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between two private individuals, it is probable that no court of equity would compel its execution. The establishment of fortified coaling stations involved, in my opinion, a departure from the implied terms of the contract, that vitiated the binding nature of the original agreement. The concentration at Singapore of the defence of the whole of the Settlements is another, although a minor, point in this contention, which has been fully dealt with by Sir Cecil Smith in the 10th paragraph of his despatch above alluded to.
6. I cannot think that Her Majesty's Government can seriously mean to hold this Colony to an understanding which. if carried to its logical conclusion, might, if the balance of power in the East should slightly alter, involve the incidence of the cost of a fortress, such as Malta or Gibraltar, on the civil population of a small settlement. The events that have occurred since 1866 have turned a commercial emporium into a place of first-class importance in the system of Imperial defence, and it is I think, vain to argue that the retention of the commercial advantages that have during the same time accrued to Singapore are the raison d'être of its creation as a place of strength and as a point d'appui for fler Majesty's forces, for exactly the same argument could be applied to either of two fortresses which I have mentioned.
7. The other point on which I should like to remark is the question of taxation. It is, I think, impossible to draw any exact parallel between the incidence of taxation per head of population in threat Britain and the Straits Settlements. Your Lordship remarks that while 80 per cent. of the revenue of the latter would, if the military contribution has been paid, be available for civil purposes, only 36 per cent. of that of the former is so available. While admitting, for the sake of my argument, your Lordship's figures, I would point out that Great Britain is a country which has incurred in the past an enormous war debt, the interest on which may reasonably be deemed to be the payment by the people for the great European aad world-wide advantages they have gained as the consequence of its expenditure. If this be admitted, 28 per cent. must be added for purposes of comparison to the calculation of the civil expenditure of Great Britain. Then it must be reinembered that in England great public works for the development of the country do not, to a large extent, fall on the public revenues, while in a Colony they almost invariably do so. Much requires to be done in the Straits Settlements that will not be done, if the whole revenue, after defraying the bare necessities of Governinent is devoted to Military Contribution, to the payment for additional barracks, and to the alterations that will from time to time inevitably take place in the system of defence.
8. The country roads in Great Britain are not kept up from general revenue, whereas in a thinly-peopled country it is inevitable that the cost of all roads outside municipal limits should be so defrayed. This will also apply to a large proportion of the charges for police, education, gaols, &c.
9. On a reasonable estimate the proportion of these items that would fall on the general revenue here, in excess of the proportion of similar charges in England, might be taken at 16 per cent, and this would bring the remaining revenue available for military purposes in the Straits Settlements to something like 20 per cent., or about 800,000 dollars, the equivalent of 80,0004 at the present rate of exchange,
10. I do not forget that the local revenues are equally, with the general revenue, a burden on the shoulders of the English taxpayers, but it must be remembered that we have local taxation in the Straits Settlements, although not to the same extent as obtains at home.
11. I do not think, if Singapore is to retain its present character, on which hinges all its prosperity as a free port, that any considerable increase can be made in taxation. An income tax has been suggested, but from whom could it be collected? The Chinese merchants, who represent a large proportion of the trading element, would bitterly resent such an impost, and it could only be collected by an inquisitorial inspection of their books, which, moreover, it would be necessary to force them to keep in the English fashion. The European merchant is very generally the junior partner of the firm, or merely a manager on a salary, and the profits, such as they are, are spent in England after a payment of their due proportion of Imperial Income Tax. It is, I think a mistake to regard this as a wealthy community," although there are a good many well-to-do people, who live in considerable comfort, but these do not, I think, bear anything like the same proportion to the general population as does the wealthy middle class of Great Britain. Below these come the European clerks and employés, who are certainly, as a class, not well off. The Eurasian part of the population, and the Chinese clerks are represented to me as being generally extremely poor, and it is probably unnecessary that I should say, that the great mass of the working population live absolutely from hand to mouth, eight or ten of them living on what would be considered a bare subsistence by an English mechanic or labourer.
12. A tax on tobacco has been suggested, and your Lordship has been good enough to cause me to to be furnished with certain information on the method followed in levying such a tax elsewhere, but there are grave difficulties, which I need not dwell upon here, in the way of collecting a tax on tobacco, although I do not absolutely regard it as an impossible one.
