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PUBLIC RECORD OFFICE

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C.O. 882

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9 PUBLIC RECORD OFFICE, LONDON

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the leading place for modern scientific work in cane sugar production. It is stated that Java also produces more cheaply than we do.

A recent Consular Report from Batavia gave certain statistics regarding the production of sugar in Java, from which it appears that in each of the two years dealt with (1904 and 1905), the average yield of cane per acre was over 38 tons, and in 1903 the average was 41 tons per acre.

We do not get anything like these averages in Mauritius, and this is not a matter of machinery but of soil and climate. Again, I am informed on good authority that the cost of labour in Java is only about half of the cost here, and, as the principal expense in sugar production is labour, it would be wonderful, indeed, if, with such advantages, Java did not produce more cheaply than we can in Mauri- tius. If it does so, it is due to these natural advantages, and not to appreciably superior machinery and methods. A table given in the "International Sugar Journal" for August, 1907, shows the average recovery of 96 Java factories in 1906 to have been 808 per cent. of the sucrose in the cane.

2. The realdrag upon the sugar industry in Mauritius is not antiquated machinery. It is, unhappily, the crushing burden of mortgage debt, bearing high rates of interest, under which many estates labour, and the remedy proposed is that they should borrow more money and so increase their indebtedness. It is not surprising if estates cannot make both ends meet under such conditions, and it is extremely doubtful that they will be able to do so, even with such improvements in machinery as they may effect, when they have added another burden, in the shape of a further loan, to their debt.

3. I would further beg Your Excellency's consideration of the conditions which are likely to prevail in the event of this loan being carried through.

The aggregate factory power of the Island is now ample for the cane supply. Last year we had a very large crop, but I do not know of any canes having been left on the ground. The factories are even compelled to compete for canes of small planters in order to secure a sufficient supply for economical working. Mr. Leclézio says (page 11 of English translation of his speech) that "They scramble for the small planters canes," and that "The factory owner cannot possibly do without the small planters." In the struggle for these canes, factories frequently pay more What then must for them than they can afford to do at ruling prices for sugar. be the effect of an increase in the capacity of the factories by means of Government loans? Evidently a fierce competition for canes, resulting in higher prices still being paid for them, and, therefore, an insufficient return to the factory owner on the additional capital he has borrowed to enable him to cover the repayment of that capital to Government.

Mr. Leclézio explicitly stated in his speech that no one who could offer proper security would be debarred from participating in the loan. It is, therefore, possible that more factories would take advantage of it in a given district than there would be cane supply for at their increased capacity. Under the conditions I have just mentioned some of them would in all probability sooner or later succumb.

No one would care to buy a factory which had proved itself unable to carry on under such conditions, and the security of the Government would be lost or imperilled.

There is, and has been for many years, a natural tendency towards centraliza- tion, and I submit that it would be imprudent and impolitic to check this tendency by propping up with Government money every small factory whose creditors will allow it to borrow.

4. I believe also that the operation of such a loan would involve great hard- ship and injustice to individuals. Let us suppose two neighbouring factories, one belonging to A and one to B. A has exercised foresight and enterprise and invested his money and possibly borrowed, in order to improve his factory, and is in a fair way to working out his own salvation. B has done nothing and is hopelessly mortgaged. B's mortgage creditor allows him to borrow money from the Govern- ment and remodel his whole factory; A's creditor will not allow him to do the same; and thus B, who deserves no solicitude whatever, is placed in a position to ruin his more deserving neighbour A by the use of public money.

It is highly probable that many mortgage creditors would refuse to code priority to the Government and that the benefit of the loan would for this reason be enjoyed by a very few individuals or companies, for whose advantage the credit of the whole Colony would be pledged. Moreover, such individuals or companies would, in all probability, be those who least require assistance.

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5. It has also to be borne in mind that what is "modern machinery" to-day may be obsolete and have lost its value as security long before the Government will have been paid for it under the scheme contemplated..

6. In conclusion, I would venture to express the fear that such legislation as is proposed would destroy private enterprise and have a deterrent effect upon the further investment of outside capital here, which will not be attracted to sugar production in Mauritius in competition with Government funds lent on easy terms and employed in the same industry.

It is no doubt the case that some planters at present find themselves in diffi- culties as a result of the short crop and low sugar prices prevailing, and that some temporary assistance from Government might not be out of place. I respectfully submit, however, that there is no case of urgency to justify such an intrusion of the Government into the sphere of industrial enterprise as the proposed machinery —- loan would constitute.

I have, &c.,

His Excellency

Sir Cavendish Boyle, K.C.M.G.,

Governor of Mauritius and its Dependencies,

&c.,

&c.,

44389

(Secret (2).)

MY LORD,

•

&c.

No. 17.

J. J. GIBSON,

Manager.

THE GOVERNOR to THE SECRETARY OF STATE.

(Received 20 December, 1907.)

[Answered by Nos. 20 and 23.]

Government House, Le Réduit, 16 November, 1907. I HAVE to-day had the honour of replying by telegraph, at some length, to your Lordship's message of the 15th current,t on the subject of the proposed loan for advances to planters to enable them to carry on the cultivation of their sugar estates. A paraphrase of my telegram will be found under cover of a separate despatch of even date.

2. Whilst expressing my regret that I failed to read your telegram of the 2nd current as conveying an irrevocable decision against the introduction of an Ordinance to give effect to the scheme, I would state that my endeavour, in trans- mitting the two messages of the 9th current,§ was to furnish the fullest informa- tion available on the subject, to show the unanimity of opinion which I believe prevails locally as to the need for such assistance, and to remove any doubts which may have arisen with regard to the possibility of securing the Government against loss, if such assistance is afforded

3. In the despatch which I had the honour of addressing to your Lordship by the last outgoing mail, I submitted the opinion that the effect of the loan would not be confined to the planting industry alone, but that it would more or less directly ease the whole financial position, proving of benefit alike to the general trade of the community and to the revenue prospects of the Government. In the same com- munication I gave certain figures showing the reductions which have been made in the amounts due by planters to the Government since the inception of the arrange- ments authorised by the Hurricane and Mechanical Transport Loan Ordinances.

4. In my telegram of to-day* I have supplemented that information by figures comparing such indebtedness as it was in 1902, when a loan similar in nature to that now asked for was allowed, with the sums at present due by the borrowers; and I stated that, even if the amount of the proposed advances were taken into account, the total to be repaid to the Government would be appreciably less than the amount outstanding at that date. I append a statement giving the details ou which these conclusions are based, my object in putting them forward being to

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• No. 11.

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