§ 7. Mr. RUPERT GWYNNEasked if the suggestion of Messrs. Samuel Montagu and Company, contained in their letter to the India Office of 16th April, that their first purchases of silver for the Government should be postponed for two months at the market rates, estimated at ⅛d., equal to a shade under 3 per cent., entailed a further brokerage to them on this transaction; and, if so, how much?
Mr. BAKERAs shown in the correspondence circulated on 19th November, a brokerage of ⅛ per cent, was paid on the amount postponed.
§ Mr. GWYNNEAre we to understand that the transaction entailed double brokerage fees to Messrs. Samuel Montagu and Company in addition to the 3 per cent 984 that had to be paid by the Government for postponing delivery for two months?
Mr. WORTHINGTON-EVANSHad not that transaction the effect of making the Government pay 4½ per cent, per annum on the money?
§ 8. Mr. GWYNNEasked the Under-Secretary of State for India, if his attention has been called to the fact that £600,000 worth of silver was purchased by Messrs. Samuel Montagu and Company on behalf of the Government of India on 11th September at 29⅛d., whereas the market price of the day was 28 13–16d.; and what is the amount of the difference in cost and commission between the two amounts?
§ Mr. H. BAKERThe market price of 28 13–16d. was the price for silver bought for cash in London, in respect of which the cost of freight and insurance to India would have been paid by the purchaser. The purchase actually made was of silver to be sent from China, freight and insurance being paid by the seller, and the purchase price being paid partly on arrival in Bombay and partly some days after arrival. The extra gross purchase price was £6,438, and the extra commission was £8. Against this there was a saving of about £6,400 on freight, insurance, and interest. The Secretary of State is satisfied that so large a purchase could not have been made for immediate delivery in London at the date mentioned without raising the London price, which, a week later, had risen to 29 3–16d., and continued to rise for several weeks afterwards.
§ Mr. GWYNNEWill the hon. Gentleman answer my question whether this £600,000 worth of silver was bought above the market price?
§ Mr. H. BAKERI have answered the question. The market price in London is not the price of silver delivered in India, and this silver was bought in China, freight and insurance being paid by the seller.
§ 9. Mr. GWYNNEasked how the India Office satisfied themselves that Messrs. Samuel Montagu and Company acted as brokers and not as dealers in purchasing 985 silver, seeing that he is unaware of the names of the sellers from whom the silver was purchased?
§ Mr. BAKERMessrs. Samuel Montagu and Company were instructed to purchase silver on behalf of the Secretary of State, i.e., to act as brokers; the contract notes furnished by them indicated that they acted in that capacity; they have assured the Secretary of State in writing that they did so; and have offered to submit their books for inspection by his representatives.
§ Mr. GWYNNEDo the India Office still dispute that Messrs. Samuel Montagu and Company carry on business as dealers as well as brokers?
§ Mr. BAKERI can only say in answer to the hon. Member's suggestion that the Secretary of State has satisfied himself on this point, and if at any future date he wishes to examine the books he can do so.
§ Mr. GWYNNEHas he examined the books?
§ Mr. GWYNNEHow can he be satisfied?
§ Mr. SPEAKERThe hon. Member had better put the question down.
§ Mr. GWYNNEIt is done.
§ 19. Mr. TOUCHEasked whether the Secretary of State for India is able to submit any estimate of the additional cost of the recent silver purchases on behalf of the Government of India, owing to the accumulation of large balances at home having encouraged native speculators to form a ring to force up the price of silver against the Government, as compared with the probable cost if, during the last three years, moderate amounts of silver had been purchased to be minted when required; and can he give any assurance that the accumulation of unnecessarily large balances in London will be avoided in future?
§ Mr. BAKERThe Secretary of State is unable to estimate what would have been the effect on the price of silver if he had made purchases in 1909, 1910, and 1911, when they were not required. In abstaining from such premature purchases he acted in consultation with the Government of India and in accordance with their views. He has no desire to accumulate unnecessarily large balances in London, 986 and their large amount in the last three years was mainly due to the net receipts in India from revenue and other sources being largely in excess of the estimates and to a very heavy demand for remittance.
§ Mr. TOUCHEIf these balances are not required in India, does it not indicate that the people of India are unduly taxed for the benefit of the London Money Market?
§ 20. Mr. GWYNNEasked if the India Office approached the Bank of England this year on the subject of purchasing silver before the order was placed with Messrs. Samuel Montagu and Company; and, if so, did the Bank of England decline to purchase because they were asked to do so through any specified firm?
§ 22. Mr. GWYNNEasked whether there is, or has been within the last ten years, a contract or agreement between the India Office and the Bank of England relating to the purchase of silver; and, if so, the terms and state when it was entered into and when it expired?
§ Mr. BAKERBefore 1906 the Bank of England charged ⅛ per cent, on all silver purchased through them. This was separate from the commission paid to brokers. In March, 1906, an agreement was made by which the Secretary of State was to pay ¼ per cent, for brokerage, commission, etc., on the first two millions purchased in any financial year through the Bank, and ⅛ per cent, on any further amount, the payment to be divided between the Bank and the brokers, as might be arranged by them, without the intervention of the India Office. The agreement was for the period from 1st April, 1906, to 31st March, 1913.
§ Mr. GWYNNEIs this a compulsory arrangement?
§ Mr. GWYNNEIs it not binding?
§ Mr. GWYNNEWill the hon. Gentleman give the House the terms of the agreement?