LONDON: Printed for
BOOK I.
CONTENTS
Whatever was the currency of Ceylon during the government of the Portuguese, no vestige now remains of it; and an investigation of that subject could throw no light upon its present condition. Under the Dutch, the various coins that were used in Holland were also current in Ceylon; namely, the silver stiver, the Schelling, the guilder or florin, and the ducatoon: but the coin peculiar to the colony, and which formed the Government currency, was the Ceylon copper coin, in stivers, now called pices. The standing value of that copper coin was dependent on the regulation of Government, that made eighty of them always equal to one silver ducatoon: the Treasury at Colombo received and exchanged them at that rate. Thirty-six of these weighed one Dutch pound, of the best copper. This coin, however, must not be confounded with the Dutch stiver, sixty-six of which (three florins and six stivers) were worth a ducatoon: the two coins had no reference to each other, although they bore the same appellation.
Almost every thing required for the Dutch settlements in Ceylon, besides what the island produced, was imported in the ships of their East-India Company, from Holland or Batavia direct. Their trade with the continent of India was not extensive: the Ceylon Government drew no bills on the settlements of that continent; and the remittances to it, beyond what the island could afford, were made in specie. All the remittances made to Holland, on the contrary, either by public servants or by merchants, were effected in Government bills. From these bills Government derived a fixed profit. It made the applicants pay into the Treasury eighty stivers for each ducatoon (which was the par), and a premium besides, equal to 11 per cent. That exchange and profit never altered; and it is of consequence here to remark it, with reference to what occurred afterwords, under our Government; as I shall notice in the sequel.
There was another fund which offered remittances to Holland, at an exchange a little more favourable than the above. Every regular servant of the Company was entitled to receive, in Holland, his fixed pay, called gagie; while his island allowances were paid to him in Ceylon currency. Those who wished to draw the amount of their fixed pay to the island, disposed of their bills in favour of those who wanted to remit; and, in doing this, they charged a profit somewhat under 11 per cent. Of the Dutch, many colonized, and were anxious to have their property near them.
Gold pagodas were coined at Totecoreen, in the Dutch mint there established, under the control of the Ceylon Government, on which Totecoreen and Monopar were dependencies. These pagodas were almost exclusively appropriated to the purchase of white cotton cloth from the natives of Totecoreen and Palamcotta, which the Ceylon Government sent yearly in great quantity to Holland, on account of the Company. This cloth was printed so as to answer the demand of the markets in South America, and sent thither, through Spain.
Some silver rupees were coined by Governors Falck and Vandergraff; but very few; and were current for thirty-six stivers each.
A great variety of foreign coins were also current in Ceylon; as, the Spanish dollar, or piastre; the star and Porto-Novo pagodas; the Surat and Sicca rupee, &c. Their prices were all regulated by their intrinsic value, compared with the silver ducatoon; and, keeping the exchange of the island currency to eighty stivers for each ducatoon, those different coins bore a price, in copper coin, according to that standard.
Such was the state of the colonial currency, so late as the year 1780. From that time the finances of the Government began to be embarrassed; but until the arrival of Governor Vandergraff, who succeeded to Governor Falck, in the year 1785, no paper money had been introduced. He found the revenues of the island inadequate to the expenses; and the Treasury exhausted by additional number of troops, which the Company had been under the necessity of raising, since the year 1780, for the protection of the colony, on account of the American war. To obviate these difficulties, he, for the first time in Ceylon,issued a paper currency. This consisted of Treasury notes, called credit brieven, payable to the bearer, on presentation, in Ceylon copper coin, at the rate of forty-eight stivers for each rix-dollar. There was no particular coin for the rix-dollar: it was merely an ideal one, divided into twelve fanams, and each fanam into four stivers.
The pecuniary distresses above stated induced Governor Vandergraff to think of raising an additional revenue to Government, by the following contrivance.
It has been already noticed, that all the remittances made at that time to the continent of India, except what Ceylon could afford in produce for exportation, were effected in gold or silver coin. It occurred to the Governor, that, by making all the public payments from the Treasury in paper money, he might sell by public auction, with some profit, the gold and silver coins which were annually imported into Ceylon by the Company; which idea he actually put in practice. This may be considered as the first step, in lowering the Ceylon exchange, and the depreciation of its currency. So long as there was in the settlement a sufficient quantity of specie, in gold and silver, which could be withdrawn from circulation in consequence of the paper currency taking its place, the profit of the specie sold by Government was trifling; but as the supply in the market was gradually decreasing, and Government withheld that which it had received from Holland, the premium rose higher. The silver ducatoons, which, in 1785, had been exchanged for not more than eighty stivers each, were sold, in 1795, at one hundred 1
Though this statement shews that the copper coin had undergone a very considerable depreciation 2, as well as the paper currency, before the British Government took possession of that settlement, this depreciation was not so great as it appears at first sight; because it was not general, in every exchange of the island with other countries. With Holland, on the contrary, if public servants wished to remove their property from Ceylon, and make remittances to the mother country, the Government continued to grant them bills, at eighty stivers for one ducatoon, adding to the payment 11 per cent. profit, as usual.
There is no doubt that this state of things must have afforded to many of the servants of that government an ample opportunity to make great profits; and we know that many opportunities of this nature must have existed, otherwise they could not have accumulated such large fortunes as many of them did, notwithstanding their scanty salaries.
If we consider the effects produced upon the real condition of the currency by the measures of Governor Vandergraff, we cannot but lament, that his anxiety to remedy the temporary difficulties of his government made him lose sight of its more lasting advantages, and the real prosperity of the country. The fixed state of that currency, on which the merchants had hitherto found a solid ground to establish their commercial calculations, was, in that part of the trade carried on with the continent of India, totally disturbed. Grain, cotton cloth, and all other commodities imported thence to Ceylon, grew dearer than they had formerly been. The price of food gradually rose, and with it that of all articles of exportation; which exposed them to be undersold in foreign markets, while the value of the property that could not be removed from the island by no means rose in proportion.
Prior to these measures, the real currency of the island was not the copper stiver, but the ducatoon, for which the stivers could always be exchanged, according to a fixed rate. The ducatoon was a coin containing 1 oz. 1 dwt. 1 gr. of English standard silver; possessing, therefore, 5s. 5d. sterling, intrinsic value, at the rate of 5s. 2d. per ounce. No doors were then open to favouritism, for making remittances; nor to such speculations in exchange, by the public servants, as were detrimental to the fair merchant, and to the holder of landed property, or any other property in the island. The moment that Governor Vandergraff allowed the exchange to fluctuate, the Ceylon copper coin became the true standard currency of the colony; and foreign exchange was no longer adjusted at the former fixed rate of eighty stivers to one ducatoon, but with an immediate reference to the actual value of the quantity and quality of the copper contained in the stiver; taking into account the inferiority of the copper that had been lately coined, the expenses and inconveniences attending its exportation, the doubt of finding an easy sale for it, and the uncertainty of its price in the other Indian markets. In a short time, this copper coin, in its depreciated state, formed, with the paper money, by far the greatest part of the currency of the colony.
Such was its condition, at the time the English East-India Company took possession of the settlement. One of their first measures, with regard to the currency, was to make a new copper coin, of the same weight and quality with the Dutch. But as the revenue was insufficient to pay the current expenses, particularly when the Company had still a considerable body of troops in the island, placed under the control of the Presidency of Madras, it became necessary to draw upon that Presidency, either for star-pagodas in gold, or by bills, to make up the deficiency. Then the question was agitated, At what rate were those pagodas to be sold or issued f The exchange under the Dutch, just previous to our taking Ceylon, had been about thirty-two and a half fanams, which made one hundred and thirty stivers for a star-pagoda; but this, considering the quality of the metal, was not equal to the worth of the gold contained in the pagoda. Seeing, then, that the thirty-two and a half fanams of Ceylon were not intrinsically worth a star-pagoda; knowing, also, that the Madras fanams, all of good copper, and considerably heavier than those of Ceylon, were current on all the Coromandel coast, at the rate of forty-five for one star-pagoda; and feeling, at the same time, that the higher the pagodas could be sold, so long as the Government was compelled to draw considerably upon Madras for supplies, the more profitable it would be to the Company; they fixed the value of the Ceylon coin at the same rate with the Madras, namely, forty-five fanams, or 180 stivers, per star-pagoda: thus determining, at once, the depreciation at about 34 per cent. from what it had been in latter years, under the Dutch. The ducatoon then became worth one hundred and forty stivers, instead of the old fixed rate of eighty; making a deterioration of 75 per cent. from the original currency of the island.
