[Original.]

Letter from the EARL OF CALEDON to VISCOUNT CASTLEREAGH. CASTLE OF GOOD HOPE, October 16th 1809.

MY LORD,-In executing the duty pointed out by the Committee of Privy Council for Trade and plantations, I have not barely confined myself to the statement required, but attempting to aid the objects, I accompany it with a detail of every expence incident to the Revenue Collection, and add such observations as occur to my mind upon the improvement of the present Revenues, their mode of collection, and such additions as will connect the advantages of the Individuals with the Interests of the State.

It is with great diffidence I submit my opinions but I trust a zealous application of such talents as I possess to the subject will justify me in a detail that however minute may prove useful.

I hope your Lordship will believe me very sincere when I inform you the great principle of my administration has been to impress every Inhabitant that I seek neither private gratitude or affection, that all favours conferred have arisen from my opinion of the meritorious exertions of Individuals, or that such favours will ultimately prove beneficial to the public Interests either directly by an augmentation of immediate revenue as rent, or indirectly by augmenting produce liable to taxation.

I feel convinced my Lord in a Colony newly acquired whose population is naturally and rapidly increasing notwithstanding great local obstacles, that system of taxation which combines the interest of the Individuals and the public is best, and if the British Government should to the augmenting population of this Country decline forming local assemblies, or any means of expressing their public opinions upon taxes and public Revenue the greatest caution is necessary in those whom His Majesty employs and invests with his representation.

The extent of Country, the habits of the Boers, and the vicinity of neighbouring Independent States renders an exact consideration of what is practicable necessary.

I am therefore bold through your Lordship to intimate my opinion that such changes as are intended should be communicated to me or such other representative as His Majesty may appoint or that if Commissioners be sent out they be restricted from making

any change in the Land taxes, constitution or privileges of the people until a reference can be made to England or until they have resided in the Colony at least one year.

I am led my Lord to this statement from the dissatisfaction which was evident after we evacuated this Colony arising from injudicious appointments made in Holland and from regulations enforced by those unacquainted with the manners and disposition of the Inhabitants and from a conviction derived from the experience I have acquired that a very few active, unquiet and dissatisfied people might with the assistance of the neighbouring Bosjesmen and Caffres unite and produce great mischief, a considerable diversion of His Majesty's Forces and ultimately render this otherwise valuable Settlement a burthen to Great Britain.

I must trust to your Lordship's favourable construction of these preliminary observations and representation of them to the Committee in order to exonerate me from all imputations of vanity or presumption, but I have deemed it a duty to make them fully satisfied that any beneficial change can only be effected by parties apprized in the clearest manner of the state of Society and the modifications of property actually existing. I feel the responsibility of these my opinions the greater as there is no public Body or any Individual who directly to my knowledge corresponds with His Majesty's Ministers on these subjects.

I have now the honor to submit under distinct heads the amount and nature of each Source of Revenue together with such observations as I think may enable the Committee to adopt any alteration that in its wisdom may appear meet, but as the subject at large has connexion with the paper Currency of the Settlement I beg to premise my statement by some observations upon it, as one of the principal sources of revenue.

The origin of Paper Money in this Colony commenced during the American war in which Holland took a part and which occasioned such a diminution in the supplies from the mother Country that Governor Van Plettenberg to relieve the temporary distress caused an issue of Rds. 47,696-24sts. and that upon no other Security than the good faith of the Government and a solemn assurance that the paper money so created should be redeemed as soon as the pressure of the existing war could enable Government to receive the ordinary supplies from home, each Rixdollar so created was estimated at eight skillings or Forty

eight Stivers, equivalent in value to something more than four shillings Sterling.

From May 1782 (the period of that issue) to the year 1784 a Sum of Rds. 925,219-46 Sts. was thrown into circulation, but the Sum of Rds. 825,904-36 Sts. being afterwards redeemed by Specie or by Bills on Holland left in circulation in the year 1789 the small Sum of Rds. 99,315-10 Sts.

This partial reduction of the original issue seems to have affixed credit to the remaining Sum and to have rendered farther issues by succeeding Governors more easy, nor indeed did the Inhabitants appear to have marked a suspicion of the insecurity of such property.

Accordingly additional sums were from time to time created between the period already mentioned and the year 1793 when the Commissioners General on the part of the Batavian Government at that time established the Loan Bank and ordered that the total amount of the paper currency should not exceed One Million of Rixdollars, nevertheless a subsequent issue in the year 1795 took place and it was found upon the surrender of the Colony in 1795 that the total amount in circulation was Rixdols. 1,291,276-42 Sts.

