CO885-(11-12) — Page 213

made from

be carefully

the recipient.

The

for supplies in con

large proportion will be The difficulty will arise the forthcoming

must confess to a very inadequate knowledge of exchange,

whatever

comings

may

but

in these circumstances

in

a

period

of

it appears

crop and

the opera

to me that

of normal trade when in

is reason

to fear that the

a real shortage of funds

be the case and outgoings balance, there unrestricted sale of drafts by the Currency Commissioners under present conditions has served to bring about in circulation among the banks, which very seriously curtail facilities the Bank of Mauritius,

will

and

that

by

sale

if

it continues unchecked

for financing

at any

rate,

the coniing crop

is unable, owing

of sterling drafts.

to the

It is important

heavy adverse trade balance and consequent shortage of sterling to replenish its coffers therefore that the money released should not again become immobilized

by hurricane loan payments

12.

critical one.

the

139

It will be apparent from the foregoing that the additional funds provided from the Guaranteed loan will be far from sufficient to make up the deficit on the year's trading and the question of financing the 1932 crop in March and April is likely to be a The answer will I think depend on the outlook in sugar market at that time. If by reason of tariff arrangements or otherwise there is a prospect of an improvement in prices in the summer of 1932′ it will I hope be possible to finance the greater of estates, though, as pointed out in paragraph 6, there way then be a movement for the liquidation of prior liabilities which may result in a number of estates changing lands. If however there is no prospect of an improved market my impression is that the Colony will then have reached the end of its financial tether and that there may be a considerable reduction in cultivation with the consequences which this involves in an overcrowded and isolated

number

community.

C

in the circumstances

it

seems

to

me

in

the Treasury vaults and

that special measures of control

to

what

is essential for

are justified. Moreover the very heavy adverse balance of imports is in itself reason to restrict importations the economic life of the Colony. ing circumstances lies in

out

of

A further special reason in exist

No.

155

of the 16th [?10th]

the fear that without some measure of control funds paid out under the Hurricane Loan may find their way

the Colony. In your telegram December, the inquiry was made whether this danger could not be guarded against by regulations

estates.

I

very varied

as

to expenditure on cultivation of is practicable. Cultivation expenses are to cover remittances

be

held

do not think this

in their nature and must for essential supplies. Without detailed inspection the operations and books

be impossible

abroad

estates it

ternally

tion and

staff

easily regard

signs

would

even

I must

of

if practicable

say

frankly

of

an elaborate organization for

to establish effective control in- a highly expensivé organiza- not believe a reliable local

a great number of

it would

that

I do

at

be

the

point

of

as

in

that

exit

for this purpose could be obtained. Control

and adequately exercised

it as desirable on these grounds, as to the situation

there would

of

convinced

drawals.

Bank

ledge

as

panic

I

that

have

shown

there

drawals

at

in

might

the

little

doubt

be

10

of

grave

indeed

the

became

Bank

risk

that

paragraph be considerable k of

present

time.

a

if

can however be of funds and I

the event

of any

feel

of Mauritius I of considerable with-

the

matter

situation

of

of the

general know-

extensive attempted with-

* C 84581/31 [No. 85]: not printed.

down.

13. It is, of course, difficult at any time to speak with absolute Confidence on the financial position of private enterprise in Mauritius. Operations are kept secret and there is little confidence among independent observers as to the sincerity of many of the statements made by representative bodies. In fact this lack of trust and confidence is one of the marked features of business and official life here and in the case of some of the older officials has become something of an obsession, though I am not contending that there is not often considerable justification for it. At present, however, even those who were at first sceptical have changed their views, and I know of no one who does not now agree that the position is dangerously near a breakdown. The failure of one or two of the larger groups or firms would bring the whole structure At any rate it must be admitted that the statements furnished by the Chamber of Agriculture as to the probable extent of cyclone losses, which were at the time sceptically regarded by many as the usual cry of " wolf," have proved in fact to be not only moderate but distinctly conservative in character. Moreover the known facts as to the trade balance, the sharp decline in imports, and the confidential information which has been sub- mitted as to the Mauritius Bank render it, in my opinion, impossible to draw any other conclusion than that the position is really acute. The information supplied by the Bank would certainly not have been given except under the pressure of genuine anxiety. Too much stress must not be laid on the fact that there has as yet been no very marked outward change in the habits of of the well-to-do classes. There has been a gradual and increasing contraction of social activities which has continued now for several years and which has been sufficiently marked to attract notice during the period of my personal observation here. In any the large majority of Mauritians live in a much simpler standard than might be deduced by casual observers from outward

life

event

140