All the civil and military servants of the East-India Company, employed in Ceylon, were apparently gainers by this state of the currency, because their pay was fixed in pagodas; and, therefore, the greater the number of fanams the pagoda could obtain, the larger appeared their income. But the value of all commodities could not be lowered in the way the currency had been: in a very short time, the price of every article of consumption accommodated itself, not to the former, but to the new value of the rix-dollar, fanam, and stiver; the rix-dollar being twelve fanams, and each fanam four stivers: so that, in truth, the Company's servants were not much the gainers. But the Dutch inhabitants, whose means of support were derived either from pensions, or from fixed incomes in rix-dollars, sustained a great loss by this depreciation of the currency, and felt severely the almost instantaneous rise in the price of all commodities.
In the year 1798, when the author arrived in Ceylon, the natives had still so much objection to receive a star-pagoda for forty-five fanams, that Government obliged their public servants to accept of a large portion of their pay and allowances in bills; which they with great difficulty exchanged in the market, sometimes at forty-five, but very frequently at less than forty-five fanams for a star-pagoda. Bills were also granted on Bengal or Bombay, at the rate of three hundred and fifty Arcot or Bombay rupees for one hundred star-pagodas.
The high pay, however, given to public servants augmented their expenses, and consequently encouraged the importation of English articles, and all luxuries. They made, besides, considerable savings; and for these reasons, bills were demanded, to make remittances. After the first shock had subsided, the currency seemed again to be placed in a fixed condition, although depreciated; and in 1800, commerce having considerably increased, and a greater quantity of small change being wanted, a new supply of copper coin was sent from England by the East-India Company, in whole, half, and quarter stivers, made of good copper, and of the same full weight as the old Dutch coin, namely, 1 lb. to 36 stivers.
The Dutch paper currency had been, in the mean time, entirely withdrawn from circulation. The British commanders agreed, in the capitulation of Colombo, that, provided the amount of the Dutch Company's property in Colombo was such as it had been represented by Governor Van Angelbeek, the new Colonial Government would be answerable for the credit brieven to an extent not exceeding 50,000 sterling; that certificates should be granted to the holders of them, bearing interest at the rate of 3 per cent. per annum, so long as the territory on the south coast of the island, comprehended between Matura and Chilaw, should remain in the possession of the British Crown; but if it were returned to the Dutch, then the debt of the credit brieven was again to be made over to them. By this means the debt was in a manner funded; and the credit brieven were no longer a currency. Even had the credit brieven remained as currency, it is evident, that, in consequence of their interest being fixed at such a low rate as 3 per cent. per annum, while the general rate in India was then from 9 to 12, their value would have been diminished accordingly; and the 50,000 sterling could not represent more than one- third of that sum at the utmost.
On the first day of January, 1802, the government of the island was transferred from the East-India Company, to the immediate management of his Majesty's Ministers for the Colonial Department. Then, for the first time, were coined silver rix-dollars. To fifty pounds of pure silver, were added five of Japan copper, agreeably to the standard of the Spanish piastre; and one pound of this metal was coined into fifty rix-dollars. Paper currency in rix-dollars was also issued, payable to the bearer on demand, at the rate of forty-eight stivers for each rix-dollar. The exchange with Madras was altered from forty-five to forty-eight fanams per star-pagoda. The exchange with Bengal and Bombay was also altered; by making four hundred rix-dollars, instead of three hundred and seventy-five, equal to three hundred and fifty Arcot or Bombay rupees.
The exchange with England, which, by taking two and a half star-pagodas to one pound sterling, and forty-five Ceylon fanams to one pagoda, made one hundred and twelve fanams and a half to one pound sterling, was still continued at that rate, making nine rix-dollars and three-eighths for one pound sterling.
Before the year 1802, the Ceylon Government granted bills to merchants, on their application, at the rate of forty-five fanams per star-pagoda, and in proportion for Bombay or Calcutta. After that date, the bills were given at forty-eight fanams per star-pagoda, as before stated; or at four hundred rix-dollars for three hundred and fifty Arcot or Bombay rupees. Bills upon England were sold at nine rix-dollars three-eighths, as before: but for the latter there was hardly any demand from persons in trade, because the colony was then supplied with English goods from the continent of India.
The Canadian war, which began in the year 1803, obliged the Ceylon Government to draw largely upon the Treasury in England, besides the amount of its credit with the East-India Company for cinnamon. This circumstance kept the market abundantly supplied with bills; which continued thus to be issued, at the above-mentioned fixed rates, until the year 1805.
The wants of Government having then ceased, and the demand for bills being greater than it had occasion to draw for, it was discovered that a premium was offered by merchants, to those who had occasion to negotiate those bills; and the Government thought proper to take advantage of that circumstance, by refusing any longer to grant bills at a fixed rate of exchange, either on the Presidencies of India, or upon England; and ordered them to be sold, by public auction, to the highest bidders.
We must now go back to the year 1798, and take notice of the following facts: The circulating medium, or currency of the island, consisted, then, almost entirely of copper coin, both of the Dutch and of the English East-India Companies; being both alike in value, except the inferior coin issued by Governor Vandergraff. Some gold star-pagodas and Spanish dollars were also in circulation, but were not looked upon as the currency of the island. In the year 1802, an addition was made to that currency of a new copper coin; besides the paper money in Treasury notes, and the silver rix-dollars, as has been already mentioned. Several issues of this copper and silver coinage, and of the Treasury notes, were occasionally made, during the years 1802, 1803, 1804, and 1805.
It is of the greatest importance to remark, that the intrinsic value of this copper coin had been altered from the former. It used to be at the rate of thirty-six stivers to one pound of copper, Dutch weight; but the rate of this new coin was at fifty stivers for one pound English, about nine per cent. lighter than the Dutch.
The silver rix-dollar was likewise coined at the rate of fifty rix-dollars in one pound avoirdupois, and equal in standard to the Spanish dollar. Seventeen Spanish dollars weigh one pound of the same weight. Had a pound of metal been divided into forty-nine rix-dollars, instead of fifty, it would have made that coin precisely one-third of a Spanish dollar: as it was, there remained about two per cent. in favour of the rix-dollars, beyond that proportion.
The paper currency, it may be repeated here, was established in rix-dollars; and promised to pay, at the Colonial Treasury, forty-eight copper stivers for every rix-dollar. When, in 1802, the settlement was taken from the administration of the East-India Company, the pay of all the public servants was made out in rix-dollars, instead of star-pagodas; taking the rix-dollar at one-fourth of a star-pagoda.
It is evident, that, from the copper coin being made lighter since the year 1802, and from not introducing a greater quantity of silver in the rix-dollar, the currency was again further deteriorated, and was much below the nominal value given to it. About the years 1802, 3, the Spanish dollar was generally accounted worth 4s. 8d. sterling, according to the market-price of silver: at that rate it required nearly four Spanish dollars and one-third, or thirteen rix-dollars, to make one pound sterling; while the nominal value of the rix-dollar had been fixed at nine rix-dollars three-eighths to one pound sterling. The nominal value of the rix-dollar, therefore, was 2s. 1 1/2d., but the intrinsic only 1s. 6 1/2d.
This deterioration of the currency was not felt or attended to at the time; because, at the Colonial Treasury, bills on England were granted for rix-dollars, at the rate of their nominal, and not their real value; and bills on Madras, at forty-eight fanams, or four rix-dollars for a star-pagoda. In these there was only a loss of about six per cent. from the exchange in pounds sterling. No Ceylon coin was exported so long as bills were granted at those fixed rates; and by that means the full nominal value of the currency, either in silver, copper, or paper, was supported.
When the island became a King's colony, the pay of all public servants was altered from star-pagodas into rix-dollars, at the rate of four rix-dollars for each pagoda. By this measure the salaries were made liable to suffer by all the changes and depreciations which the Ceylon currency was likely to undergo: and if the loss was not felt at the time, it must be attributed to the very proper and just rule then followed by Government; namely, the receiving of the Ceylon currency into the Treasury, in exchange for foreign coins, or bills on the Presidencies of India or upon England, at the same rates at which those rix-dollars had been issued.