At the Capitulation Governor Sluysken proposed an article which was agreed to, namely to "continue the paper money at its present value, to prevent the total ruin of the Inhabitants," and in an additional Article the Houses and Lands the property of the Dutch East India Company were mortgaged to its amount, by which means there was a specific security given to the currency which it never had antecedently.

From the occupancy by the British until the evacuation there were but three Sums created, one of 250,000 Rixds., the other 165,000 Rds., and the last 80,000 Rds.; the cause assigned for the first augmentation was that the Inhabitants refused to take Government Bills on England, the second sum was created as an addition to the Capital of the Loan Bank, and the last for the purpose of procuring Rice in the time of scarcity. Upon the restoration of the Colony these sums were accounted for to the Dutch Commissioners in the following manner, the Sum of 250,000 Rds. by the Sale to the Batavian Government of Stores, Ammunition, &c., the Sum of 165,000 Rds. advanced to the Loan Bank remained at large, having for its Security the mortgaged

property of those who borrowed it, and the last Sum of 80,000 Rds. was liquidated by the Sale of Rice the Article which it represented.

From this period until the Surrender of the Colony in 1806, the Batavian Government by degrees added 300,000 Rds. to the paper Currency, and altho' the particular purposes for which the Sums. so created were specified, yet the application was widely different from the proposed object, inasmuch as money created for erection of public Buildings was converted into a military Chest and the Security was never obtained to the great dissatisfaction of the public; nor was this the only instance in which public faith was not kept altogether inviolate, part of those lands and the Buildings upon them which were secured for the payment of the original Sums were sold in Lots to Individuals for 80,000 Rds., which was applied to the current expences and to which amount the public Security has in consequence suffered.

The gross amount of the Paper Currency in circulation in the Colony at the Surrender in 1806 was Rds. 2,086,000, to which Sir David Baird added 80,000 Rds., and the total Sum in circulation at present is Rds. 2,169,197.

Having thus stated the quantity and Security of the paper money I refer your Lordship to the enclosure No. 1, if a more detailed account be thought necessary.

As founded upon and connected with the currency of the Colony I must beg leave to call Your Lordship's attention to the

LOAN OR LOMBARD BANK.

On closing the Books on the 31st of December 1808, the profit arising from this Establishment for the past year amounted to Rds. 44,632-1-5, which profit accrues from the interest paid by Individuals for Sums advanced by the Bank. As what I shall hereafter submit in my general remarks for the consideration of the Committee will very much depend upon my view of this Establishment, I beg to trace it from its origin to the present period.

The Loan or Lombard Bank was established in the year 1793 by the Commissioners General Nederburg and Frykenius who were sent out to regulate the affairs of the Dutch East India Company in their Eastern possessions.

The general distress felt in the mother Country at that period extended itself to this Colony, and in order to give temporary relief to those persons who though possessed of property, were notwithstanding unable to answer the demand of the moment, Government caused this Bank to be established, and to effect its purpose ordered and issued at different periods a creation of paper money to the amount of 680,000 Rds.

The administration of the Bank was vested in a President and two Members to whom the money was entrusted with instructions for its distribution upon sufficient Security for the encouragement of Trade and Industry in the Settlement.

According to its Instructions this Board was authorized to lend money on moveable as well as immoveable property, but the term of the Loan was not to exceed a period of two years, with an additional clause leaving it to the discretion of the Board to renew the Loan at the expiration of the term. The loan was likewise granted subject to an annual charge of 5 per Cent upon the Capital, being one per Cent less than the legal interest, as appears by their Instructions.

To the original Capital Lieutenant General Dundas added in the Year 1802 by two new creations the Sum of Rds. 165,000, which made the gross Capital of the Bank amount to Rds. 845,000.

A Bank which had for its object relief of distressed industry and the promotion of Trade was no doubt an Establishment worthy of a considerate Government, but this institution which professed the attainment of such objects had by the mode of administering its affairs rather tended to the prejudice than to the relief of the Industrious part of the community.

That clause which empowered the Committee to continue the Loan beyond the period of two years and which was intended to be used solely upon particular occasions became general in its application, the repayment was never made, not even demanded, and consequently each Loan diminished the Capital without a reflux of its former issues to answer subsequent applications, as the interest was employed to the immediate use of Government and formed part of the current Revenues of the Year; nor was this the only abuse, it has likewise been found that it was not the necessitous alone who sought for and obtained the advantages of a Loan, that many who could succeed in borrowing from the Bank a sum at 5 per Cent lent it at increased interest to the more