PUBLIC RECORD OFFICE
Reference :-
CO. 882
8 PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO
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As against the doubling of the exchange compensation I proposed (omitting to notice the few cases in which the original rate of 2s, to the rupee still holds) that officers drawing leave pay and pension in this country at is. 10d. should draw it at 1s. 9d.; that officers drawing leave pay and pension at 18. 6d. should draw it at 1s. 4q.; and that all future officers should draw at 18. 4d.; the object being to prevent an increase in non-effective changes, and, so far as it is equitable, to accelerate the abolition of fictitious rates of exchange. I also proposed that in the cases of widows and orphans of officers now drawing leave pay and pension at 1s. 6d. to the rupee, and of all future officers, the rate for payment of Widows' and Orphans' pensions should be Is. 4d. instead of 1s. 6d. I suggested that £1,000, or Rs. 15,000 at 1s. 4d. should be the maximum limit of pension in the case of officers hereafter joining the service, and I suggested additional increases to the emoluments of the cadets, the passed cadets, the 5th and the 4th classes of the cadet service, proposing to apply my proposals within the cadet service to all officers, including the few Ceylonese who have entered the Government service as cadeta.
I proposed that the double compensation should be applied outside the cadet service to the salaries of all grades usually filled by Europeans; and lastly I suggested that, as vacancies arise, the fees now drawn by the holders of some of the higher appointments in the Government service might with advantage be paid into the Treasury,
I estimated the total cost of my proposals not to exceed Rs. 200,000. The committee puts it at Rs. 205,610, and values the increase at 6 per cent. on the present salaries.
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6. On receipt of my despatch, after consulting your Executive Council, you decided to appoint a "representative committee of officers of different departments in the Government service, with the Attorney-General as chairman, to consider the proposals which I had made: the terms of reference being, broadly (a) to frame a scheme on the lines indicated in my despatch, showing the additional expense involved; (b) to advise whether, having due regard to the public interests, the proposals were adequate; (c) if they were not thought adequate, to detail such modifications as appeared advisable, giving full reasons and a statement of the actual and comparative expense. The result is the full and clear report which you have forwarded in a sympathetic despatch.
7. The main conclusions of the report are that my proposals are inadequate, that exchange compensation should be abolished, that existing nominal salaries in the cadet service and the European grades of other departments should be increased by 20 per cent., being a net increase of nearly 13 per cent.; that station allowances, called in Appendix B, "House Allowances," of 10 per cent. on the mean salaries, with a minimum annual allowance of Rs. 600, should be given to officers stationed in Colombo, if not already provided with Government quarters-the minimum allowance to be given to cadets (of whom only 10, I notice, are allowed for); that the 18. 10d. rate for leave pay and pension should be reduced to 1s. 6d., and the 1s. 6d. rate to 1s. 4d., a very few special cases of the 28. rate and family remittance being specially dealt with; that the rate of 1s. 6d. for the payment of Widows' and Orphans' pensions in the case of the younger officers should be retained; that Ceylonese who are at present given exchange compensa. tion should be given double exchange compensation; that the age of voluntary retirement should be reduced from 55 to 50; and that maximum pension after 30 years' service should be allowed; and, finally, that the question of fees should in the main be left alone. The total additional expenditure involved in the committee's proposals, including 27,000 rupees for the addition to the establishment which I have sanctioned, is shown to be Rs. 469,000, or possibly Rs. 450,000.
8. Commenting on the report, you propose, with the concurrence of your Executive Council, to reduce the suggested station allowances at Colombo from 10 per cent. to 5 per cent., halving the expenditure of Rs. 90,000 under this head, and thereby reducing the total cost of the scheme to a little over Rs. 400,000; you would, on the other hand, wish to somewhat further improve the position of the junior members of the cadet service at a total extra cost of Rs. 26,800 per annum; and you agree with a dissentient view of one member of the committee on a point of retention of family remittance in certain very few cases. Otherwise you consider the recommendations of the committee, including the proposed alteration of the pension rules and the date of retirement to be reasonable and moderate; you strongly urge their acceptance on grounds both of justice and of policy; and ask that they may be submitted to the Legislative Council.