As long as this practice was continued, the nominal value of the currency was supported; notwithstanding it did not contain, either in the silver or copper coin, a quantity of metal equal to that nominal value. But when the Ceylon Government withdrew this support, (which it did in 1805,) by refusing any longer to receive into the Treasury, from public servants, Ceylon rix-dollars, either in silver, copper, or Treasury notes, at the same value for which they were issued; and would not grant bills for them, either on the Presidencies of India or upon England; then the whole currency of the island fell down to the intrinsic value of the pure silver, or copper, that was in the coin.
It should here be remarked, that the market being then tolerably well supplied with silver rix-dollars, it is conceived that the copper coin was no longer the regulating medium; its place having been occupied by the silver rix-dollars: therefore, in future observations on the intrinsic value of Ceylon currency, that of the silver coin above mentioned will be generally referred to.
The great demand for bills, occasioned by an unfavourable balance of trade, (which will be fully explained hereafter,) seems occasionally, at short intervals, to have depressed the exchange, even below the deterioration of the coin: but as five rix-dollars in silver were sold upon the continent of India for one star-pagoda, the exportation of that coin kept the exchange, also, at that rate (equal to sixty fanams per star-pagoda) during the years 1806, 1807, and part of 1808.
The measure adopted by Government, in those years, of granting to civil and military servants a great part of their salary in bills, at fifty fanams, or four rix-dollars and two fanams for a star-pagoda, by thus multiplying the channels through which bills were to pass into the market, and by lessening the monopoly which otherwise Government had in bills, aided to keep the exchange within some bounds. In the mean time, the silver coin disappeared; and but little of it remained in the year 1808, when a new coinage took place. In that year and the following, 692,159 rix-dollars in silver were coined; but, with a view, it is presumed, of preventing the exportation of the new silver coin, the Government ordered an addition of 10 per cent. alloy to be made in this, more than the former coinage had contained; making, in all, 20 per cent: this was another deterioration of the currency. The silver rix-dollar of 1802, 1803, and 1804, was intrinsically worth 1s 6 1/2d.; that of 1808 and 1809, only ls. 4 l/2d. 3 This measure, however, did not prevent the exportation of the silver coin; but, probably, it was the cause of the further depression of the currency, which, in 1809, fell to sixty-three fanams per star-pagoda. The exportation of the silver still continuing, and having, in the year 1811, nearly taken the whole of it, as well as the heaviest copper coin, out of the island, (namely, that which was coined at the rate of thirty-six stivers to one pound, Dutch weight); no limits being then established for the exchange; bills being no longer granted to public servants, which was forbidden by proclamation of the 10th March 1812; and a great scarcity of grain prevailing in the colony, from excessive and long drought; the currency, consisting chiefly of paper money, was reduced to a most deplorable condition; remittances were much wanted for the importation of food; the distress was general and alarming; the value of the star-pagoda rose to seventy-five and eighty fanams, instead of forty-eight, which was the par established in 1802; and at the end of the year 1813, when the want of grain had not completely subsided, no good bills on England could be obtained at eighteen rix-dollars per pound sterling, which is an exchange of Is. ls 1 1/3d. for the rix-dollar, instead of 1s. 9d. as it was fixed, for the pay of public officers, by the above-noticed proclamation of the 10th March 1812.
There will be occasion to advert more particularly to this regulation, in other parts of the Work. It must, however, be here stated, that, in consequence of the depreciation.of the currency since 1802, His Majesty's Government, by that proclamation, thought it right to grant an increase of pay to the public servants, by rating their salaries, which were fixed in pounds sterling, at 1 s. 9d. for each rix-dollar, instead of 2s. 1 1/2d. which was the rate of the year 1802. This new exchange was determined upon under the supposition that the silver rix-dollars were all of the same standard of silver as the Spanish dollar, and that, in weight, two and 2/3 rix-dollars were equal to one Spanish dollar, taking the value of the latter at 4s. 8d. sterling. These data, unfortunately, were not correct. We have already seen that the rix-dollars coined in 1808 and 1809 had no less than 20 per cent. alloy; the Spanish dollar having only 10; and a pound of metal, mixed as above stated, was coined into fifty rix-dollars, being within 2 per cent. three rix-dollars to the weight of one Spanish dollar.
It has been a singular misfortune to this colony, that since Governor Vandergraff first began to disturb the state of its currency, every measure afterwords adopted has tended the more to confuse and deteriorate its condition. In the year 1813, this depreciation from the original value of the Ceylon stiver in 1780 was not less than 210 per cent.; for, in 1780, the ducatoon exchanged for eighty stivers; in 1813, for two hundred and forty; which is the relative proportion of eighteen rix-dollars for one pound sterling. The depreciation, from the year 18O2 to 1803, was about 90 per cent.
From all that is here stated, it will appear to be my opinion, that the principal cause of the depression of the exchange originated from the debasement and deterioration of the coin, combined with the refusal of Government to receive the Colonial Currency into the Treasury for bills on the Presidencies of India, or upon England, at the same rate at which it was issued; and selling those bills at public auction, to the highest bidders.
Another powerful cause, however, of this calamity is to be found in the unfavourable balance of the trade of the island. I am the more convinced of the influence that that balance has had upon the exchange, and, at the same time, of the correctness of the statements on which those balances have been struck, from seeing how the alterations, that appear in the latter, agree with the changes, which have taken place in the former.
Prior to the year 1809, no statements had been made, with a view to form a correct knowledge of the state of the trade of Ceylon in imports and exports, and in the amount of its foreign debits and credits. In that year I was appointed to the situation of Comptroller General of Sea Customs, which was placed upon a higher footing, and invested with new and greater powers. That important branch of revenue had formerly been divided, under the administration of the different General Collectors of Districts; which had, perhaps, prevented the knowledge of the commercial interests of the island from being concentrated, and brought to light. Upon taking charge of this new department, I felt the necessity of forming such statements as could enable me to judge of the general balance of our foreign trade. Of the years 1806, 1807, 1808, and 1809, I could form but an imperfect idea; because no regulations had been established to ascertain the share which our own merchants had taken in that commerce; although it was known that foreign merchants and foreign capital were very extensively employed in it. Information was also wanted on the proportion of freight belonging to Ceylon: nor had the exports coast-ways been distinguished from those that were made out of the island. Not being able to collect these particulars from official documents and accurate dates, I was obliged to depend, in making out my calculations, for the four years above mentioned, upon the judgment of the best-informed merchants, and upon my own observations and conjectures. I collected, however, authentic materials, to form, for those years, good statements of the quantities and value of all the goods imported and exported; which could not be done for any period prior to 1806, as the accounts of the Custom-houses had been blended with those of other departments. From the first of January, 1810, the calculations that have been made, respecting the balances of trade, are founded upon information to be depended upon, as much as a subject of such intricacy will admit of. I shall have occasion hereafter to lead the reader through the statements of all the Imports and Exports of the Colony; and into a consideration of the interests both of Government and of individuals, in the general balances of its commerce. It will suffice here to call the attention to the following sums-total, appearing in the annexed Tables, N" 1, 2, 3, 4, 5, 6, and 7, which shew the value of all the Imports and Exports made from the year 1806 to 1813, inclusive: namely,
Rix-Dollars. Rix-Dollars.
In 1806. Amount of Imports . . . 3,727,100
Ditto ... Exports 2,727,804
1807. Ditto ... Imports . . . 3,387,302
Ditto ... Exports 2,915,190
1808. Ditto ... Imports . . . 3,303,695
Ditto ... Exports 3,039,466
1809. Ditto ... Imports . . . 2,635,235
Ditto ... Exports 2,660,795
1810. Ditto ... Imports . . . 3,112,748
Ditto ... Exports 2,777,997
1811. Ditto ... Imports . . . 3,574,313
Ditto ... Exports 2,781,633
1812. Ditto ... Imports . . . 4,215,399
Ditto ... Exports 2,442,895
1813. Ditto ... Imports . . . 6,378,739
Ditto ... Exports 2,443,940
From these sums, however, no balance is struck; as it would be incorrect, for several reasons. First, the total of the exports made coast ways are inserted among the others. Secondly, the prices of the goods imported and exported are both taken agreeably to those in the Ceylon markets; by which means, in the former, the profits of the importing merchants are included; but, in the latter, the profits of the exporter are not considered. To form some idea of a correct balance of debits and credits between the Ceylon merchant and the foreign Mercado's, it was necessary to have some knowledge of the share which the latter had in the trade of Imports to Ceylon, and of the Exports from it: and, lastly, it was necessary to disengage from the transactions of individuals, those of the Ceylon Government; which, by reference to the said Tables, from N 1 to 7, inclusive, will be seen are there intermixed; as the cinnamon, pearls, &c. on the Export side; rice, and other goods, both in the Imports and Exports.
