387
PUBLIC RECORD OFFICE
Reference :-
mmmmm.C.O.882/11
|PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
·
34
incidence. The lump sum there mentioned was $5 millions, of which a portion represented the actual military contribution as now levied in this Colony and the balance to make up the round sum was to be a free-will offering for the purpose of general defence, especially our debt to the Navy, towards which we make no contribution at all.
Well, I took the matter up on those lines and you will find it difficult to believe how much trouble I had to get it settled. In fact, the final document in connexion with the proposed settlement was not handed to me till I was getting into the train at Victoria Station to come back to Malaya. But the Departments at home have now all agreed, and if a Bill on the lines of the one which I have brought out with me, and which I propose to read to you, can be passed, the whole of this long-standing dispute will be settled. Perhaps I had better first read to you the covering letter which Lord Passfield wrote to me about it, dated the 19th May, 1931:-
(His Excellency read the covering letter and the proposed Bill.) The new adjustment will, it is hoped, take effect in the next Budget.
Now, I think that this settlernent is probably very advantageous to us because, although at present our garrison is small, it might very well happen that we shall require this garrison to be increased. In fact, the General will tell you that we do not regard the present situation as satisfactory in any way, and we want a larger garrison actually for our own local defence scheme quite apart from any question of the Naval Base.
Then there is no doubt, I think, that if there is a change of Government at home the Naval Base scheme will be completed and presumably the Base will then be defended. At present all work on the defence of the Naval Base has been suspended. When, how- ever, such work is resumed, it will, with every passing year, become increasingly difficult for anyone to say what portion of the defence of the Straits Settlements is local and what part Imperial. We are bound to have wrangles over such points and, therefore, a lump sum payment is the only safe plan. You make up your mind what you are pre- pared to pay for insurance, and that is the sum you fix on for a term of years; at the end of that period of years you revise it by mutual agreement.
Subject to anything you may say to me, I propose to publish this draft Ordinance with the necessary Objects and Reasons attached, and introduce it for first reading at the next meeting of the Legislative Council.
I should like to know how it strikes you all?
MR. BAGNALL: I should think, Sir, that the Unofficial Members would like to discuss this matter fully among themselves between now and the next meeting of Council, and it should not be published until they have had a chance of conferring together and sub- mitting their conclusions. We suggested that the annual contribution for five years should be the approximate cost of the garrison for the past three years, that is $3,600,000.
The Treasurer will tell us how THE GOVERNOR: It is much more than that now. much it is.
-
MR. SMALL: The figure is £498,000 a year, or about $355,000 a month.
MR. BAGNALL: I am referring to the figures we had at that time. The Unofficial Members considered that we might be inclined to make a voluntary contribution in addition to this, or, if all the Colonies were assessed similarly and all paid their share towards naval and other expenditure, that it would be fair to debit Malaya with a similar cost. Our general principle was that we should pay nothing but the cost of local defence. That sum, round about $3 millions, had sufficed for many years, and we saw nothing in the situation that indicated any considerably increased expenditure. The Unofficials have never had any details worth talking about as regards the making up of the sum that was debited to us each year, and although these tremendous debits have come along since,
gave they are probably open to exactly the same objections as the initial ones which to this question. Although we are told now that the cost is very much enhanced, in our opinion some of it may be just as dissatisfying to us now as the initial ones of three or four years ago.
rise
THE GOVERNOR: I don't think so, Mr. Bagnall. This matter is considered at the present moment simply from the point of view of what is needed for the defence of Singapore town. It is quite clear to me that if Singapore town is to be properly defended, very considerably further expenditure will have to be incurred.
There is one point that I might clear up. There was a certain sum of about £87,000 which we contended was wrongly paid, and which the War Office has admitted to be a wrong payment. They hold themselves ready to refund that sum at any moment. We shall get it back and the amount will be adjusted in connexion with this year's payment.
35
The proposal in the scheme I have just put before you is that the expenditure for the current year should be adjusted on the old basis, and from whatever amount is due from us on the old basis this year will be deducted the sum of £87,000.
MR. SMALL: There are two sums to be adjusted in respect of previous years. The present rate of contribution is supposed to continue till the end of March next year, but they have suggested a definite figure for that period. Then, there are certain other figures outstanding on account of previous years; for example, £46,000 in respect of 1929-30. Then they owe us £87,000 and I think there is a claim of about £50,000 on account of anti-aircraft equipment. But the position at the present moment in regard to previous years' expenditure is that they would refund us something like £41,000, and anything that we have to pay them in respect of previous years would probably be met by the excess amount we are paying at the present moment. We are paying at the rate of £498,000 a year, but they propose we should pay a fixed amount of £446,000 for this year and so settle it finally.
