PUBLIC RECORD OFFICE
Reference :-
PICO. 882
9
PUBLIC RECORD OFFICE, LONDON
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In the eleventh paragraph the Secretary of State asked For a compensatory grant of £60,000 a year for thre years for the loss of opium revenue caused by the policy of the Home Government; and he undertook, if this were agreed to, to direct the repeal of certain sections in the Liquors Revenue and Petroleum Ordinances which had been passed to carry out Sir J. Anderson's proposal that revenue from new sources of taxation should not be liable to assessment until it exceeded the deficiency caused by the loss on opium and spirits revenue.
The Secretary of State then went on to deny the Paras. 11 Treasury claim that the exclusion of receipts from t assessable revenue was a matter which required their approval: and finally he demanded on behalf of the Colony that fuller accounts of Army expenditure should he furnished to the Straits Settlements.
1572410.
Shortly afterwards (on the 7th of June) the War Office On W.0, were sent a copy of this letter and were told that though the Secretary of State adhered to his views as to the profits on Government buildings, he would not refuse to Ask the Governor to include the gross receipts in the total revenue assessable to contribution when the whole corre
As to the exclusion of school spondence was finished.
fees and recovered hospital charges, Lord Crewe referred The War Office to his letter addressed to the Treasury.
9th June
of
The question of the Ceylon contribution was promptly raised again by the War Office when the Treasury had refused to agree to a Committee; and they asked in May, W.O., 1910, if they could now have a reply to their letter of the 15857/10, 25th of October, 1909, consideration of which had been W.O.. deferred. The Secretary of State replied that it was 35139/09. necessary to consult the Governor, and that a copy of the Letter of orrespondence had accordingly been sent to Sir H. McCallum. In the covering despatch, Lord Crewe said Despatch that it appeared to him that the Army Council had good with Jane grounds for holding that the maximum contribution on W,0)., should be the whole cost of the garrison, or 94 per cent. 15857/10, of assessable revenue, whichever was the lesser amount ; but he suggested for consideration a compromise, since be did not wish to force the matter through the Legislative Council by the official vote. The compromise was that the War Office contention should be accepted subject to the following limitations :—
(1) If Trincomalee were again occupied, the maximum contribution should again be three-quarters of the cost of the whole garrison.
(2) Refunds and reimbursements of revenue were to be excluded from the assessable revenue.
(3) The maximum cost of the garrison should be fixed on the average cost during the three years ending with the 31st December, 1910; if any change were made in the garrison leading to increased expenditure, no part of the increase should be borne by Ceylon, unless the Ceylon Government had previously been consulted and had
18sented.
Sir H. McCallum would have none of this proposal. Gov., He argued that the existing arrangement was intended 31600/10. to be a permanent settlement of the question; that the principal-reason which induced the unofficial members to agree to the 1898 Ordinance was the belief that it was a final settlement; that it was impossible to argue that there was any reservation, expressed or implied, that the arrangement was to be altered if Trincomalee were abandone 1; he combated the view that Colombo was only
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32472:10.
W.O., 40770 11.
Treasury, 742/12.
closure.
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“fortified maling station," and maintained that it was a naval base, and would be, in war time, the principal naval base in East Indian waters; and he earnestly rustel that Lord Crewe would support this contention.
He added that “My conviction of the injustice of the War Office proposal is so profound, that I do not feel I can usefully discuss the terms of the 'com- promise.
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of
After the question had been personally discussed with Sir Hugh Clifford, Colonial Secretary of Ceylon, a copy this despatch went to the War Office in a letter of the 23rd of November, 1910, in which the Secretary of State said that though he would be prepared to accept the Army Council's view, the fact that no reservation had been made at the time placed the Imperial Government in a bad position, especially as the recently adopted system of elected representatives of the educated classes in the Legislative Council rendered the policy of trying to force an amending ordinance by means of the official majority quite impracticable. But Mr. Harcourt offered to make out the best case possible for the War Office, to let the matter be settled by the vote of the unofficial members, and to entrust the General Officer Commanding the troops with the presentment of the case.
After some months the War Office, on the 21st December, 1911, said that after consulting the Treasury they thought it would be better not to press for any change, and the matter rests there.
The last episode, so far as Ceylon is concerned, was a proposal that only the net excise receipts from arrack and spirits should be assessable to revenue, since, in consequence of the proposed abolition of the farm, the Government intended to take over the manufacture of arrack. The
id. En Army Council were prepared to agree to the assessment of net receipts only from the Government distillery, but would not assent to the exclusion from assessment of the The Treasury cost of collection of the new revenue. concurred and nothing further has been done pending the deliberations of the new Committee.
Treasury, 8014 11.
Para. 9.
As regards the Straits Settlements the Treasury returned to the charge in March, 1911; the letter amounted to a statement that the Secretary of State had approved deduc. tions from assessable revenue in contravention of the agreement of 1895 that no important change in the method of accounting for assessable revenue should be made without their consent: they held, in consequence, that the various amounts deducted constituted a debt from the Colony to the Home Government, and refused to consider the question of a compensatory grant until this matter had been settled. They added that the broad principle adopted in settling Colonial military contributions was that so long as a Colony made no contribution towards the cost of its naval defence it might fairly be asked to bear the full cost of its garrison and of inaintaining its land defences. Enclosed in this letter was one from the War Office, in which, after contending that the cost of the chandus and spirits preventive service should not be deducted from revenue, but a sponding addition made to any compensatory grant that might be given, the Army Council refused to agree to reimbursements being excluded from assessable revenue because it would involve a departure from the arrange- ments made when the percentage system was agreed upon. They then refused seriatim to accept the Colonial Office
corre-