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PUBLIC RECORD OFFICE, LONDON

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sary to propose. He would therefore be grateful if Their Lord- ships would authorize him to inform the Governor that Parliament will be requested to vote a sum of £5,000 as a free gift in aid of the relief of distress in the Colony.

8. Consideration must next be given to the financing of the losses, to the Government and to the estates and other private persons, resulting from the hurricane. Lord Passfield feels that this can only be done by the raising of a loan out of which the Colonial Government would pay for the repair and replacement of its own damaged property and would make long-term loans to private persons and companies who had suffered loss in the hurri- cane. Such loans would be constituted by law, first liens on the properties involved and their amounts would be assessed with reference to the damage done by the hurricane and the borrower's own ability to bear the loss. The loan to be raised by the Govern- ment might also include a sufficient sum to cover the cost of certain public works on which the Government has embarked, and on the construction of which it has expended large sums, but which it will be unable to complete from its own resources in the altered conditions. The total loss, Government and private, due to the hurricane, is very approximately Rs.10,000,000, or £750,000; the sum involved in connection with the principal public work which Lord Passfield has in mind (the La Nicolière irrigation scheme) is approximately Rs.2,000,000, or £150,000. It would appear, therefore, that the total loan to be raised might be approximately £1,000,000; but the Governor would of course have to be consulted as to the exact amount.

9. Of this, probably more than half would be re-lent to sugar planters, and interest and sinking fund payments would be receiv- able from them. From experience with previous loans made to the planters of Mauritius (notably on the occasion of a previous calamitous hurricane in 1892) Lord Passfield anticipates that these liabilities would ultimately be honoured; but it is obvious that, at any rate in the early years and so long as the sugar industry remains depressed, there is a considerable risk that the receipts from the planters would not suffice to cover the charges on the part of the loan re-lent to them. The charges on the part used for Government expenditure would in any case be a charge on general revenue, and it therefore appears probable that during an initial period of indeterminate length, which depends mainly on the state of the sugar industry, the loan charges will fall largely upon general

revenues.

10. In view of the apparently unavoidable deficit in the Colonial Government's finances in the near future, Lord Passfield cannot feel any assurance that these charges could be met; and he would therefore find it impossible to suggest that a loan to be raised by

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the Mauritius Government in these circumstances should be A loan raised without brought under the Colonial Stock Acts. obtaining the benefit of the Colonial Stock Acts would inevitably Lord Passfield have to be raised on much more onerous terms. therefore proposes, and trusts that Their Lordships will be prepared to agree, subject to Parliamentary sanction, that a loan as described above should be raised with a guarantee by His Majesty's Govern- men of the interest and sinking fund payments.

11. A precedent for such a procedure exists in the raising by the Colonial Government, after the hurricane of 1892, of a loan of £600.000 guaranteed by His Majesty's Government, and I am to observe that, as Their Lordships will be aware, His Majesty's (iovernment were never called upon to fulfil their guarantee given on that occasion. Lord Passfield contemplates that the 1892 pre- cedent would also be followed as regards the local administration of the loans to planters which was then undertaken with the help of a specially appointed advisory Commission, and I am to add that he is informed that all advances made to planters from the 1892 loan have been repaid to the Colonial Government.

12. If a guarantee as proposed is given by His Majesty's Govern- ment, Lord Passfield realizes that it will be expected that the Colonial Government will make every effort to balance its budget and so avoid His Majesty's Government being called upon to imple- ment the guarantee, and further to build up again a Reserve Fund, the use of which, suitably safeguarded, might be expected to render unnecessary further appeals for the assistance of His Majesty's Government in the event of similar calamities in the future. He would therefore propose that, as a condition of the proposed assistance, the Colonial Government should be invited to consent to an investigation of the financial position of the Colony by a Commission to be appointed in consultation with the Treasury, similar to the investigations which are being undertaken in British Guiana and Palestine. The Governor would be asked to invite the Council of Government to pass a formal resolution indicating in general terms their willingness to assist in the carrying out of the measures which might be recommended by such a Commission.

13. The proposed investigation, and the carrying out of its pro- posals, will take some time, and there appears to be no means of avoiding a continuing excess of expenditure over revenue in the meantime. Lord Passfield will, however, consult the Crown Agents for the Colonies as to financing the Colonial Government in the inmediate future, in the event of the complete exhaustion of the Government's available assets. Should the financial Com- a balance of mission be unable to propose any means of effecting the Colony's revenue and expenditure until the general position of the sugar industry improves, the situation will have to be reconsidered.

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