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shall be, wholly or partly, into colonial connection; or whether these States may be dis- posed, of their own free will and accord, to remain under our protection, it is clear, that we ought, in the meantime, to endeavour to propitiate all classes of the people towards us, by every act of kindnes and generosity which may strengthen our moral and political re- lations with them, whilst we are securing our possession of those important fortresses which command harbours and roadsteads,* that will prove of inestimable value to Great Britain, in those vital occurrences, which sooner or later, must take place in these seas, and in the adjoining territories.
Without meaning to insinuate any faithless attempts, or hostile designs of aggrandise- ment, on the part of any of the Powers who have possessions in these quarters, but merely taking the facts as they are, and considering the changes that have taken place in political affairs in all the countries bordering upon these seas, since the Ionian Islands came under British protection; and giving those Powers which are extending their possessions and relations, full credit for honesty of purpose in pursuing their ends for their own legitimate advantage, I need only advert to Algiers, with its dependencies, and to Ancona, to Austria, which, though only an infant naval Power, is most active in extending her relations, and whose flag is seen more frequently than any other in the Adriatic, and passing these Islands displays itself no less actively in the Archipelago, the Levant, and Black Sea; to the un- settled state of Greece, and the intrigues of France and Russia to subvert our infu- ence in that country, and to gain supremacy in the royal closet. To the precarious existence of the Ottoman Empire in Europe: to the ambition of, and the encroachments making by Russia; to the combinations which, consequent upon any change at Constantinople, must take place in Egypt and in Syria, and in the continent opposite to this island: to the unsettled state of Spain, and the temptation which the possession of the Balearic Isles holds out to those who are evidently desirous of acquiring a naval station in the Mediter- ranean, I need only advert to these facts and circumstances to point out the increasing importance of these islands to Great Britain, not only as naval and military stations, but as points from which she may exercise great moral and political influence throughout this region, to counteract any design or attempt at aggrandisement, which may arise out of the present uncertain posture of affairs.
In a political sense these islands are in the anomalous condition of being in a sort of middle state between a colony and a perfectly independent country, without, in some respects, possessing the advantages of either. For, though the Ist Article of the Treaty of Paris stipulates that the Ionians Islands shall form a single, free, and independent State, yet the specific restrictions and limitations contained in the IInd IIIrd IVth and Vth Articles, are destructive to the most essential parts of Sovereign Power, and accordingly place them in an anomalous political condition, hitherto unknown in the history of nations.
They cannot for instance, except through the medium of the protecting country, enter into any Commercial Treaty with a Foreign Power, however advantageous it might be to their trade; whilst their commerce and navigation, are, by the laws of England, placed upon the same footing as those of Foreign Powers. The productions of these islands are all treated as those of a foreign county, and not with the favour which is generally shown to those of a colony; and some of their productions are virtually excluded from the markets of the United Kingdom by heavy duties which class them with those of foreign origin.
Ionian shipping is considered by our navigation laws, foreign property, and cannot, therefore, be admitted to the advantages and privileges enjoyed by colonial shipping, whilst in foreign ports, the shipping and commerce of these islands are liable to disadvan- tages by being considered British or Foreign, as the authorities interested may choose to decide.
The youth of these islands are not admitted into the army or navy of the protecting Power. The civil service of the protecting country is also shut against them, and the agents of Great Britian are the exclusive organs of all their consular and diplomatic trans- actions. The ordinary establishments of the Ionian States are, from such causes, necessarily charged with the maintenance of a vast number of the respectable and deserving youth of the country; and it is only just and politic, that in the absence of any other honorable career, military, naval, or commercial, the youth of the country should be more generally employed than would otherwise be called for.
The policy of France and Russia, when standing in similar relations with these States, was different. They permitted and encouraged Ionians to enter their service, and some natives of these islands have attained to high honors in the career they had chosen. The effects of this policy are seen and felt here, and both these countries have the warmest partizans in these islands, at the present day.
But it is more particularly with respect to the nature aud amount of the pecuniary obligations imposed upon these States, in their anomalous connection with Great Britian, that I would now solicit the most serious attention, and consideration of Her Majesty's
• That nothing essential to the stability of our tenure be omitted, it is necessary to observe, that the fortifications of this place. Corfu and Vido, are still in a very imperfect or unfinished state. The splendid works projected for Vido, will not, at the present rate of execution, be finished for some years. The citadel is not yet in a state of defence. Fort Neuf, the key of the roadstead or seaside is un. touched, and should we be caught in a political storm in such a state, disastrous consequences must ensue. Vide Despatch to Lord Glenelg of 21st April, 1836, No. 125; and ditto of 25th April same
year, marked private.
