PUBLIC RECORD OFFICE
Reference :--
C.O. 882
6
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
PUBLIC RECORD OFFICE, LONDON
58
despatch of the 24th of June, 1909. Owing to the policy adopted by His Majesty's Government with regard to opium, the revenue derived from the opium farms in Hong Kong and the Straits Settlements was threatened with an immediate and serious diminution and an eventual disappearance. After much correspondence with the Treasury, and an appeal to the Cabinet, the details of which need not be quoted here, it had been decided to grant Hong Kong a sum of money for three years, calculated on the basis of half the direct loss of opium revenue, with a promise from the Treasury that the matter should be favourably reconsidered if, at the end of the three years 1910 11 to 1912-13, Hong Kong revenue showed that further help was needed. In the Struts Settlements it had been decided that the Government should abolish the opium farm and take the monopoly into its own hands. Of course, under the farm system the opium revenue was absolutely net, while the establishment of a Government monopoly meant much expenditure in the creation of an opium monopoly department, capital expended in imildings, the cost of purchase of row opium and its conversion into Sir J. chandu (ie., opium prepare for consumption). Anderson accordingly asked that only the net revenue from the Government monopoly should be assessable to the contribution and also that, like Hong Kong, the Colony should be given a substantial.contribution as compensation for loss of revenue. He added that as it would probably be necessary to find new sources of revenue to replace the diminished opium revenue he hoped that the Home Government would forgo the contribution on such new revenue until the income from such sources, plus any com- As pensatory grant, exceeded the loss of opium revenue. the opium and liquors revenue were let as a single farm, the Governor claimed that the contribution should not be paid on the combined revenue until it exceeded the amount realised under the existing contracts.
On consideration of this despatch Lord Crewe came to the conclusion that the time was now ripe for a fresh discussion of the basis of the military contribution, at least A letter so far as the Eastern Colonies were concerned.
was therefore addressed to the Treasury on the 26th of Tid. August forwarding a copy of the despatch, in which, after expressing bis trust that the Lords Commissioners would ree that it was impossible to dispute the justice of the contention that only the net revenue from spirits and opium should be assessed for the contribution and urging" that the receipts from new taxation should be exempted until they exceeded the amount of the loss caused by the new opium policy, Lord Crewe attacked the general question. He pointed out that even in the recent period of prosperity which the Colony had enjoyed there had been frequent protests from the unofficials, which would doubtless be more constant and urgent since the check which the Colony's prosperity had received; he drew attention to the enormous increase in the cost of the garrison since 1896, (the figures were inaccurate, but even on the War Office showing the increase was enormous) for which the Colony had to pay nearly the whole cost without having any voice he in determining the size or cost of the garrison; mentioned that similar dissatisfaction had been voiced in the other Eastern Colonies; and he invited the Treasury to agree to the appointment of an Inter-Departmental Committee "to consider de novo the whole question of the
L
military contributions paid by the Eastern Colonies."
W.O..
23601 09.
W O.. 25602 09.
Gov.. 22524/09.
Ibid. Despatch
of 15th October.
W.0., 35139/09.
59
On the same day two letters were sent to the War Office, regarding the question of contribution on receipts from buildings let for profit and on receipts from elucation fees. In the first it was argued that, since the receipts had risen from $3,000 in 1895 to $30,000 in 1909 owing to the necessary building of quarters for officers and buildings for the farmers, the receipts were practically a new source of revenue and should be treated on the general principle applicable to remunerative undertakings. But in view of his proposal for a Committee, Lord Crewe did not think it worth while to pursue a separate correspondence on a matter of comparatively minor importance. In the latter the Secretary of State declined to agree with the Army Council: he asserted that education fees were of a municipal character and would not have been part of revenue in 1895 if a central educational body had existed; and that as they now ceased to form part of the Colonial revenue, they ceased, ipso facto, to be liable to contribu- tion. He added that the Army Council were not entitled to object to the removal of any class of revenue from the revenue assessable to contribution unless the Council were prepared to agree to the converse proposition; that revenue not included in assessable revenue in 1895 was not subject to the contribution.
While the two Departments meditated, Sir John Anderson proposed (in a despatch of the 8th September, similar powers 1909) to establish a Hospitals Board with to those of the Education Board. It was to have power to determine the charges to be made at all Government hospitals and asylums, to receive the sums so collected and to disburse them: the recoverable hospital charges would cease to be assessable to the military contribution. The Secretary of State approved the scheme, but said that the question of contribution must be reserved, and that he would send a copy of the correspondence to the Treasury and War Office. Meanwhile the War Office, which had been considering since August, 1908, the Ceylon despatches protesting against the proposed increase of the contribution to an amount equivalent to the whole cost of the garrison, delivered itself, on the 25th of October, 1909, of a long letter reasserting its contention. The latter argued that the abandonment of Trincomalee resulted in a position similar to that which would have been the case if the station had never been occupied. i.e., that the maximum limit of the contribution became the whole cost of the troops in the island. It went on to traverse the Governor's argument that, as Colombo now occupied the place of Trincomalee in regard to Imperial strategy, the grounds on which part of the cost of the latter garrison was borne by Imperial funds applied to Colombo, The War Office contended that Trin- comalee had been a naval base and that Colombo was, and remained, merely a fortified coaling station; that the Colonial Government had always in the past accepted liability for the cost of the garrison of Colombo as being necessary to the defence of the Colony; and that the circumstances of the port were in no way exceptional. In conclusion they referred to the "broad principle repeatedly asserted by preceding "Secretaries of State, to the effect that so long as a "Colony makes no contribution towards the cost of its "' naval defence it may fairly be asked to bear the full "cost of its garrison and of maintaining its land
$2093
# #