File 1262/1915 Pt 2 'Persia: Financial assistance: The Moratorium' [‎327r] (417/424)

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mroads by the Government of India upon the loanable resources of the United
Kingdom, and the further forcing up of rates against the British taxpayer
n a ime of national emergency, until it has been demonstrated by experiment
ha the strain cannot, at any rate as regards the Indian Government’s own
iequipments, be relieved by the offer of similar inducements on the Indian
market.
0. 1 he depreciation of existing securities arising from the necessity for
o enng a higlier rate of interest on new borrowing is the inevitable result
o sec ar condiuons and there can be no defence for maintaining an
artificially low rate of interest in India in the interests of the Presidency The name given to each of the three divisions of the territory of the East India Company, and later the British Raj, on the Indian subcontinent.
•iii vs and other fmhan instUutions at the expense of similar institutions iii
the h mted Kingdom which suffer from the flotation in England at a hKher
late of interest of Indian issues which might be avoided if the Indian
Government were prepared to pay an adequate rate in their own market.
7. It appears therefore to my Lords to be essential that it should be'made
a condition of the offer of any further Indian Government loans in the United
Kingdom that at least as favourable terms should be offered concurrently
The Under Secretary of State
for India.
I am, &c.,
John Bradbury,
EKGLOSLRE Ko. 11 : Jhclicl Office to Tecasiivy.
^ 51 - 3 * * * * 8 * lo - India Office The department of the British Government to which the Government of India reported between 1858 and 1947. The successor to the Court of Directors. ,
.u ! u i re • ' y the Secretar .V o f State for India in Council to inform
you that he has given very careful consideration to Sir John Bradbury’s letter
dated 29th September, No. 19,920. '
2. Before stating his views on the various points raised, Mr. Chamberlain
i esires to make it clear that lie did not send the letter from this Office to the
ireasury, dated 20th August, without first satisfying himself that the
opinions expressed in the telegram from the Government of India dated
ti August, therewith forwarded, were such as he could endorse. He is
convinced of the soundness of the view of the Government of India and in
all essential points, of the arguments by which they support it.
3 The one point regarding which the Lords Commissioners specifically
cast dpubt on the correctness of the arguments used is the difficulty or other
wise of remitting to this country the proceeds of a war loan raised in India
a re " , f this matter, the position is as follows :-The remittances that can
be made from India to tins county by the sale of drafts do not one year
with another, greatly exceed the requirements of the Secretary of State in
Council (which the proceeds of drafts are the only recognised resource
ior meeting) m respect of expenditure chargeable against revenue
\\ hen there is an excess it is normally applied to capita] expenditure-
but it is occasionally added to the portions of the Gold Standard Reserve ami
laper Currency Reserve held in this country. This year and next, any
excess remittances would naturally be used for the first and second of the
three purposes mentioned above, the Gold Standard Reserve being in u,-<mnt
need of replenishment. Ihe third purpose may be left out of cousiderntiou
as there is at present no special need to apply to it the proceeds of drafts’
lo divert any possible resources from the first of the three destinations
would involve an increase pro tanto of the amount required to be obtained
in this country for capital expenditure; to divert any from the second would
increase the risk of difficulties in connection with the exchanges” on the
occurrence of which the Lords Commissioners in their letter of 25th Februarv
V- ’ . “Pressed their readiness to help this Office. Either form'd’
diversion would thus entail the certainty or possibility of serious disadvantage
to tne Ireasury. °
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Enc in adr. D