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- Government, For the pecuniary arrangement being now very generally discussed, relatively with the falling off of the revenue for the last year, and the recent withdrawing of a large portion of the military force from this station, (with fluctuations in either of which it is contended, the contribution should be made rateable) makes this a fit time, to submit the following observations on the principal amount, tendency and effect of that pecuniary obligation.
No colonial possession of Great Britain, having a legislative assembly, pays any part of its revenue into the military chest, to be appropriated by the Lords of the Treasury. Gibraltar and Malta are the only crown colonies which contribute in this way, by paying surpluses of revenue over civil expenditure into the military chest, in aid of military expenditure.
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Now supposing the £35,000 a year paid into the military chest by these States, to be a surplus revenue, they are, in this respect, put upon a footing with those crown colonies, one of which is a fortress, held exclusively as a naval and military station, the other a possession acquired by conquest.
Most of the colonial possessions of England provide, wholly or in part, for their civil lists, or pay, in some way or other, the salaries of those who are sent from England to rule and manage them; several of these possessions likewise provide, at their own charge, local corps to contribute to their military security, and remit, into the military chest, sums accruing from rents of crown or military lands and buildings, and other payments derived from colonial resources, and which sums (called "appropriations in aid") reduce by so much the gross charges incurred for the military expences of the colonies severally.
But whilst in these islands no crown property exists, they contribute (exclusive of their civil list, charges for the Lord High Commissioner, and the principal British functionaries) a larger sum towards their military expenditure than any of the colonies of Great Britain, excepting those which form together the Jamaica command, namely Jamaica, Bahama, and Honduras.
It does not appear to me, that these islands, as forming an independent State under the military protection of Britain, should be classed with the crown colonies, Malta and Gibraltar, and be designated as paying what is called surplus revenue into the military chest to be appropriated by the Lords of the Treasury, even if there were a real surplus.
Malta paid last year into the military chest, in aid of the expence of the Maltese regiment, in appropriation of surplus revenue accrued in 1836, £5,000; Gibraltar, about £12,000; Cape of Good Hope, £7,000; Mauritius, about £9,000; Bermuda, £3,000; all the Windward and Leeward Islands, forming one command, pay about £12,000; the Ionian Islands, £35,000; Jamaica, Bahamas, and Honduras, together, about £88,000 sterling.
To enable the Ionian Islands to pay their contribution, and the other charges in- cidental to British protection, a larger revenue is extracted from these States than, in their present condition, they can sustain. This is done by excessive duties upon ex- portation of their natural produce, and by which the burthens of taxation are distributed in a manner which, as I shall hereafter show, presses more heavily upon the industry of the country than in any other possession of Britain.
In the colony of Gibraltar there is no extent of country to improve; no demands upon the revenue for draining, making roads, and for all the other essential improvements which here demand more than the revenue can accomplish.
Malta is in a high state of cultivation, and the surplus, small though it be, which she pays, may fairly be considered a balance accruing beyond what is required for keeping the country in an industrious and wholesome condition; but, certainly, in these respects, no surplus revenue can be said to be forthcoming in these States.
The first form of the payments made by these States, on account of military pro- tection, was that of separate payments, which, though averaging nearly the amount of the present contribution, were, however, made at the convenience of the Government, ac- cording to the actual state of the treasury; and always with an expectation that, when the fortifications should be completed, the demands made upon it for military protection, would be reduced. Those separate grants were voted by the Legislative Assembly and the Ionian Government; and Parliament thereby retained the power of suspending such payments in the event of unfavorable seasons, or any other adverse circumstances.
By this arrangement there was a prospect, that the sum of £20,000 sterling per annum, voted by the Ionian Parliament for the erection of military works, would cease to be paid by the Ionian Islands whenever the fortifications of Corfu and Vido should be completed; but, according to the present arrangement, the contribution is permanent, and every prospect of relief seems to be precluded. In the former case, any reduction of military expenditure, that might be effected, would have been far the benefit of the Ionian Government, without detriment to the British treasury; whereas, by a fixed per- manent contribution, any diminution of military expenditure, as, for instance, the recent withdrawal of two regiments from the command, is exclusively to the benefit of the
* Despatch Home, 18th January, 1838, "Confidential" Diminution of Troops, recommending their restoration.
