CO882-10 — Page 532

505

PUBLIC RECORD OFFICE

C.O.

Reference :---

882/10

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

PUBLIC RECORD OFFICE, LONDON

to consult you further in the matter, recapitulating the arguments used by them. Their point of view is fully set out in Mr Montocchio's letter of the 29th of June. (Appendix 2.) In reply you authorised me to make it clear (1) that you regarded the status quo as a radically unsound arrangement and were not prepared to agree to its continuance, (2) that in the absence of any strong demand for a token currency based on sterling, you considered that steps should be taken for bringing the rate of exchange into closer agreement with that of India.

9. It now remained necessary to obtain the agreement of the Banks, and of the Sugar Syndicate which largely controls the supply of sterling in London, to taking the necessary steps for carrying out your decision with the least possible detriment to the trade of the Colony. Some years before, in 1919, when it was decided to bring the exchange to a parity with India, the rate had been abruptly altered from But the circum- 13. 4d. to 18. 8d. the rupee without any appreciable ill effects. stances in the present case were entirely different. 1919 was a year of great prosperity. Estates had done well in the previous years, and sterling prices for sugar that year reached such high figures that losses from exchange were hardly noticed or at any rate were easily borne. On the other hand, 1924 had been a bad year, and prices for 1925 showed little sign of leaving any considerable margin of profit to planters.

10. Accordingly at a small conference held on the 8th of July, at which repre- sentatives of the Banks and the Planters were present, after making known your decision, I expressed readiness to do everything possible to meet the economic diffi- culties which might be caused by too abrupt a change in the rate of exchange by recommending to you that the change should be made gradually, and invited After time had been suggestions as to the manner in which it should be effected.

taken to consider the situation as it then stood, the statement of which a copy forms Appendix III to this report was brought forward. The substance of this was duly submitted to you, and on receipt of your reply I was able to announce that you noted with satisfaction the readiness of the Banks to meet your views 80 far as economic conditions permitted, and that you agreed to the maintenance of the prohibition of export of silver for the present subject to the following pro- visos: (1) reduction to extent suggested by Banks to be made not later than October 31st, (2) immediate reduction of rates for importation of foodstuffs: that you recog nised that the process of bringing the rate into harmony with the Indian rate must be gradual, but considered that it should be possible for the rate to be brought to shipping point and the removal of the embargo to take place not later than the 31st of March, 1996.

11. The Banks accepted these amendments and a communiqué was accordingly issued to the Press in the following terms :-

COMMUNIQUE.

As a result of the investigations which Mr. Beckett has made since his arrival in Mauritius, he has reached the conclusion that there is not at present sufficient support for any practicable scheme of linking up with sterling to admit of the change being successfully carried through. He has accordingly been in communication with the Secretary of State on the subject of the main- tenance of the status quo, to which the Secretary of State is not prepared to agree.

On this basis negotiations have been in progress with the Banks with a view to bringing the rate into closer harmony with that of India.

In order to meet the Secretary of State's wishes the Banks have agreed-

(1) To lower the rate for essential foodstuffs" to 4 per cent. after departure of ships now loading in India.

(2) To reduce the rate on London to Rs.14.25 not later than the end of October, provided the rate in India keeps below this rate. *

(3) To use all endeavours to procure a further reduction of the rate as early and as far as economic conditions will in their opinion permit. The Secretary of State on his part notes with satisfaction the readiness shown by the Banks to meet his wishes so far as economic conditions permit, and in consideration of this has agreed to the maintenance of the embargo on the exportation of Rupees up to 31st March, 1920.

7

The Secretary of State will, however, feel compelled to give instructions for raising the embargo thereafter unless satisfied that the economic conditions warrant its maintenance.

5th August, 1925.

Colonial Secretary's Office, Port Louis.

It should be noted that the original agreement for a reduction of the rate for the importation of essential foodstuffs did not apply to the National Bank of South Africa, nor does the further reduction which has been made apply to that Bank.

12. The above arrangements are of a temporary nature, and constitute the machinery necessary to bridge the gap at present existing between the rupee in Mauritius and the rupee in India. regret that it was not found possible for

the transition to be brought about in a shorter time, and I am doubtful whether time will not show the Banks have acted against their own interests and those of trade generally in pressing for so long a period during which uncertainty will continue. This, however, is a consideration which they have had before them, and it was their opinion that no shorter period could be allowed without very serious consequences in view of the low prices obtaining for sugar.

13. While it has become evident that for the present Mauritius must continue to use the rupee of India, and as soon as possible must follow the fluctuations of the Indian exchange, it is necessary to observe that this conclusion is a "choice of evils" and that a thoroughly satisfactory arrangement must be dependent upon a condition over which Mauritius, in common with other rupee-using Colonies, has of necessity no control. Only a decision to stabilise the rupee in relation to the pound sterling can bring back to Mauritius the conveniences which the Island enjoyed during the years in which the Indian rupee was fixed at 1s. 4d.

The return of Great Britain to the gold standard, and the appointment by the Secretary of State for India of a Committee to consider this question give some hope that it may be found possible to re-establish a gold or a gold exchange standard for India, though not necessarily at the old rate of Rs.15 to the pound. If, however, this should prove impracticable, minor fluctuations of the rate should have no serious effect on Mauritius, but any high appreciation of the rupee would undoubtedly have a depressing effect for the time being on the interests of planters, since so far as I have been able to observe the period of the lag in the adjustment of wages and prices to a new level is in Mauritius decidedly long. In this connection it may be worth while to invite attention to paragraph 32 of the report of Drs. Kemmerer and Vissering on the resumption of Gold Payments in the Union of South Africa,* much of which will be found applicable to the relations between Mauritius and sterling.

14. This report would be incomplete if I were to fail to place on record both my appreciation of the readiness which I found in all quarters to assist me in my investigations, and my gratitude for the universal courtesy with which my repre- sentations were considered and for the unstinting hospitality with which I was everywhere entertained.

I am, Sir,

October, 1925.

Your most obedient, humble servant,

H. BECKETT.

Appendix 1.

Extract from proposed Statement (paragraph 9 of Report).

*

As regards the controversy between sterling and rupees, the Secretary of State wishes me to take up a neutral attitude, We understand at the Colonial Office the attachment which you feel in Mauritius for the rupee. It is a coin with a very wide circulation, not only throughout the immense Empire of India, but in many neighbouring countries. It is a fine coin with high silver content and immense prestige, it has never been tampered with, and it meets with a ready reception every- where. In normal times by using the rupee you are on complete parity with the coinage of India, and this is a very great advantage when it is considered that practically all your food supplies and

• Pretoria, 1995.

پسند