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General Manager almost entirely subordinate to the Board. I understand, however, that you are not satisfied with the draft as it originally stood, and that the powers of the General Manager are to be increased, for instance under Clause 18 (1) he and not the Board is now to appoint officers. But it is not clear exactly how far the draft is to be regarded as being modified. There are, however, two special points on which I may comment. First on the absence of any provisions similar to those embodied in the Kenya-Uganda Order in Council laying down the financial policy to be followed by the railway and requiring the building up of adequate Renewal and Betterment Funds, and secondly on the need in fixing the conditions of service for the railway staff of bearing in mind that any conditions which would make difficult the interchange of officials with other Colonial Government Railways should be avoided.
11. The conditions of service of railway officials are absolutely in the Board's discretion. Powers of actual appointment and removal are to be entrusted to either the General Manager or the Board. These proposals would put Malayan Railway officials on an entirely dfferent footing from the officials of any other Government Railway. They would not be Civil Servants. The Secretary of State would have no voice in their recruitment, in their conditions of service, or in their dismissal. Yet in practice it would be impossible to prevent aggrieved Railway officials from petitioning the Secretary of State and appealing to public opinion in this country, and the Secretary of State would be expected to defend the actions of a Railway management over which he had given up all control.
12. A further consequence of the anomalous position of the Malayan Railway officials would be to make the Malayan Railway service a closed service in the sense that interchange between it and other Colonial railways would be practically impossible. The introduction of the Provident Fund system might intensify this isolation. In this connexion I would invite reference to the report of the Provident Fund Committee and to the views expressed at the Colonial Office Conference, 1930 (see my Circular despatch of the 12th of September, 1930*). If it should eventually be decided to should be glad introduce a provident fund for some or all Malayan Railway officers, to have an opportunity of seeing the proposed rules in draft before they are brought into force. Railway Civil Servants from other Colonies could hardly be expected to accept service under the Malayan Board, while the Malayan Railway officials would be unknown to the Personnel Division of this Department. I am satisfied that inter- change of officials, between Government railways is unquestionably advantageous, and that the Federated Malay States Railway has suffered in the past from the absence of more frequent transfers. In view of the general approval of the policy of unifying conditions in the Colonial Service and facilitating interchange, I feel that it would be a most retrograde step to approve such conditions of service for Malayan Railway officials as are proposed in the draft Bill.
13. The position in the Kenya-Uganda Railway system is that the High Com- missioner may, under the Order in Council, make regulations governing conditions of service, but he has to consult the Railway Council and the regulations have to be for- warded to the Secretary of State who may disallow them. And in the exercise of his legal powers the High Commissioner has in certain matters to conform to instructions which the Secretary of State has given by despatch. In particular, he must report changes in staff, obtain prior approval for appointments to posts carrying over £1,000 a year, and conform to the Colonial Regulations in matters of discipline. As at present advised, I consider that at least an equal measure of control should be preserved over Malayan Railway appointments.
14. I return the draft Billt and shall be glad if you will consider the whole question, and furnish me with your considered views as to the changes in control of the Federated Malay States Railways which should be attempted after the Federated Malay States Government has effected a separation of the Railway budget from that of the Federal Government. Such changes should, in my opinion, whatever the exact form they may take, preserve an effective control of the Railway by Government.
I have, &c.,
PASSFIELD.
• Not reprinted.
+ Not printed here.
O. 92813/32 [No. 2].
No. 67.
FEDERATED MALAY STATES.
THE HIGH COMMISSIONER to THE SECRETARY OF STATE.
(Confidential.)
SIR,
(Received 8th February, 1932.) [Answered by No. 68.]
"
Bel Retiro," Penang, 14th January, 1932. I HAVE the honour to address you with reference to Lord Passfield's Confidential despatch of the 20th August, 1931, in the concluding paragraph of which he asked that the whole question of the control of the Federated Malay States Railways should be reviewed by me, and that I should furnish him with my considered views as to the changes which should be attempted after the Federated Malay States Government had effected a separation of the Railway budget from that of the Federal Government.
2. It will be seen from the Federated Malay States Estimates of Revenue and Expenditure for 1932, which were forwarded with my despatch No. 737 of the 27th November, 1931,† and from the copy of the Supply Enactment for 1932 which I enclose herewith, that the separation of the Railway from the general budget is now complete. The " Depreciation Fund," mentioned in the quotation from Sir Hugh Clifford's Confidential despatch of the 14th April, 1928, which occurs in paragraph 8 of Lord Passfield's despatch under reply, has also been established under the name of the Railway Renewals Reserve," and a short report§ on this fund is attached.
3. Recommendations for changes in the system of railway management and control can no longer, therefore, be regarded as premature in the sense of paragraph 9 of Lord Passfield's despatch. Nevertheless the large number of criticisms and comments contained therein on various points arising out of the draft Bill, which the Legal Adviser had prepared on my instructions, necessitates in my opinion a reference to you on certain crucial matters of principle before the labour of drafting amendments is incurred, and before I elaborate in detail the reconstitution of the Railway Administra- tion which I have in mind.
4. It will, I feel, clarify the position if I summarize at this point the grounds on which I regard its reconstitution as unavoidable :-
(a) First is the fact, to which Mr. Spiller drew attention in paragraph 282 of his report, that the Straits Settlements and Unfederated Malay States are vitally interested in the efficiency of the Railway, but have no voice in its efficiency or management.
(b) Secondly is the opinion held by the General Manager, and endorsed by Mr. Elias on a review of the conditions which he has found obtaining in Malaya, that the present system of constant references to Government on all matters of staff, tariff, and departmental expenditure militates against a businesslike working of the line.
(c) Thirdly is the fact that the abolition of the post of Chief Secretary and of the Federal Secretariat under the policy of decentralization will render some change imperative.
6. It will also clarify the position if I indicate the points in Lord Passfield's despatch for which I would make provision in any draft legislation :-
• No. 66.
Paragraph 11. It would be made clear that officers recruited in England were servants of the Government and not of the Board, although they would be under order of the Board as regards duties, &c. On the other hand locally recruited officers would be the servants of the Board. The latter could not expect, and probably would not desire, chances of promotion to railway appointments in other Colonies.
Paragraph 12. Similarly, if a Provident Fund system were established it would apply only to the servants of the Board, i.e., locally recruited officers. Paragraph 10.-Clauses providing for contributions to the Railway Renewals Reserve Fund could, if you considered it essential, be inserted. In view of the proposal, which I shall make later in this despatch, for a Board of Control consisting mainly of Government Officials, I doubt, however, whether statutory provision for such contributions would be either neces- sary or desirable.
+ C. 92289/32 [No. 1]: not printed. Not reprinted. § Not printed here.
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