18 May, 1926.]

[Continued.

interest to know what the loss on the old gold coinage was when the sovereign circulated? This is very small.

4953. I do not mean this particular item, but when the sovereign was in circulation, what was the annual cost? It depends on how much light gold coin is presented by the Bank for re-coinage each year. The

average loss per sovereign

was 1 per cent., but of course you understand that is only the legally light. If it is below a certain weight, then the holder of the sovereign has to bear the loss; those are called "light cut," they are melted down and just gold value given for them. (Mr. Phillips.) £8,692 is allowed for light gold. (Colonel Johnson.) That is over the Empire; light gold may be presented at any branch mint, and it is re-coined at our expense.

4954. I should like to ask one question with regard to the silver coin withdrawn from Australia; was that demonetised?-No; the Australians during the war, owing to the difficulty we had in providing them with silver coin, made up their minds to have a silver currency of their own, and that being so the Treasury agreed gradually to withdraw from Australia the British Imperial coins which had hitherto circulated there, and for that we pay face value. It is melted down in Australia and we get the bullion value, but have to pay the face value.

Major Salmon.

4955. You lose on that transaction?— We lose and Australia gains; it is a present to Australia.

4956. Does it come to a large sum of money in percentage?—It is about £100,000 a year for a succession of years. 4957. That is what it costs the British Government?—Yes.

4958. That is the difference between the value of the bullion and the price they paid, which was the face value of the silver? Yes. (Mr. Phillips.) I might perhaps point out there that we did not really lose, because we got the

4959. What did you say was the amount with regard to the gold?-The loss on the coinage of gold was £8,600. (Colonel Johnson.) I should think that would be about a fair average figure now. You mean what is the value of the gold that is being rubbed away in people's pockets every year?

4960. Yes. About £8,000 a year would be right.

Mr. Pethick-Lawrence.

4961. I do not know whether it really comes under the Mint, but could the Treasury tell us what is the cost of renewing the paper currency every year?— (Mr. Phillips.) I should have to look that up I am afraid.

Sir John Marriott.

4962. Do you suggest that the average loss on gold coinage is the same to-day as it was before the war?-(Colonel Johnson.) At present it is, because these light gold coins have been accumulating, and they are now being presented to the banks, but of course in this country, as gold is not circulating, there will be no substantial loss, but, on the other hand, Sovereigns are travelling all over the world, and in some very peculiar places. As hon. Members will know, we pay for fair wear and tear even in an Afghan's pocket.

4963. And that comes to as much now as it did before the war? We do not know yet.

4964. You say £8,000 would be about the annual loss?—Yes, that is about what we have estimated we shall pay this year, for instance.

Chairman.

4965. Have you anything to add, Sir Malcolm? No, thank you.

Chairman.

4966. Paragraphs 17 and 18, on page ix of the Comptroller and Auditor General's Report, refer to this Account. These two paragraphs, Sir Malcolm, refer to the British Dyestuffs Corporation, and the British America Nickel Corporation, and both refer to matters which I think the Committee have previously discussed at length? (Sir Malcolm Ramsay.) That is so.

4967. By the paragraph you bring the matter up to date, I think?-Yes, this records the final outcome of these proceedings, which originated out of the War, in the first case to safeguard the position of dyes in this country and in the second to prevent the supply of nickel to Germany.

4968. Would you like to add anything on the Paragraphs, Sir Henry ?-(Sir Henry Payne.) I do not think I really

have anything to add. The Government decided it was desirable that they should realise the shares in the British Dyestuffs Corporation, and those shares have been realised to the best advantage possible.

4969. Have you anything to say on paragraph 18?-I am sorry to say that the result will be that we shall realise nothing from our securities in the British America Nickel Company. The property has been sold for an amount which is insufficient to discharge the prior claims.

4970. So that Sir Malcolm's fear of a total loss, expressed in the second part of the paragraph, will be realised, I am afraid? Yes.

Mr. Briggs.

4971. May I ask with regard to the British Dyestuffs, whether there was a payment of £600,000 to the Government

8 June, 1926.]

4977. Was not the value of the shares very much depressed at the time?-No. I forget the exact month the settlement took place, but that was the settlement reached at the then market value.

4978. Market value does not necessarily mean actual value, does it?-I think it is obvious that if one had attempted to sell 1,700,000 shares the then quoted market price would have fallen very rapidly.

4979. But you had control of the Company, had not you, by voting power?(Sir Henry Payne.) In a sense through voting power, but we had not got the majority of the shares.

4980. But you had the voting power? -We had a good deal of control through the special voting power attaching to one share.

4981. Was that taken into consideration? I do not know whether it was taken into consideration with regard to the value of the shares.

4982. Who bought these shares ?-We surrendered the shares; they were not sold to anybody.

4983. They were cancelled?-It was a surrender to the Company, for £600,000.

4984. With regard to the British America Nickel Corporation, who decided that we should give up a first mortgage for an A. Income Bond?-The Board of Trade in consultation with the Treasury.

[Continued.

4985. Have the Treasury anything to say about that?-(Mr. Phillips.) Sir Henry Payne will correct me if I go wrong; I think the main consideration for this was that, as a condition for the arrangement, we got out of various large contracts for purchasing nickel which we had with this Company, which would, having regard to the steady fall in price after the war, have undoubtedly proved very onerous. (Sir Henry Payne.) Would you like me to explain the reason a little more? The reason which influenced us rather, I think, in agreeing to this, was that it was very problematical what we should have realised if we had taken extreme measures at that time and put the Company into liquidation, as we no doubt could have done. The property was not one which would have, in any sense, a ready market, and it would certainly have wanted a great deal more money spent on it, so that no one would buy it who was not prepared to put up a large amount of money. There were other people in exactly the same position as ourselves.

