CO882-10 — Page 534

10

Complete stoppage of all aloe fibre industry, which feeds a poor population which does not work the soil.

(g) Large decrease of the sugar output through insufficient cultivation and abandonment of lands difficult to work.

All those factors, isolated or united, might produce disturbing elements which should be avoided at 'any price.

I do not see why, while the fall of the pound sterling in India is caused by the disloyal and seditious attitude of part of the population, a community loyal as ours should suffer the conse- quencies of Swarajism and non-cooperation.

If that movement came to spread should we be compelled to realise our pound sterling at Rs. 10.00 or less?

We must take into account that all our pound sterling are not sold between Rs. 14.80 and Rs. 15.00. We must transfer to India considerable amounts in order to provision the Colony with foodstuffs: oils, rice, dholl and other grains.

1

The rate asked for documentary Bills for foodstuffs is only 5 per cent. for acceptance at 30 days' sight. No interest is claimed until the due date.

If traders had to send rupees to India for their purchases they would have, over and above the cost of transfer and insurance, to take into account the interest on the remittances, until their return in the shape of goods. Account must be taken of that item.

With respect to the embargo on rupees, I advise that it be maintained in the interest of all concerned, I am not concerned with the interest of strangers, as for example certain Shipping Companies which may find an immediate interest in a low exchange, or which may do business in matters of exchange by draining the island of its coin which, except in very rare instances, is imported at the cost of the Banks.

With regard to that embargo I must destroy a legend which is current here and probably abroad too, i.e., that it was on the entreaties of the Banks that Government prohibited the export of rupees.

If the Banks welcomed the embargo on the silver rupees, I must say that that embargo was put on because Government was unable to supply two merchants of Port Louis with the rupees which they asked in exchange for Treasury Notes. This is a fact which must be borne in mind.

I do not think that I am mistaken when I say that if the interdiction of export rupees was Temoved, without reckoning the disadvantage which would result from the measure, Government would find themselves in the same condition as at the end of 1923, as I suppose that nobody can I dream, in the present situation of the Colony, of the forced currency of the Treasury Notes. cannot deny that a decrease of the rate of the pound sterling would reduce the cost of articles imported from Europe, but the purchasing power of the population would be diminished to such a degree that no good result can be expected from such reduced rate.

I regret to put before you such a gloomy picture of our situation, but in such serious circum- stances I would not have done my duty had I not done so. I have given you my opinion, which is shared by almost all the Planters and by men who, by their situation, are in a position to feel the pulse of the country at every moment.

I need not add that I authorise you to make whatever use you deem advisable of this communi- cation which is not confidential.

PIERRE MONTOCCHIO.

I am, etc..

Appendix III.

11

6. However, solely with a view to conciliation and to show their readiness to meet the views of the Government Advisers, in spite of all their fears as to the harm which may result to the Colony, these Banks have approached the Mauritius Sugar Syndicate, and they believe that arrange- ments can be made to bring down the rate of exchange gradually, if the "Indian rate continues at its present low level.

7. They are convinced, however, that this rate could not fall below Rs. 14.25 per pound sterling without a complete dislocation of the affairs of the Colony.

**

8. Always with the same idea of conciliation, the Banks think that they can arrange with the Syndicate to bring the rate of exchange on drafts for the importation of essential foodstuff's " from India to 4 per cent. net, no interest being claimed on these drafts.

9. If there is an improvement in the economic conditions, the Banks will be only too ready to discuss with the holders of the pound sterling (the Sugar Producers) measures for bringing the rate of exchange into still closer harmony with that of India, should the Government still be of opinion that this was desirable.

10. If the lowering of the rate of exchange to an absolute minimum of Rs. 14.25 per pound sterling meets with the approval of the Government's Advisers, the new rate, after the necessary arrangements have been made with the Mauritius Sugar Syndicate, could be brought into effect from the moment that payment has been received in London of the first sugars of the coming crop, say about October, 1925.

for THE MAURITIUS COMMERCIAL BANK,

G. GRANDMAISON,

Secretary.

for THE MERCANTILE BANK OF INDIA, LIMITED,

G. DICKSON,

Manager.

507

END-

STATEMENT BY THE MAURITIUs Commercial BANK AND THE Mercantile Bank of India.

At an interview with the Managers of the Banks on the 8th instant, Mr. Beckett asked them to consider what would be the best means of bringing the local rate of exchange " into closer harmony with the Indian rate."

2. Whilst the Banks appreciate the fact that Mr. Beckett, in asking for their suggestions, is showing a desire to lessen, in what measure he can, the inconvenience caused to the Trade by the lowering of the rate, they cannot lose sight of the fact that they are being asked for suggestions for the carrying out of a scheme of which they do not approve, and to which they have all along been opposed.

3. In making the undermentioned suggestions, therefore, the Mauritius Commercial Bank and the Mercantile Bank of India, Limited, wish it to be clearly understood that they maintain in toto their arguments in favour of a local rate of exchange for the pound sterling, there being no reason, in their opinion, why this rate should fluctuate with the Indian rate.

4. These Banks wish to point out that, since the conference which was held in January last, the sugar market has declined considerably, in consequence of which the Colony is passing through A very critical period of difficulty and uneasiness which it would be disastrous to aggravate. Indeed, during the last few days the position has become worse, in consequence of the alarming rate at which sugar has fallen, the latest cables indicating that, with the rate of exchange suggested below, the producer will not get more than about Rs. 9 net for 50 kilos of crystals, i.e., fully Rs. 1.25 below his cost of production.

5. Any drastic step which might be taken to cause the rate of exvnange to drop suddenly to a very near parity with that of India would, therefore, be most inopportune and fraught with many dangers.

(4) W1,117,1576 30 296 SER, Lad, p. M

PUBLIC RECORD OFFICE

Reference :-

CO. 882/10

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

>