All these considerations, however, being made, with as much care as the difficulty of the subject and circumstances would permit, I found the following to be the result, respecting the balances between Ceylon and foreign merchants: namely,
Average of the years 1806, 1807. Rix-Dollars.
Amount of goods imported and debits created
against the Ceylon merchants 3,049,855
Amount of all goods exported and credits created
in favour of them 1,707,991
_________
Balance against them 1,341,864
_________
In 1808. Amount of Imports, &c 2,908,658
Ditto ... Exports, &c 1,555,451
_________
Balance 1,353,207
_________
In 1809. Amount of Imports, &c 2,299,861
Ditto ... Exports 1,690,412
_________
Balance 609,449
_________
In 1810. Amount of Imports, &c 2,460,835
Ditto ... Exports, &c 2,074,658
_________
Balance 386,177
_________
In 1811. Amount of Imports, &c 2,918,314
Ditto ... Exports, &c 1,913,698
_________
Balance 1,004,616
_________
In 1812. Amount of Imports, &c 3,113,320
Ditto ... Exports, &c 1,706,863
_________
Balance 1,406,457
_________
In 1813. Amount of Imports, &c 4,749,220
Ditto ... Exports, &c 2,329,287
_________
Balance 2,419,933
_________
The reader will remark some coincidence between the alterations of the exchange in these years, and the balance of trade. From the year 1806 to 1 809, while the balances were becoming more favourable to the island, the value of bills on Madras did not rise, on an average, beyond sixty fanams, or five rix-dollars for a star-pagoda, but remained pretty steady at that rate, or only, at times, one or 1^ fanam lower. It could not, in fact, rise beyond sixty fanams, so long as there were in the island silver rix-dollars to be exported to the continent of India; where they could be sold at that rate, (namely, five for a star-pagoda,) which was about their intrinsic value, by the silver they contained 04* 4.
I have likewise stated, that, during this period, the Colonial Government issued, occasionally, accommodation bills to public servants; which being in great part brought into the market, through many channels, contributed to keep the exchange nearly at par with the intrinsic value of the Ceylon coin. The silver coin, however, was gradually disappearing. In the year 1809, the new silver coin, which was 1O per cent. worse in alloy than the coin of 1802, 1803, 1804, and 1805, had replaced it: and I am inclined to believe this to have been the cause of the exchange then falling to sixty-three fanams for a star-pagoda, instead of sixty, not-withstanding the balance was still improving.
The exchange then appears to have been under the combined influence of the intrinsic value of the coin and the balance of trade. Had it been acted upon merely by the balance of trade, it might have become much more favourable to the island than the rate of sixty fanams per star-pagoda, while that balance of trade was so rapidly improving as it did from 1806 to 1810; but the actual defect of intrinsic value in the rix-dollar prevented it.
Towards the close of the year 1811, began the scarcity of grain, and the great dearth with which the island was visited, till the year 1813 inclusive. The yearly balance of trade grew worse; from 386,177 rix-dollars, of the year 181O, to 2,749,220 rix-dollars, the balance of the year 1813. The Ceylon exchange fell from sixty-three to eighty fanams to a star-pagoda: and, by the year 1812, all the silver coin, and great part of the copper, had disappeared from the island.
From these facts, it appears to me to be clearly established, that the depression of the exchange was occasioned by the deterioration of the coin, and the unfavourable balance of trade; that by the existence of silver coin, although deteriorated, the exchange was, for some time, prevented exceeding sixty or sixty-three fanams per star-pagoda; and that the subsequent increased balance of trade against the island, while no coin any longer remained in it to fix a limit to the exchange, occasioned the extraordinary and distressing fall of it to eighty fanams for a star-pagoda.
An opinion has been entertained, that the disordered and alarming state of the exchange might have originated from a superabundance of paper money in circulation; but I am not inclined to adopt this opinion, for the following reasons. It is easy to ascertain the quantity of currency circulating in Ceylon: and it must be premised, that there are in that island no public or private banks; and that, from the year 1806, to 1814, no foreign gold or silver coins were seen in circulation, as general currency employed in payments for goods.
In the month of July, 1812, when the exchange was falling to sixty-eight and seventy fanams for a star-pagoda, the whole currency of the colony consisted of copper coin and Treasury notes; for all the silver rix-dollars had then been exported: the copper was excessively scarce, and barely sufficient for the purpose of payments in the most minute retail sales in the bazars.
Rix-Dollars.
We may probably exceed, in taking it at
one lac of rix-dollars 100,000
The amount of notes issued by the Ceylon
Government, to the 30th of June, 1813, was 1,928,296
_________
Total of currency 2,028,296
But from which must be deducted, as being then in
the Treasury, and at the Kutcheries (the offices
of Collectors of Districts), under orders for
canceling 150,701
_________
Remains 1,877,595
On the 30th of June, above mentioned, there were,
as balances of cash in the hands of the different
Public Accountants (independent of those to be
canceled) Treasury notes to the amount of ... 486,080
_________
Total amount of Currency actually in circulation. 1,391,515
_________
Now we will take a general view of the capital circulating annually in the Colony; of the different payments that these thirteen lacs and 91,000 rix-dollars of currency had to perform; and also of the means by which the credit of that part of their currency which consists of paper money was supported.
As to the latter question, it will be admitted, I hope, that about twenty-two lacs of rix-dollars, (which I take to be the average then received yearly at the Treasury and the Kutcheries, for revenue collected in the island,) and, I should suppose, at least twenty more for bills actually sold or issued, and drawn in each year upon the credit of the cinnamon contract, and on that for the pay of the King's troops, making, in all, forty-two lacs, were sufficient to support the credit of about thirteen lacs of rix-dollars, issued in Treasury notes.
Lacs,
Rix-Dollars.
We will now place these forty-two lacs as one of the
payments which the currency of the island had to
perform yearly ... 42
We must add the amount of the yearly expenditure of
Government within the Colony also, at ... 42
The total amount of actual payments for goods
imported and exported by merchants, at no less, upon
an average, than ... 50
But when we consider that these goods must pass, at
least, through the hands of two merchants, frequently
of three and more, before they are either
exported or consumed, we must add, upon the most
moderate calculation ... 50
___
Total ... 184
This is exclusive of all the payments made on goods produced and consumed in the island, payments arising from transfers of immovable property, and the infinite variety of other pecuniary transactions; to perform all which, we have not more than thirteen lacs of rix-dollars of currency in positive circulation.
Far, then, from apprehending that the amount of paper currency in the island has been excessive, here we see another instance of the rapidity, with which the currency of a State passes, in a very short time, through a great many hands.
I have other reasons, which appear to me conclusive, in proving that there has been no excess of paper currency in circulation in that colony; although there might have been an accumulation of it in the hands of some servants of Government, who, for want of means of remittance, and not trusting to the security of merchants in the island, were at a loss how to employ it.
In the first place, I have noticed, that in Colombo, at the season of the favourable monsoon, when the port is open to the coasting vessels from the Coromandel coast, and especially in the months of January, February, and March, when the trade is more brisk, and payments larger than usual are made at the Custom-house, the want of currency was often complained of, even by those merchants who could command the best credit.
Secondly, it is a fact, that so long as the exchange upon Madras did not exceed sixty-three or sixty-four fanams per star-pagoda, (which I conceive to be the par between the actual value of that pagoda and of the Ceylon silver rix-dollar of the years 1808 and 1809,) no premium could be obtained, nor was demanded, for the Ceylon silver rix-dollars, when exchanged for Treasury notes; which must have been the case, if there had been in the market more paper-money than the pecuniary transactions of the island had occasion for: and it was only in the latter part of the year 1812, when the exchange fell to sixty-eight and seventy fanams per star-pagoda, that the few silver rix-dollars then remaining were purchased for exportation, at the advanced price of one, or, at the utmost, 1 1/2 fanam, premium on each rix-dollar.