* See Report on military expenditure.
spatch to Lord Glenelg, No. 3, January 18th, 1838-Subject, Wines, &c.
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British treasury. The saving to Great Britain, by having withdrawn two regiments from this station, is estimated at £25,000 for the current year, much to the detriment of the industry, commerce, and revenue of the Ionian Islands, by the abstraction of so much of the demands upon its markets, and by the diminution of money spent in the place in the shape of pay and allowances. It is not surprising, therefore, that, in the reduced state of the revenue, a fixed contribution should now be considered a very improvident arrange- ment for these States to have made; and that evil-intentioned persons should endeavour to foment dissatisfaction, by representing it as a very ungenerous and illiberal exaction permanently imposed upon these islands, insinuating, at the same time, that it will last just as long as British connection continues, and no longer.
The contribution is considered, by all parties here, and very designedly denounced in certain foreign countries, as a direct tribute imposed upon these States, and paid to account of British Parliamentary estimates in aid of and appropriated by them; and that, in this respect, these Islands are treated with less liberality and favour than any of the other dependencies or possessions of Great Britain.
However incorrect these assertions may be, however sinister these insinuations, yet such being the reflections cast upon that arrangement by all who desire to see the con- nection between these Islands and Great Britain dissolved, every friend to that connection must wish to see it taken into reconsideration as a question of policy; and, to this effect, it becomes my duty to present fully to Her Majesty's Government my views upon this subject; and, in earnestly recommending a liberal, generous, and munificent line of conduct upon this affair, I may likewise express my conviction, that there is not a British functionary, in the service of the Ionian Government, that does not desire, for the credit, honour, and advantage of our country, that the burthens imposed upon these states for military protection and British management, be modified and diminished, as well for the benefit of these people, as to defeat the very sinister attempts of the enemies of British connection and British interests, who endeavour to make this pecuniary arrangement the instrument of much detriment to England.
The principle of making the governed the creditors of the Government; that is, any thing which creates in them a vested interest in the stability of the Government, is a sound, Such an interest has the fundholder: and such (apart from sustaining maxim of state. the economical and provident objects of the institution) is the effect of the savings' banks. To reverse the principle, and make the governed the debtors of the Government, by direct impost or tribute, must tend to produce, on the contrary, subversive and destructive effects. Thus, for example, the project, which, by a representation to that effect, I defeated, of making emigration to British North America pay itself by imposing upon the Emigrant the obligation of paying a certain quit-rent to the crown, redeemable within a certain num- ber of years, to form a fund to defray the expence of transporting Emigrants to the Colonies, or to contribute in kind towards the subsistence of new settlers for the first periods of their establishment, by supplying certain quantities of grain, &c., for their subsistence, was manifestly subversive in principle.
Under any circumstances, such impost or tribute is hurtful and impolitic, but when it is made to affect, collectively and politically, a remote and important de facto possession, connected with us by ties less intimate than those of other dependencies, coveted and courted by rival Powers, the danger of such an exaction becomes still more manifest; it operates as a premium to a change of allegiance; it acts as a wedge, and not as a tie.
The question I am treating is another instance of this. The very large portion of the revenue of these States, absorbed in the payment of the fixed contribution for military pro- tection and for the civil list expenses of the Lord High Commissioner, his residents in the islands, and other British functionaries, is, unquestionably, tending to subvert the union at present subsisting between Great Britain and these States, so true is this, that the agents and partizans of France, and particularly of Russia, do not fail to take advantage of every opportunity to insinuate that there are Powers, who would be glad, in certain events, to take these States under protection without being paid for it;* and the manifest insufficiency of the Ionian revenue to defray obligations to the amount imposed, and at the same time to provide for the manifold wants of the State and the necessities of the country, give force to such insinuations.
This disposition to create, and predisposition to feel, dissatisfaction with the exaction is greatly stimulated by the terms in which most travellers, some authors, and, universally all foreign visiters, speak of and deprecate this arrangement, 1 have heard it deeply la- mented by many enlightened men of our own country. I have already said that it is par- ticluarly so by all the British functionaries in these States, and by such of our countryinen as know the wretched state and great necessities of the people; and I have received many confidential representations from the first men in this country, made in the best spirit towards British protection, who deplore this arrangement, on account of its subversive tendency, and the mischievous uses which are made of it.