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13. The natural desire on the part of the Dutch to absorb the trade that is now carried on from these Settlements, makes it a matter of grave necessity to avoid the irritation that would be caused to our population of Chinese, Malays, and Indians by the imposition of unaccustomed taxation."
14. I earnestly hope that nothing short of the direst necessity will cause your Lordship to direct me to commence even for the erection of military buildings a system of borrowing money. To raise loans would, in my opinion, be the beginning of the end of a sound system of finance for the Straits Settlements.
15. It must not be lost sight of, as I fear it has been to some extent during this correspondence, that the revenue and prosperity of the Settlements are not necessarily measured by the bulk of the trade, which passes through them, and which is, for all practical purposes, a transit trade, in which little or no profit is made. Neither must it be forgotten that although the revenue of the Colony seems to show some advance, when stated in dollars, it does not show, when given in sterling, even that moderate increase which your Lordship seems to regard as assured.
16. Your Lordship will, I think, admit that I have applied retrenchment with no sparing hand, and although I do not wish to anticipate the effect of the reductions I have made I fear, that under some heads of service it will be necessary, in order to maintain efficiency, to increase the votes. In any case I submit to your Lordship that the prospect held out in paragraph 11 of your despatch under reply, is of the gloomiest to a Colony that has been hopeful of developing its resources by increased expenditure on useful and remunerative undertakings. In plain language the position appears to be that the Colony is to be allowed bare subsistence, and that all its remaining resources are to be devoted to armaments, in the cost and extent of which it has no voice, and which it deems-and I think with justice--to be far in excess of its require- ments of commercial security.
17. I would crave your Lordship's pardon if I am overpassing the bounds of official decorum in saying that, in my humble opinion, the Departmental Committee on the report of which Her Majesty's Government has based its decision was scarcely, from the Colonial point of view, fairly constituted. Assuming that the Treasury and Colonial Office members were adequately representative of Imperial and Colonial interests, the War Office was hardly the department that should have furnished the member, who would in fact be the arbiter in all points of difference, on some of which the War Office and the Colony are hopelessly at issue.
18. I note what your Lordship says as to the increased annual cost of the garrison over what was anticipated in 1888. I should be glad if your Lordship would cause me to be furnished with the figures on which this calculation is based, as I am unable to procure the information in the Colony.
19. I have endeavoured in this despatch to avoid dwelling on controversial matter, but I would venture to remark that it would be a source of some satisfaction to this Colony, if I could be informed why Her Majesty's Government is treating the Straits Settlements in so entirely a different manner to other Colonies. Take, for instance, Jamaica or Cape Colony; the former has double, the latter twelve times, the gold revenue that the Straits Settlements has, and neither of them as a coaling station is probably of more importance than is Singapore; or take Natal, with treble the revenue and not at present a coaling station in the Imperial system at all. Only one of these Colonies pays, so far as I am aware, anything, and that one (Natal) only some 4,000, towards the cost of garrisons of much the same strength as that of the Straits Settlements. The same remark applies with more or less of force to Sierra Leone, to the Gold Coast, to Nova Scotia, to Barbados, and to St. Lucia. None of these, so far as I know, bear any proportion of the cost of Imperial defence, although they have Imperial garrisons. Even in the cases of Ceylon, Hong Kong, and Mauritius, the amount recovered is not nearly in the same proportion to the cost of their defence and to their revenues, as is that exacted from the Straits Settlements,
20. I append a table showing what has been the proportion of military expenditure to revenue, &c., paid by this Colony during the last 10 years.
24. Troonclude by expressing an earnest hope that it may not be too late to deal with this question on the basis (perhaps) of a certain fixed proportion-say 20 per cent.-of the Colonial revenue being taken as its contribution for military and naval defence. I am aware that such a system, by reason of the fluctuation in the dollar value, might to some extent disturb the estimates of receipts by the Imperial Exchequer, but this disturbance would be infinitesimal in comparison to the hopeless confusion into which the calculation of the contribution on a gold basis reduces the Budget of a Colony, of which that contribution, with other military charges on the 1895 Estimates, exceeda one-fourth of the estimated revenue.
C. B. H. MITCHELL.
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