This fact alone seems conclusive, that the depression of the exchange did not originate from a superabundance of paper currency in circulation. Had that been the case, we should have seen, when the bills were sold, for many years, at about sixty fanams for one star-pagoda, that they could have been purchased cheaper when paid for with silver coin than with Treasury notes, which difference was never experienced.
It may here be asked, What must we consider to be the value of the Ceylon currency, with reference to the pound sterling ? A fixed criterion cannot possibly be established; for can it be the silver rix-dollars that will fix that value ? No; because then; are none remaining in the colony. Will it be the copper coin ? This is so mixed with bad metal some copper being heavier, and some lighter and so little left in circulation in 1814, barely sufficient for purposes of small change in the markets for provisions that it cannot be supposed to have formed the standard of the whole currency.
In this distressed state of things, I fear that to recommend efficient means for placing the currency upon a solid and proper footing, and to ameliorate the exchange, will prove a more difficult task than it has been to point out the causes which, in my opinion, have occasioned its present depressed condition.
If those causes are to be found in the deterioration of the coin, and the unfavourable balance of trade, it must be admitted, that the remedy can only be obtained, by bringing the intrinsic value of the coin more on a level with its nominal value; and by adopting every measure that can improve the agricultural and commercial state of the country. But it will also appear evident, that no single unconnected measure will be of any avail.
Were there not a large balance of trade against the merchants of the island, it might be equally conducive to give steadiness to the currency, either to raise the intrinsic value of the rix-dollar in silver to the full amount of its nominal value, or to lower the latter to a par with the low state of the coin. This is, in fact, what the public has already done; and it would only be an open and liberal acknowledgment, on the part of Government, of that which every body is now too sensible of. No person possessing a star-pagoda in gold will change it for a lesser number of rix-dollars in silver, than such as shall contain, in that metal, a value equivalent to the gold that is in the pagoda. But while the balance of trade is so great against the Ceylon merchants, as it was in the years 1812 and 1813, it would be of no service either to add to the intrinsic, or to deduct from the nominal, value of the rix-dollar. Should the former measure be adopted, the silver coin would immediately disappear, and be taken away for exportation, in spite of any ill-advised prohibition that might be placed against it. Should Government, on the contrary, lower the nominal to the low state of the intrinsic value of the coin, it would only add to its expenses, in the payment of all civil and military servants, whose emoluments are now fixed in pounds sterling, and paid at a fixed rate, with the high nominal value of the currency.
It may naturally enough be asked, How can the colony support, for so many successive years, a large balance of trade, always unfavourable ? No country, it will be said, can carry on trade for a long time, upon such terms. This difficulty will be solved, by reflecting, that the balances above stated are not against the whole colony, but against that mercantile interest in which individuals only are concerned.
In making out, not only the balance of the Ceylon merchants, but of the colony at large, comprehending in it the interests of Government, a very different result from the statements already given is obtained. We must then take into account the value of the cinnamon and pearls sold by the Colonial Government, and the import and export duties paid by foreign merchants; on the other side, the value of rice, and other grain and provisions, imported on account of Government; and, in one word, consider Government as the first merchant, joining its interests to those of individuals concerned in the foreign trade, from the best calculations that can be made. The balances will then stand thus; namely,
For the average of the years 1806, 1807:
Rix-dollars.
Total amount at the credit of the Colony ... 3,295,165
Ditto ditto at the debit of the Colony ... 3,369,855
_________
Balance against Ceylon ... 74,690
_________
For 1808.
Total amount at the credit of the Colony ... 3,457,489
Ditto ditto at the debit of the Colony ... 3,134,059
_________
Balance in favour of Ceylon ... 323,430
_________
For 1809.
Total amount at the credit of the Colony ... 3,073,292
Ditto ditto at the debit of the Colony ... 2,500,322
_________
Balance in favour of Ceylon ... 572,970
_________
For 1810.
Total amount at the credit of the Colony ... 3,149,781
Ditto ditto at the debit of the Colony ... 2,733,930
_________
Balance in favour of Ceylon ... 415,851
_________
For 1811.
Total amount at the credit of the Colony ... 2,887,596
Ditto ditto at the debit of the Colony ... 3,241,120
_________
Balance against Ceylon ... 353,524
_________
For 1812.
Total amount at the credit of the Colony ... 2,560,669
Ditto ditto at the debit of the Colony ... 4,004,066
_________
Balance against Ceylon ... 1,443,397
_________
For 1813.
Total amount at the credit of the Colony ... 2,561,704
Ditto ditto at the debit of the Colony ... 6,028,438
_________
Balance against Ceylon ... 3,466,734
_________
It will result from this, that although, in the years 1811, 1812, and 1813, in consequence of the great sums advanced by Government in the importation of grain for the preservation of the colony, the balance rose alarmingly against Government and the colony at large; in years, however, of common plenty, its condition is more favourable, owing to the resources arising chiefly from the culture of the cinnamon, the duties paid by foreign merchants, and occasionally the pearl-fisheries. From the first and latter resources, Government is enabled to afford to the Ceylon merchants, bills on the Presidencies of India, to adjust their balances. There is, besides, another source of credit, not entered in the above statements; because, although it affords a means of remittance, it is, however, no object of revenue to Government. This is the amount of pay to the King's troops, drawn in bills on England, which are sold in the colony. On the other hand, it must be reflected, that besides the demand for remittances made by the merchants, there is one arising from the public servants, for transmitting to England, or to the continent of India, either their savings, or that portion of their pay which several of them remit to their families or friends in the mother country.
These circumstances being explained, it is evident that both the Ceylon merchants and the public servants, being thus placed under the necessity of continually making a very large portion of their remittances by bills, the exchange must entirely depend upon the price which the Colonial Government chooses to demand for those bills; for it is from Government alone that they can be had.
It is of the utmost importance to form a correct opinion of the advantages, or disadvantages, that the Ceylon Government has derived from the premium received on Government bills of exchange, which is brought forward in the accounts of the island, under the denomination of Batta: for I apprehend the continuation of the present disordered state of the currency might have, in part, proceeded from a mistaken idea having been entertained upon this point. It was perhaps believed, at one time, that the batta on bills was an actual profit to Government: but I feel convinced that it has been a real loss.
The sums received under this head, since the year 1806, have not exceeded, upon an average, the annual amount of 150,000 rix-dollars; but this batta has entailed on the Ceylon Government an additional expense of 325,000 rix-dollars, now paid to civil and military servants for difference of exchange, without its compensating them, at the same time, but in a trifling degree, for all the losses they bear in consequence of it.
The Ceylon Government has, likewise, lost considerably by the depreciation of currency, in proportion to the amount of the taxes and revenues paid yearly into the Ceylon Treasury in cash; and particularly so upon the taxes that are fixed immediately in rix-dollars, known under the heads " Licences, Sale of Salt, Sea Customs, (on those articles which pay a fixed duty upon the quantity of goods exported or imported, without reference to their value, as arrack, areeka nuts, and other commodities,) Fines and Forfeitures, Post Office, Marine Department, tax upon the wearing of jewels, and the Ouliam or Capitation-tax;" the whole together amounting to nine lacs and a half, or 950,000 rix-dollars annually. Upon this branch of revenue, the loss sustained by Government, from ill receiving it in a depreciated currency, cannot, upon the most moderate calculation, be rated at less than two lacs and a half, or 250,000 rix-dollars.
Besides this immediate detriment to the finances of Government, which greatly exceeds any pecuniary profit arising from the Batta 5, must be considered how much has been lost, no less to Government than to the colony at large, by the total derangement it has occasioned in all commercial property; and the obstacles raised to the general increase of wealth and prosperity of the colony, by the vexatious uncertainty into which all speculations upon imports and exports have been thrown by the disordered and precarious state of the currency.
