CO885-24 — Page 83

PUBLIC RECORD OFFICE

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TLC.O. 885

24 PUBLIC RECORD OFFICE, LONDON

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

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it appears unlikely that it will be removed while hostilities continue; but satisfac- tory arrangements have been made to profit by the free market afforded by Portugal, so that live cattle, eggs, petroleum, and fuel are now obtainable in sufficient quantity from Lisbon. Morocco has also recently been induced to permit the shipment of a moderate supply of eggs and poultry to Gibraltar, and the shipment of flour from America has not been interfered with.

5. As soon, therefore, as sources of supply became reasonably assured, an arrangement was suggested to, and readily accepted by, the local merchants, under which, in return for the removal of the restrictions upon trade in any commodity and permission to deal freely in any excess quantity, they guaranteed to keep as a permanent reserve, deposited in the King's warehouse, a minimum stock of that commodity. This arrangement appears to be a most desirable one from the point of view of the Government. The reserve of each article which it is considered neces- sary to retain is assured, and, being frequently removed and replaced, is not liable to deterioration. Further, it results that the stock of any commodity in the Colony at any given time is much greater than the fixed reserve, so that in case of urgent need the floating stock could be taken up to increase the reserve supplies. This principle has already been applied in the case of flour, coffee, preserved milk, lard, soap, petroleum, and sugar.

6. The instance of sugar presented some temporary difficulties, which were fully and frequently discussed between the Colonial Secretary, the Prices Commit- tee, the leading merchants, and myself. On the outbreak of war the available stock of sugar was such as to permit sale by importers at 18s. per cwt. and by retailers at 2d. per lb.; but the rise in foreign markets made it evident that these prices must eventually be increased. As the stock decreased it was found that, while certain dealers had freely disposed of their sugar at the price fixed by Proclamation, there were others who had held back their stock. intending to profit by the certain rise of prices in the near future. This action on their part gave rise to considerable dis- content, and it was clear that no merchant would purchase foreign sugar until an alteration of the law allowed him to sell it at a legitimate profit.

7. There was strong feeling against permitting those merchants who had held back their stocks to make an unfair profit over those who had sold freely, and even- tually, after consideration of other alternatives, a proposal put forward by the importers themselves was adopted. This was, shortly, that the Government should commandeer all sugar then in Gibraltar, paying the wholesaler or retailer, as the case might be, the price then fixed by law, and should immediately raise the prices of sugar to such a figure as would permit purchase in foreign markets, and then at once resell the sugar to the merchants at, or approximately at, the new rate.

8. It was at once pointed out that the objection to this proposal was that the Government would make a profit on a trading transaction. To this the merchants replied that they were in no way concerned with that aspect of the question, and suggested that the Governor might decide to devote such profit to charitable relief works or to some other public purpose. Apart from this point, it appeared on full consideration that the proposal afforded no other grounds of complaint, since each merchant would receive exactly the profit, wholesale or retail, which the existing law allowed to him, and the subsequent raising of prices would enable merchants to import Spanish sugar from Malaga.

9. The project was therefore carried into effect: all sugar was purchased, and resold at prices which left a profit of £431 in the hands of the Treasurer, and I now ask your permission to earmark this sum for use in any relief work which may hereafter commend itself. I am glad to be able to state that the action taken by the Government in dealing with this question has met with no hostile criticism.

10. Those merchants, ten in number, who had guaranteed a permanent reserve for the future of 100 tons of sugar represented that by locking up capital in this reserve they had reopened the door to general trade, and that it would be unfair to them that those who had refused to participate in the guarantee should benefit at their expense by the removal of restrictions. They therefore asked for protec- tion, and requested that all those who wish to trade in sugar should be required to contribute to the reserve. Considering that the merchants who maintain the reserve do so at some commercial inconvenience, and thereby render a service to the Colony, the request appeared to be not unreasonable, and in order to meet it "The Importa- tion of Foodstuffs Ordinance," enclosed in my despatch No. 148 of 8th October, was

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enacted. Since its publication other traders have applied for licences, the amount contributed to the reserve by each being proportionately reduced and the burden on individual firms thereby lightened.

11. It has seemed necessary to explain at some length the position with regard to supplies generally, and in particular the circumstances which led up to legislation to control dealings in sugar, and I trust that the action which has been taken, both with regard to existing stocks and to the principle of permitting a freer trade in the sugar now being imported, will commend itself to your approval. I would add that in removing restrictions on the export of foodstuffs I have borne in mind the necessity of preventing extensive dealings in those articles which Gibraltar obtains from the United Kingdom, free transactions in which might tend to deplete the stocks available in Great Britain.

I have, &c.,

The Right Honourable

Lewis Harcourt, M.P.,

&c.,

&c., &c.

H. G. MILES, Lieutenant-General,

Appendix "H" in No. 57. MEMORANDUM.

Governor.

THE number of messages stopped from the institution of cable censorship until 31st March is as follows:-

1914. August

September October

November

December

1915. January

February March

4,823

729

558

434

438

230

211

$24

The above figures are exclusive of telegrams altered by the Censor and passed

as altered. These might amount to another 50 per month. Those held pending inquiry might possibly amount to a further 100 per month.

I understand that the effect of the institution of the censorship upon the volume of business done by the Company in Gibraltar has been practically nil, in so far as can be judged by comparison with the work done in the similar portion of previous years.

It would seem probable that the financial effect during the earlier portion, when code messages were not allowed, will have been beneficial, owing to the greater length

open messages.

of

Appendix "I" in No. 57.

REPORT OF CHIEF Assistant CENSOR, GIBRALTAR.

At the commencement of the war all telegrams to or from Germany or Austria were stopped, as also were all code telegrams (not being Government telegrams) and all messages not in French or English.

This station is the point through which all telegrams from Italy and the eastern Mediterranean must pass to get to South America, and through which in normal times many messages pass in preference to other alternative routes, and interference here naturally affects a very large amount of business.

The blow coming suddenly, during the full flow of ordinary business, the number stopped at this period was very large.

It is impossible that at that time arrangements could have been already made by German and Austrian commercial houses to have representatives in adjoining neutral countries such as Holland, Denmark, Switzerland, and Italy to carry on trade with extra-European neutrals on their behalf, and consequently the sudden dislocation of communication must have been a substantial temporary eet-back for them.