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9. I propo to examine some of the grounds which the committee and you yourself have set forward in support of your proposals, and then, after disposing of certain more or less incidental points which have been raised in the correspondence, to state my views on the main question. I have now had before me the views of two committees, in either case consisting of officers reporting on their own salaries. I do not take exception to this course there are precedents for it but it is my obvious duty to scrutinise the recom- mendations very closely, although they are warmly supported by yourself, and endorsed, I am glad to add, by the high character of the Ceylon Government service. There are heavy claims on the Ceylon revenue at the present time, and likely to be for many years to come, and a permanent increase to the annual expenditure of over Rs. 400,000 is a very serious matter.
10. Some of the arguments used by the committee and in your despatch seem to me unconvincing, and to invite opposite conclusions to those which have been drawn. For instance, in the 11th paragraph of your despatch you refer to the growing number of transfers and promotions from Ceylon, and-if I understand your contention aright→→ the consequent weakening of the Government service in Ceylon, which should be counter. acted by giving greater inducement to the officers to remain in the island. I should answer that in the first place I think you will find that, among civilians at any rate, there has been as great a drain lately from the-in your opinion more highly favoured— service of the Malay Peninsula. In the second place the prospect of advancement outside, as well as within a service, would naturally make that service popular and attract good men into it; and the record of Ceylon officers who have been transferred is certainly such as to encourage young men to enter a service, members of which have been selected for high preferment in other colonies, In the third place there has been a constant complaint in Ceylon of slowness of promotion, and the transfer of Ceylon officers to other colonies tends to obviate this complaint. I must confess I should very much regret in their own interests, in those of Ceylon, and in the interests of the Empire as a whole on the broadest grounds, if officers in the Eastern colonies were to become as you will find they have in some cases been reluctant to accept promotion outside those colonies, for the Eastern Civil Services, recruited as they are by open competition, are the best training ground which the Colonial Office has at its disposal for the Crown Colonies and Protectorates generally. Nor can I believe that the promotions from Ceylon will ever be so numerous as seriously to weaken the administration of the colony.
11. Again, you write as follows: "In paragraph 5 of your despatch you base your proposal to grant exchange compensation on the whole instead of the half of an officer's salary on the concession recently granted to European members of the Government service in the Malay Peninsula and Hongkong. In the case of the other Eastern colonies, how- ever, the concession represented a considerably greater increase in salary, because an officer was recouped the difference between the dollar at the current rate of exchange, viz., 2s., and the dollar at 3s., while in Ceylon an officer is only recouped the difference between 18. 4d. to the rupee and 18. 6d. While, therefore, the effect of granting exchange compensation to officers in Hongkong, Straits, &c., on their whole salary increased their emoluments by 25 per cent., the corresponding concession in Ceylon would only result in an increase of 6 per cent."
Similarly, the committee in the 11th paragraph of their report contrast the increase which I proposed with "the corresponding increase-about 25 per cent.-recently given to the Straits and Hongkong services."
But it is obvious that one reason, and the main reason, why the gift of double compensation meant more in the Malay Peninsula and Hongkong than it would mean in Ceylon is that, while in Ceylon the fall of the rupee had for some years past been arrested, and the value of the coin not merely steadied but enhanced by the action of the Indian Government, in the Malay Peninsula and Hongkong the value of the dollar had during those years continued to fall.
The dollar in the Straits Settlements was originally worth 48. 3d., and the rupee in Ceylon was originally worth 23. The grant of double exchange compensation made a dollar which was once worth 4s. 3d. worth 38. Had similar conditions prevailed in Ceylon, and similar remedies been applied, the rupee which was once worth 2s. would have been made worth 18, 5d. This is what it is worth without double compensation; without any compensation at all it has for some years been worth 18. 4d.; and I proposed