If it be, therefore, most urgent to prevent any further detriment, both to the solid and permanent interests of Government, and of the colony at large, I would recommend, as the first measure, to raise the intrinsic value of the silver rix-dollar to two shillings, by coining silver rix-dollars with ten per cent. alloy, and containing such a quantity of pure metal, that ten rix-dollars may, according to the general average value of silver, be worth one pound sterling.
I had, for some time, entertained the idea, that an exchange nearer to that which was fixed by the Proclamation of the 10th March, 1812, would have been advisable; namely, 1s. 9d. to a rix-dollar, instead of two shillings, as is now proposed. The consideration that led me to that opinion, was the inconvenience attending all alterations in the established pay of public servants, which is now made up in rix-dollars, agreeably to that exchange. Reflecting, however, upon the advantages that will be derived from having such a value placed upon the Ceylon currency as shall adjust itself, without fractions, both to the pound sterling and to the star-pagoda, taking the latter at eight shillings, I cannot find a more appropriate rate than that I have proposed. The confusion that has been introduced into the accounts of the colony, from the varieties of exchanges, and by the complicated and difficult fractions arising from them, have rendered those accounts intricate and perplexing to a great degree, even to the best-informed civil servants; and have added work, in the offices of the different accountants, which, with a fixed exchange, unencumbered with fractions, could have been spared.
There are other serious reasons for advising this exchange; namely, ten rix-dollars to one pound sterling; two shillings to the rix-dollar, or four rix-dollars to one star-pagoda; and I see no objections that may not easily be avoided.
In the first place, the pay of all civil and military officers could, with great justice and propriety, be reduced in proportion to this rate of exchange; by which means an annual saving would be made of about 325,000 rix-dollars 6.
Secondly, by the issue of the new silver rix-dollar, possessing intrinsic value at the rate of two shillings for each rix-dollar, or four rix-dollars to the star-pagoda, the credit and value of all the paper currency would also be supported accordingly. This would be an act of justice towards the public; as the greatest part of that paper currency was issued in 1802, 1803, 1804, and 1805, when that was the fixed exchange: and what might have been issued of new Treasury notes, since 1805, may be considered as only replacing the old ones.
When the British Government in Ceylon had established a fixed exchange, as it did in 1802, and maintained it for the three following years, (it had, in fact, remained fixed at pretty much the same rate since the year 1797,) all kinds of property acquired a settled value. The natives, and all the inhabitants of Ceylon, regarding it as such, have never divested themselves of the idea, that, when circumstances should mend, the currency would revert to that settled standard. In consequence, the value of immovable property has by no means risen in proportion to the deterioration that has taken place in the currency. The return to the former rate would do justice to that property. The measure would be hailed as a return to times of prosperity.
As much as Government has lost in the intrinsic amount of certain fixed revenues, which I have already adverted to, so much it would gain by raising, and then supporting, the value of the currency in which they are paid.
It would certainly be advisable to give timely notice of the alteration intended; in order to prevent too sudden a fall in the price of bills; and give time to those who have credits out of the island, to draw, if they choose, the amount of them at an exchange most to their advantage: but no great inconvenience could be felt from the circumstance; for those credits can be but few, when the balance is always so large against the Ceylon merchants.
Some measure, likewise, ought to be adopted, for the fair settlement of debts contracted in rix-dollars in latter years, when their price was so much deteriorated. It might not be just to compel the debtor to pay in a currency that will be raised in value higher than it was at the time he contracted the debt: but how was it just to compel the creditors to receive the depreciated rix-dollar of 1813, in payment for the good rix-dollar advanced in 1805 ? The same question may be put with regard to any debt contracted and paid at the distance of two or three years, after the great changes that were taking place in the currency. All such questions, therefore, could with more propriety be referred by the Civil Courts to arbitration; or else might be settled upon a scale of the value of the rix-dollar, made according to the average exchange of each year, from 1797 to the latest period.
These appear to me to be the points of most importance bearing upon the question. Any obstacle of less import could very easily be removed. I see, therefore, no inconveniences to be apprehended from re-establishing the exchange upon a fixed basis; and making a silver coin, for regulating the whole currency, at the rate of ten rix-dollars to one pound sterling.
Nor does it appear necessary that a large amount in silver rix-dollars should be coined, but merely sufficient to fix the real worth of that coin, upon which the value of the paper currency is to rest: for although, previous to the introduction of a silver coin, the copper money might have been looked upon as the regulating coin of the whole currency in that colony, the public will no longer consider the latter as such, after the introduction of silver. The quantity of silver rix- dollars necessary to put into circulation, in order to fix this standard of value in the whole currency, may, with prudence, be restricted to 200,000.
But, in adopting this measure, it would not be safe to allow the exchange to suffer any material fluctuation; and we have already noticed, that it would not be desirable, with a view to the real interest of Government, so long as the balance of trade continues so much against the merchants of the island.
The claims and honest interests of the public servants, civil and military, ought also to be taken into consideration: for it is not just, .that those gentlemen, who give their services to the public, and waste their constitutions in an Eastern climate, away from their relations, friends, and country, should, by the very act of the Government which they are serving, be deprived of what is granted to them, as a fair reward for their services, or compensation for severe privations.
The issue of bills to them at par, for part of their pay, in as great a proportion as Government shall be able to afford, will be but an act of justice; because it is only by that means that the value of the other portion of it, paid to them in Treasury notes, can be supported. If the supply be ample, nothing will be more conducive to keep the exchange at, or very near, par, and to prevent all sudden fluctuations; because, by increasing the number of sellers of those bills in some proportion with the purchasers, a fair competition will be maintained.
But the Colonial Government must also give occasionally, to merchants applying for them, bills at par; and, to prevent all appearance of favour being shown to one more than another, these bills may be distributed to them in proportion to the value of the goods imported by each of them within certain periods; that amount to be ascertained from the books of the custom-house. A similar measure was practised, with great success and perfect order, in the years 1812 and 1813, when the great scarcity of grain compelled the Ceylon Government to grant every encouragement to the importation of that necessary article of food, to save the island from famine.
To give these measures, however, their full effect, every possible means must be employed to enlarge and economise the credit established by the Ceylon Government upon the East-India Company, or anywhere out of the island. The first branch has lately received a considerable annual increase, from 60,000 to 101,000, which the Company, since the year 1814, has agreed to pay for cinnamon. The careful application of these resources, with a view to keep the exchange at par, cannot be too strongly inculcated on the Colonial Government. Every public want that can, by any means, be supplied by the produce of the island, should not be provided by importing things from abroad; and every expense should be curtailed, that may tend, in any way, to diminish the supply of bills to be put into circulation in the Ceylon market, and that should not, at the same time, be of an indispensable nature. The supply of wine, beer, and other goods, which the Colonial Government has been in the habit of importing from England, for the civil and military servants, ought to be discontinued; because it prevents private adventures; and because Government pays for the whole in bills, while merchants would contrive to pay part of those goods by articles of exportation. But it may with propriety, and much benefit, continue the investments of colonial produce, some of which, in late years, have been sent to England. It would be highly beneficial to encourage both the Ceylon merchants, and the public servants, to take an interest in those investments; which could be disposed of in the London market by the colonial agent, or others that could be appointed, by the joint consent of the parties concerned.
Nothing would be more conducive to the general prosperity of the island, than the formation of a well-regulated partnership of that nature, which would employ the capital and savings of the public servants, in the manner the most beneficial to the colony; namely, the encouragement of all exports, and the obtaining for them the highest sale price, the opening of the most extensive market for them, and forming of a large fund of credit in England. It is true that the quantity of goods exported (which from Ceylon are almost all the produce of land with very little manufacture upon them) would not immediately be increased, and we know they are already too few to balance the value of those imported; but the selling of those exports at a higher price than what they now obtain on the continent of India, would greatly tend to diminish the 'present unfavourable balance of trade. The advantages to be derived to Ceylon from the sale of arrack and cocoa-nut oil in England are incalculable; because the island may, in the course of ten or twelve years, be made to produce them in a much larger quantity; and because the sale of those articles in England, being both the produce of the same tree, would raise the price of all the Ceylon arrack (no less than 5000 leagers exported annually) which is sold in India. This arrack has little other vent besides the consumption of the troops under the Presidencies of Madras and Bombay, and His Majesty's navy in India. The contractors for these supplies may make sure, therefore, of having it at the lowest possible price; and the more so, when (as it has frequently been, and I believe is now the case,) the same persons hold the contract for both the Company's army and his Majesty's navy. For many years past, the average price of the best Ceylon arrack, sold in the Madras market, or other markets in India, cannot be stated higher than twenty four star-pagodas per leager, of one hundred and fifty gallons; making only one shilling and three-pence per gallon, after having paid all the charges of exportation, duties and charges of importation, up to the day of sale. This price is so low, that many of the Ceylon merchants were ruined in the trade; which is now in a total decline, in consequence of being, as I have stated, placed under a kind of monopoly: and the cultivation of the cocoa-nut trees, one of the very first agricultural interests of the colony, is thus most seriously injured. The opening, therefore, of a large market in England, for the sale of arrack and cocoa-nut oil, would diminish the supply of the former for the continent of India; a fair price would be obtained for it, both here and there; and this great resource of the colony put again in a flourishing condition. The consequence of these improvements would be a decreased demand of bills for completing the commercial remittances.