It is true that the VIth Article of the Treaty of Paris provides that a particular convention or settlement with these States shall regulate, according to their revenues, everything which may relate to the maintenance of the fortresses, the pay and subsistence
.709.
"bservation of similar telor made in despatch to Lord Glenelg, No. 10, dated March
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of the British garrisons, and the number of troops of which they are to be composed. There is, therefore, no doubt of the right of Great Britain to exact this contribution; and this has been accordingly recognized and fixed in amount, by the alteration introduced into the constitutional Charter in 1835. But this is not the question which I am treating. I submit whether, in sound policy, we are right in accepting it.
An opinion founded upon good authority is entertained here, among the best friends of British connection, that Capodistria admitted the VIth Article into the Treaty of Paris,* foreseeing that, if acted upon, it would prove a perpetual source of dissatisfaction and contention; and I am warranted in saying that Sir Thomas Maitland entertained this belief. Perceiving that this would be the tendency of such a permanent settlement, that distinguished person refrained from recommending or forcing such an arrangement as that now subsisting.
In Sir Thomas Maitland's address to the Primary Council, convoked by him to concert the basis of the constitutional compact to be entered into under the Treaty of Paris, upon the subject of finance, he states, "that although Great Britain might insist upon the fulfil- ment of the letter of the Treaty, by forcing on, at once, a convention for the payment of our troops; yet, looking at the actual situation of these Islands, the disordered state of their finances, and that, in truth, the whole financial system must be essentially changed before any correct notion of their disposable means can be arrived at; she (Great Britain) is disposed, in the meantime, simply to require that the expenditure is confined within proper limits, and the surplus thrown into the general Treasury, to be applied to the purposes of useful works, that may be positively necessary, or to the repair and mainte- hance of the fortresses of the country."
Now it cannot be said that either of the reserved conditions, expressed or understood in the preceding passage, have altogether been accomplished so as to admit, with due regard to the interests of these States, and to our national honour, of such a pecuniary arrangement as that now subsisting; for this country is still deficient † in almost all works and institutions of positive necessity, and the very bad system upon which the finance hangs, has not been essentially changed in principle, but maintained in full force; and the expenditure in the several islands, instead of being reduced within the nar- rowest possible limits, was by the Act of 1834 "for trying experimentally (sperementare) a system of municipal finance," most lavishly increased.
A few days after my assumption of the Government the Civil List was considerably increased, especially in the judicial branch, notwithstanding my recommendation to the Assembly, then and since, that it should be reduced. However objectionable I felt that measure at the time, I did not think I should have been justified, in the first week of my administration, in rejecting a Civil List which had obtained the sanction of both branches of the Legislature.
I have now brought that expenditure within proper limits, and I have effected other reductions by which the general Treasury may be enriched; and I am occupied in con- sidering how an essential change may be made in the revenue system, by a gradual transi- tion from the present system of taxation, namely excessive duties upon exportation, to moderate duties on articles of general consumption.
A surplus revenue cannot be said to exist, whilst public works and institutions, posi- tively necessary to the prosperity of the country, and to the happiness and well-being of the people, are either incomplete, or have never been commenced for want of the necessary
funds.
It is not, therefore, in my opinion, consistent with the fostering and paternal care. and that" peculiar solicitude" to which we are solemnly pledged to improve the condition of the country, that we should exact such excessive payments for the repairs and mainte- nance of the fortresses, and for other expenses of a military nature, until we shall have raised this country to a very different state in the scale of improvement, by draining marshes, executing public works, and founding institutions, all most urgently required, as the first steps to a better order of things.
Reverting, therefore, to the opinion entertained, that Capodistria introduced the Article above cited, foreseeing its consequences, I may observe, that whether he did or did not foresee these, and act accordingly, or whether Sir Thomas Maitland was influenced, as above by these apprehensions, I affirm, that the exaction of the contribution is made to operate in the manner which has been attributed to Capodistra's design; and that it is
Art. VI. His Britannic Majesty consents, that a particular Convention with the Govern- inent of the said United States shall regulate, according to the revenues of these States, everything which may relate to the maintenance of the fortresses already existing, as well as to the subsistence and payment of the British garrisons, and to the number of men of which they shall be composed in time of peace."
The same Convention shall likewise fix the relations which are to exist between the said armed force and the Ionian Government."
These deficiencies reported in Despatches Hame of—
6 June, 1835, No. 28.
29 July, 1835, No. 39.
Reports upon State and Condition of the Population. Address to Legislative Assembly, 7th March, 1837.
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