4986. Who held first mortgage Bonds? -Who held first Mortgage Bonds to exactly the same amount as we did; they were willing to agree to the reconstructon, which could only be carried out by giving the people who put fresh money into the concern a first charge. Of course, as it has turned out, we certainly should not have realised less than we have-we could not have-but we might, if the course of the market in nickel, and other things, had been favourable, have got out quite well, but we should probably have lost a good deal in any case.

4987. What was the total amount of the First Mortgage Gold Bonds?-The total amount was just double what ours

was.

4988. $6,000,000?—$6,000,000.

4989. An Income Bond is the worst security you could possibly take?-We came immediately after the people who put up the new money.

Major Salmon.

4990. With regard to paragraph 18, I should like to know how much money the British Taxpayer has actually lost

8 June, 1926.]

[Continued.

in the British America Nickel Corporation?-£600,000.

4991. Is the Company still in existence? -It is being wound up.

4992. And will all the shareholders lose the whole of their assets?-Yes.

Colonel Assheton Pownall.

4993. And the Bondholders too?-Yes, except the people who put up the additional money on the security of the first charge Bonds.

Major Salmon.

4994. Will those that put up the additional money on the first charge realise their money plus a profit?-They will realise rather less than the money they put up; they will have a loss, but not a very large one.

4995. And the reason that we became interested in the Nickel Corporation was presumably due to the war period?-It was solely a war transaction; the object of it being (it is a little indirect perhaps) to prevent nickel finding its way into Germany at a time when nickel wanted there.

was

4996. As regards paragraph 17, the British Dyestuffs Corporation, Corporation, Ltd., exists at the present moment?-Yes.

4997. Are they in a solvent condition? -Certainly.

4998. But it has cost the British Government £600,000?-Yes; it cost other shareholders a good deal too. The British Government are not the only shareholders who have lost.

4999. As a matter of fact we have cut our loss?-We have cut our loss. Perhaps I have passed one figure that you gave which I am not sure that I ought to have. You said the British Government had lost £600,000?

5000. Yes?-I think we lost more than that.

Chairman.] That is what we actually got for our interest.

capital to work upon, presumably stands a chance of making ends meet, or possibly a profit? I should hope so, certainly.

5003. Although there may be a profit in the future on the smaller capital, the British Government will not get any benefit from that; they will have made a loss of £1,100,000?-Yes, but, of course we have got the £600,000. I do not know whether anyone would say that there would be sufficient profits to pay a substantial dividend on £1,700,000.

5004. Quite so, but I can quite imagine you could write down the capital of the Company to such a figure that they could pay substantial dividends on the reduced capital?-On the reduced capital, quite so.

5005. As I understand it, the British Government put in £1,700,000?—Yes. 5006. And were satisfied to take £600,000?-Yes.

5007. And lose £1,100,000?—Yes.

5008. What is the total capital of the Company? The issued capital is £9,197,108.

5009. That has been reduced to what figure?-£4,775,580.

5010. In

round figures, one half?

Yes. 5011. And now we have not any interest whatsoever in it?-None at all.

5012. The only reason we had an interest in the British Dyestuffs Corporation was on account of the war?-Yes; on account of the difficulties, which were brought out in the war, through our having no dye industry in this country.

5013. At what date did you take an interest in the Company: after the war? -No, during the war. The first interest which the Government had was during the war.

5014. When was the Company floated? -It began in 1915 or 1916.

Major Salmon.

5019. So both these concerns are now a dead loss to us?-So far as our money interest in them. I do not think I should like to say that either had been a dead loss. The British America Nickel Corporation served its purpose; it was I should very important at the time.

not at all like to say that the British Dyestuffs Corporation has not served its was to assist in the purpose, which establishment of the dye industry in this country.

5020. I should like to ask the Treasury when this was written off the Accounts of the National Exchequer ?— (Mr. Phillips.) Do you mean the British Dyestuffs?

that come under what? There is British America

War Realisations, or no money from the Nickel Corporation.

The payment by the British Dyestuffs Corporation would be included under Miscellaneous Revenue.

Sir Fredric Wise.

5026. Is that the same way that you would treat flax, for instance?-I do not know particularly about flax, but any receipt of that character would be put under Miscellaneous Revenue, either Special or Ordinary according to circumstances.

Colonel Assheton Pownall.

5027. With regard to the £600,000, which I gather was the market price at the time of the sale of the British Dyestuffs Corporation shares, did that represent a fair price month in, month out, for many months prior to your carrying the transaction out, or was it just the price at that moment? (Sir Henry Payne.) I could not say exactly, I have not looked it up, but substantially it was the price over some period; they were not just depreciated at the moment and taken at that.

5028. There would be a great temptation otherwise to bang the price down?I think if you were to check the prices, you would find that would not be so.

5029. The Stock Exchange have their methods of doing these things.-It had not paid a dividend for a considerable time.

5030. Therefore, the price was more or less a stable one?-More or less; I have not checked it, so I can only speak generally.

5031. What would have been our position with regard to the British America Nickel Corporation had we not agreed to transfer these Gold Bonds into A. Income Bonds, in view of what has since happened?-Our position would have been that we could at that time have forced the liquidation of the concern and had it sold, and we should have received half the purchase price.

5032. £300,000 if it was £600,000 altogether? We had £600,000 and there were other people who had similar Bonds