I am fully aware, that should the amount of bills to be disposed of in the colony exceed the limits of the demand, much detriment may then accrue to its commercial and agricultural interests, by the consequent discouragement that would be given to exportation.
On the arrival of that happy epoch, we shall be in time then to allow the exchange to go through every fluctuation produced by the general turns of the colonial commerce. Government may cease then to grant bills to merchants at par. Bills would naturally be brought to that exchange, by the state of the balance of trade. Government may then dispose of their bills by public auction; continuing, however, to grant to public servants such a portion of their pay in bills as should by them be demanded. By such measures, a fair and open competition would still be maintained between the purchasers and the sellers. The occasional fluctuations, which may then occur in the exchange, would only act so as to give a fair stimulus either to exports or imports, such as it operates in an healthy state of commerce, gradually to increase both one and the other, without producing any of those violent shocks in the affairs of speculators, which are inevitably attended with general detriment to the public prosperity, either by destroying capital, or by suddenly diverting it from its accustomed channels.
Flattering prospects of a great and steady improvement in the balance of trade had been entertained in the years 1809 and 181O; but the failure in the rice crops, of the years 1811, 1812, and 1813, not only destroyed those prospects for that time, but entailed arrears, as greatly to postpone a return of them.
It is of the first importance, in order to form an accurate conception of the state of the colony in this respect, to examine the nature of these balances, and to know the sources from which they chiefly originate. .'
By casting a look over the general statements of Imports and Exports, from the year 1806 to 1813, (Tables NM 1, 2, 3, 4, 5, 6, and 7, already cited,) we shall find the following sums, under different heads of goods imported; and the total value of goods exported in each respective year:
All other Total Value
Value of Rice Cloth Goods of Goods
Imported Imported Imported Exported
In 1806. 2,216,291 ... 861,381 ... 649,428 | 2,727,804
1807. 1,580,460 ... 1,173,846 ... 632.996 | 2,915,196
1808. 1,453,364 ... 1,021,900 ... 828,431 | 3,039,466
1809. 1,312,627 ... 759,028 ... 564,580 | 2,660,795
1810. 1,350,645 ... 722,480 ... 1,039,623 | 2,777,997
1811. 1,643,811 ... 897,767 ... 932,730 | 2,781,633
1812. 2,109,522 ... 909,973 ... 1,195,904 | 2,422,895
1813. 4,284,019 ... 600,888 ... 1,493,831 | 2,443,940
From this statement we collect, that the value of grain imported annually has never been less than equal to one half of the whole amount of goods exported; including, too, the cinnamon and pearls, which are the property of Government, and all the coast ways exports; the latter amounting yearly, upon an average, to 200,000 rix-dollars, which ought to be deducted from the total of the above-mentioned exports. At other times, the value of rice imported has exceeded the whole amount of goods exported; as in 1813, when it nearly doubled it.
Will it be said, in the face of such a statement that the Ceylon Government can allow the exchange to fluctuate, and enhance the price of bills, by selling them by public auction; and that the state of the f currency may, with safety, be left to settle itself, when there is no coin left in the island, and when there are such unfavourable balances of trade, originating from the importation of food ?
But grain is not the only article of urgent necessity among the objects of importation. The common cloth for the dress of the natives amounts to about one fourth of the value of the whole exports, taken upon the broadest calculation, as has been done above.
Few countries are placed in so depressed a condition as Ceylon is, in respect to trade; and until we rescue it from that condition, the principle of letting the exchange and currency find their own level cannot, with safety, be applied to it. As the payments for the importation of food absorb, in years of common plenty, a very large portion of the exports; so, when the least degree of scarcity occurs, the country has no resource left wherewith to encounter the urgency of the times. What must be the consequence, if, when bills are wanted to pay the importation of food necessary to the very existence of the population, when the country is destitute of coin, Government, being the only possessor of those bills, should sell them to the highest bidders ?
I was one of three members of a Committee appointed there to dispose of the Government bills, in the year 1812, during the scarcity of grain. The rapidity with which they rose in price was matter of distress to every feeling and reflecting mind. It was followed by a proportionate rise in the price of food, in all the markets; until Government was under the necessity of putting a stop to the sale of bills by auction, and to grant them to merchants, for a time, at a fixed rate, for the importation of rice; which effectually prevented the increasing evil.
In consequence of the state of dependence in which Ceylon is placed with respect to food, it suffers in the severest manner, not only from the failure of crops within the island, but also by those that now and then occur upon the Coromandel coast, whence the island is for the most part provided: and when it happens that a scarcity prevails in both countries, the addition made to the price of grain, added to the increase in the quantity demanded from importation, occasions such overwhelming balances against the island, that it cannot recover them for many years.
The reader must be aware, that, with the exception of Trincomale" and Jaffnapatam, the ports of the island are shut from the month of May till October; and that the free navigation of small craft from the Coromandel coast is confined to the months of January, February, March, and April, when the greatest part of the general stock of rice necessary to be imported for the consumption of the year must be received.
From all that has been said, it is evident, that, in addition to the measures already proposed for the improvement of the exchange, others should be adopted, that may tend to augment the quantity of food which the island can produce, and to encourage the manufacture of cotton cloth for the dress of the natives.
In pursuance of these salutary views, all obstacles should be removed that now stand in the way of these improvements; and then every direct encouragement which the Colonial Government can afford will have a full effect.
I conceive that the tenure by which land is now held is one of the great impediments that oppose the improvements and extension of agriculture, especially in the production of rice and other grain. It will be more appropriate to enter into detail upon this subject in a subsequent part of the Work; but I must insert in this a few general observations, which are particularly applicable to the point now under consideration. The King, or the Government of Ceylon as his representative, is supposed to be the owner of all the land. Some of it is inheritable by the descendants or relations, male or female, of the holders: but great part is only held at the pleasure of Government, upon service tenure, or so long as there is in the family male issue, or near relationship, able to perform the services attached to that land. Such a precarious tenure must be an effectual bar to every improvement; and it must prevent the natives of Ceylon feeling, upon the land held by it, that interest which they would feel upon full possession. Much of the land is loaded with a rent, payable to Government, of one-quarter, one-third, or even half, of the produce: the rest pays only one-tenth. This difference arises, in certain cases, from the quality of the land; and may in some measure equalize the rent, more than an uniform rate, without reference to the fertility of the land, would have done. But it is no less certain, that it must lessen the exertions of those occupants who have to pay the highest rent. It must in every way prevent improvements, to reflect that Government is to share so largely in the produce of the expenses and labour which those improvements must necessarily demand.
I am aware of the danger attending the altering of old institutions, in matters of so much delicacy and importance; but when the benefits to be derived by the introduction of a more perfect system are great, and apparently certain, a pertinacious adherence to that which is defective must prove as hurtful as an indiscriminate love of novelty. Nothing but good would be derived from permitting, and encouraging, the occupants of land to redeem the heavy share which they pay to Government, reducing all to one-tenth; and from granting full possession of the lands, so that they may be willed, or made to descend, to the heirs at law, male or female. Having to treat this subject hereafter more diffusely, I shall not now detain the reader any longer upon it.
The present system of collecting the land-tax in kind, and by farming the rights of Government to renters, is also conceived to be very prejudicial to agriculture, under various considerations; but these will come, with more propriety, to be discussed under the head Taxation.
