɛad- vantage as compared with his Indian competitor; and I should hope that the moderation of the views of the Currency Committee and the Indian Government will have dirarmed any agitation which may at one time have seemed likely to arise for the severance of Ceylon from the Indian currency system. Had the Govern. ment of India sought to raise the rupee suddenly to the high rates of former years, such as la 10d, or even Is. 6d. I should have anticipated such an agitation on the part of those planters and merchants who believe that it is through low exchange that Ceylon has been restored to its old level of prosperity. The enclosed printed copy of an able latter from Mr. J. North Christie (which was previously communicated to you in my despatch, No. 364 of 2nd December laat) indicates the grounds on which such an agitation would have been based. But much of what is said by Mr. Christie beoornes less convincing so long as the rate does not gɔ above le. 4d, and so long as the fature bullion value of silver remains in its premenit state of uncertainty. If, however, silver should remain at a very much lower level than in the recent past, so as to produce a wide divergence of value between the coined rapes and its equivalent in ballion, the Ceylon Government might find itself in facs of an agitation on the part of planters and others for a severance of the connexion with India; and should such an agitation arive I do not perceive that your Government could refuse to discuss tho arguments of those who advocated the change.

3. Whether it would be wise and equitable to make a change, is a wholly different matter. If and when the difficulty arisen, it must be met socording to the circumstances as they then appear; bat as at present advised, I should anticipate that the balance of advan- tage would be held to be greatly against a change.

35

Whatever the line taken in other matters, one ling must be imperatively insisted on, that is, that the carc must be decided in accordance with the interests of une community as a whole, and not in accordance with those of any particular class. The dire interest of the Government must always be strongly against a change which would enhance the burden of its sterling home charges, such as the military contribution, the service of the sterling debt, and the payments made at home, on account of stores supplied, as well as those made to, or on behalf of public servants at a conventional rate. The community itself, as consumers of imported godds. would suffer directly by the increased cost of piece goods and other commodities coming from gold-using

countries.

6. On the other hand, it may be doubtful how far the planting and other producing classes would gain by the change to a rupee circulating at its varying ballion value. The plantations of Ceylon are largely cultivated by the labour of Tamils coming from and returning to the mainland. The wages to be paid to these immigrant labourers are a matter of bargain, and must be sufficient to induce them to migrate. If they were offered wages measured in a rupee of less ex- changeable value than the Indian rupes, they would expect to receive a larger number of rupees. The direct advantage would thus be lost, and, indeed, it would not be other than a hindrance to immigration if the labourers were paid in a coin which did not circulate in India, and which they would have to exchange for Indian rupees, probably at a loss, before returning to their homes.

7. As regards the purchase of land for planting par poses, I do not perceive that a change in the currency would make any difference. The planters, whether they purchase from the Government or from private owners, must be assumed to offer as much as they consider that they can profitably do, having regard to the cost of production and what their produce fetches in the market of a gold-using country. If a rupee of lower valve is adopted, they will be tempted to offer, or the owner will be disposed to ask, a larger number of rupees than if the Indian rupes had been retained.

8. As regards rents, debts, and mortgages, I have to observe that a change in the currency system could not properly be allowed to operate so as to lighten the burden to the tenant or debtor. A subsisting contract to pay in rupees is a contract to pay in Indian rupees, and the rights of creditors in the matter would have to be safeguarded by a re-enactment of the second and eighth clauses of the existing Order in Conneil of 1897

9. In conclusion, I may observe that, withoas expressing any opinion on the question whether Ceylon, as a whole, has derived advantage from a low exchange, it appears to me that low exchange does not acum to have much to do with the growth of the great tea industry. The industry increased very rapidly daring the years 1888, 1889, 1890, in the face of rising exchange. Many other osuses have affected it, which cannot them- Belves be affected by the state of the exchanges, ruch as greater facilities of transport, the lowering of the duty at home, and the growing reputation of the articlo amongst consumers.

I have, do. (Signed) RIPON. The Officer Administering the Government.

No. 2.

The MARQUESS OF RIFON to 8ın H. E. I JERNINGHAM (Mauritius). (Mauritius, No. 181.)

Sin,

Downing Street, July 11, 1893. WITH reference to the correspondence, noted in the margin, relative to-the Governor, No. 34, Jan. 10,

100.

ourrency of Mauritius, I have Becretary of State, No. 2, the honour to forward, for Governor (Seychelles), No, your information, a copy of the

78, Oct. 11, ispo,

report of the Committes up- Betary of State pointed to inquire into the Indian Currency, together with copy of correspondence on the subject between the Government of India and the Secretary of State for India.

E 2

shali), No. 1, Jan. 3 11.

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