Another impediment to agriculture is said to originate, in the southern districts, from the great number of cinnamon gardens left without enclosures, and the severe penalties imposed against cattle found straying in them. This prevents the owners of lands contiguous to, or in the vicinity of, those gardens, from keeping the cattle, which is materially wanted for cultivation: many lands remain waste in consequence of it. The late acquisition of the Canadian territory, where cinnamon can be plentifully collected in the forests, will very likely alter the whole policy of Government upon that important branch of revenue, and die regulations that are connected with it. We shall have occasion again to advert to this subject, in speaking of the Cinnamon Investments.
These are the principal obstacles to an augmentation in the produce of rice and other grain, which deserve the most serious consideration of the Colonial Government.
In speaking of the direct encouragements which it is in the power of Government; to afford to agriculture, I shall not enter into a discussion of the possibility of repairing the Giant's Tank, near Mantotte; which would afford means of irrigation to the surrounding fields, sufficient to the production of upwards of 134,000 bags of rice 7. I will likewise abstain from speaking of the capability of rendering fit for cultivation the fields called the Moottoo Raja Villie, near Negombo, which now lie a waste marshy ground, lower than the surface of the sea, which is near them, and consequently much impregnated with sea salt. Either of these undertakings would require immense sums to be ventured upon, with a great chance of failure. It will be much safer, and attended with more good, to facilitate the general improvement of the country, aiding the exertions of the natives in those many improvements which their scanty means will not allow them to attempt alone.
The repair of all the small tanks which are dispersed throughout the country, and which, in many parts, have been entirely left to be destroyed, is a matter of the first interest to Government, no less than to the islanders. The advances that Government should make, to replace them in perfect order, may be repaid by some trifling contribution from the fields that will receive the benefit of them; and the first outgoings would, indeed, return to the public treasury, with accumulated interest, by the general increase of the revenue derived from the land-tax. The island owes much already to the unremitting attention paid by Governor Maitland to the increase of the cultivation of paddy; and his measures, in the districts of the Wanny and Balticalo, have been attended with full success since the year 1806.
There is an old institution in Ceylon, which would contribute, in the most effectual manner, to torn the labour of the natives to the production of food, but which has, of late yearn, fallen into disuse. In a country where the mildness of the climate, and the simplicity of its inhabitants, seem to create but very few wants, the spirit of their ancient legislation appears to have been turned, with peculiar anxiety, to secure the means of existence.
The institution itself appears, at first sight, as a tax of the worst kind; namely, a species of capitation tax, levied not in money, but in labour, and some what resembling the .old French carvee.
The lower classes of inhabitants in Ceylon were under the obligation to work a certain number of days, weeks, or months, in the year, for Government, without remuneration, or with a very trifling one. This apparently very oppressive tax was made subservient to the general prosperity of the country, by the means of redemption that were attached to its institution; namely, that every person who proved he had sown and cultivated an amonam of paddy was exempt from the tax 8. This measure, enforced with some modifications, may still be rendered a source of great general benefit to the country.
We know, however, that the raising of paddy requires low grounds, and a very abundant supply of water; it is, consequently, subject to frequent failure, by the dryness of the seasons. Nothing, therefore, can be of greater consequence, than to promote the culture of a grain apt to flourish upon comparatively elevated and dry grounds.
The Turkish corn, or maize, has been proved to succeed well in Ceylon. It would be a great resource in seasons when the supply of rains is too scanty to yield an abundant crop of paddy; it would, in common years, add to the general means of sustenance, and render a less quantity of rice imported sufficient for the maintenance of the population. To the sowing an amonam of that grain, and rearing the produce of it, the same privilege ought to be attached that w,e have seen was granted to those who cultivated an amonam of paddy. In the years 1812 and 1813, some of this grain was produced in the districts of Balticalo and Matura, and exported thence to other parts of the island in small quantities.
The Head-men of the districts should be commanded to promote the cultivation of this grain; and the Governor may, by occasional marks of favour and distinction, to those in whose districts the largest quantity and best quality should be produced, induce them to make great exertions in the accomplishment of this desirable object. The variety of grain, called by the natives dry grains, are greatly inferior, in every respect, to Turkish corn, and can hardly be used as constant food. But the natives of Ceylon were so little acquainted with the different ways in which that corn can be used as food for man, that in the year 1812 they had never made flour of it, but merely eaten it roasted whole.
I have also seen the bread-fruit tree grow very luxuriantly in that island, upon the most elevated, hard, and dry soil. The rearing of that tree, and of the jack-fruit tree, which likewise yields a wholesome food in the greatest plenty, deserve the attentive care of Government.
With a view, however, to aid the cultivators of paddy, by securing to them, in times of great cheapness of that article upon the Coromandel coast, such a price as may produce a sufficient return for the employment of their capital and labour, it would be advisable to impose a moderate duty upon importation, whenever rice sells in the Ceylon bazaars under a certain rate. Judging of that rate from some local knowledge, and from having had occasion to consider the subject, both in times of plenty and of scarcity, I should suggest this duty to be imposed when the second sort of Cara rice, from the Coromandel coast, sells at less than two rix-dollars and a half per parrah.
These measures, if enforced with prudence and steadiness, may do much towards increasing the quantity of food that the island can produce and lower the exchange by diminishing the necessity of importing that primary article of life. But there is another object which deserves attention, with a view to the improvement of the balance of trade and the exchange; this is, the weaving of cotton cloth for the natives.
In taking a view of the different branches of Importation, I shall then enter into detail upon the subject of the duties levied upon cotton cloth: it will suffice here to say, that a material advance in them would ensure a market to the Ceylon weavers, and offer them that premium which, in the present state of the country, can alone contribute to extend this branch of manufacture. On the other hand, the tax which is now levied, by stamp, upon the cloth manufactured in the island, is one of the most impolitic: nothing, in fact, can be so destructive to this most important branch of industry, except another tax that has been levied when this cloth was exported from one district to another by land - a tax which I have reason to hope is by this time abolished. It will also be highly commendable in the Colonial Government to use the home-wove cotton cloth for the dress of the troops; a practice which the present Governor has most laudably introduced.
A premium, or mark of distinction, ought to be granted every year to the three weavers that should, at a certain fixed meeting, present to the Governor the three best-woven pieces of cloth. The natives of Ceylon are extremely partial to such marks of distinction; and, if distributed with a sparing hand, much good may be done, at a trifling cost to the public.
I have now gone over the various measures which, in my opinion, may with propriety be recommended, with a view to improve the commercial balance of the island; to fix and give stability to the value of the currency; and to prevent, in future, that unjust and pernicious disorder and waste of property, which, for some years past, there has been so much reason to lament; and which has originated from the deterioration of the coin, and depreciation of currency, joined to a very unfavourable balance of trade.
In many instances I have had an opportunity of recommending these measures for this Colony, and sincerely wish they may prove beneficial to it.
1: In 1812, the ducatoons were bought at two hundred and eight stivers, or four rix-dollars and four fanams each.
2: In 1787, Governor Vandcrgraff caused money to be coined from the brass of old guns, instead of fine copper.
3: The charges upon the coinage of silver amounted to 4 per cent.; those on (he copper coin to nearly 25 per cent.: until the year 1811; when, on the recommendation of the author, coining by contract was discontinued; and he established, and gratuitously-conducted, a mint, under the immediate inspection of Government, by which the charges of coinage in copper were reduced to about 11 per cent.
4: Five rix dollars make precisely sixty fanams.
5:
Rix-dollars.
Paid to Public Servants for difference of exchange, 325,000
Loss on current revenue ... 250,000
_______
575,000
Deduct profits of Batta ... 150,000
_______
Actual loss 425 000
_______
6: The measures to be adopted for preventing the future depreciation of the rix-dollar, will be stated hereafter.
7: A bag of rice weighs 164lbs. English, neat weight.
8: An amonam is eight parrahs; a parrah of paddy, when cleaned, gives half a parrah of rice: a parrah of rice weighs about forty-four pounds English.
Proof read and Reformated OCR Text into HTML to put Online at Lakdiva.org
Title:
A View of the Agricultural, Commercial, and Financial Interests of Ceylon
Author: Anthony Bertolacci
Publisher: LONDON: BLACK, PARBURY, AND ALLEN
Date: 1817.
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