THE GOVERNOR: I don't want you to come to a decision at once; but I wish to think the matter over and I strongly recommend to you the proposed settlement.
MR. BAGNALL: We wrote a letter on the 12th July, 1928, at considerable length, after much conferring and correspondence, dealing with the principles, to which we have never had any reply.
THE GOVERNOR: You are now asked to pass a sponge over the past and to agree to the principle of a lump sum contribution for the future. All efforts to distinguish between local and Imperial defence and to make adjustment by percentages will be completely washed out and a very much simpler basis of payment will be substituted. I may say that this is the basis for which we struggled in Hong Kong for many years, but which we failed to get.
MR. BAGNALL: It seems to me the Unofficial Members agreed to pay $3 millions as a fixed contribution and wished to reserve to themselves the right to give something further if they wished, and the Home authorities are telling us what we shall wish to give.
THE GOVERNOR: It was Sir Hugh Clifford's suggestion, I believe.
MR. BAGNALL: On the face of it, it looks as if they have estimated their cost for the next five years at, say; $4 millions and fixed our contribution at a round sum of $5 millions.
THE GOVERNOR: I have always, in discussing this matter with the Departments at home, maintained that this Colony is thoroughly loyal, that it had no wish to evade any just obligation and that it is prepared to contribute to the cost of its own defence. That was categorically so stated by Sir Hugh Clifford, and I believe it to be true. The only question is, therefore, how much you are prepared to pay. When five years are up, the Imperial Government were to put before us figures which showed that we were paying a very small percentage of the total cost of our local defence, I think we should be prepared to reconsider the matter, especially if at that time we were prosperous instead of in adversity.
if
MR. BAGNALL: Won't we then be faced with an official majority in Council putting through, say, $6 millions or $7 millions?
THE GOVERNOR: No, I don't think so. I think I can guarantee you that.
MR. BAGNALL: We had a guarantee from Mr. Chamberlain in 1899.
THE GOVERNOR: I am perfectly certain that when they say at home " ment," they do not mean by an official majority.
by agree-
MR. BAGNALL: There is another point that occurs to me at the moment, and that is, when we were discussing this in 1927 and 1928 we were having a period of good times when money was much easier come by than at present. If we agree to $5 millions at the present time, it will be open to them to say we agreed to that figure when in the depth of a slump, and how about $10 millions now in boom time?
THE GOVERNOR: I am not surprised that you are very suspicious about the people
at home, but I feel sure this offer is made in all good faith.
DR. NOEL CLARKE: There may be a change in the Government.
THE GOVERNOR: That won't alter matters.
MR. BAGNALL: As it has taken four years for the Home Government to come to this decision, I don't think it should be rushed.
Page 390Page 391
383
PUBLIC RECORD OFFICE
Reference:--
PELLIC.O.882/11
PUBLIC RECORD OFFICE, LONDON
| ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
36
THE GOVERNOR: I don't wish to rush you, but I think that the new plan ought to take effect in the next financial year; that is a convenient date. Will you discuss it among yourselves and let me know what you think? I would like you, Mr. Shelley, to give Mr. Bagnall a copy of Lord Passfield's letter and the draft Bill which I have just read. It might be just as well if you had the Treasurer present at your discussions, in order to give you up-to-date figures.
MR. BAGNALL: I am sure, Sir, the matter will have the consideration of the Unofficial Members.
SIR,
Enclosure 3 in No. 21.
Singapore, 16th July, 1931. At the informal meeting held on 6th instant you placed before the Unofficial Members of the Legislative Council, for their consideration, a draft Ordinance, as received from the Colonial Office, to take the place of Ordinance No. 64 (Defence Contribution).
2. The Unofficial Members of Council, in their letter of 12th July, 1928, to His Excellency Sir Hugh Clifford, stated their views at length on the matters of principle involved. To that letter they have had no reply. Briefly these views, to which they still adhere, may be restated as follows:-
(a) The Colony is liable only for the cost of a garrison sufficient for local defence. The Unofficial Before the inception of work on the Naval Base and its defences the cost averaged less than $3,600,000 annually (1920–24). Members of Council are prepared to agree to a new Ordinance providing for a payment of $3,600,000 annually for five years.
(b) Subject to, and after, satisfactory settlement of (a), the Unofficial Members of Council are prepared to consider making an annual payment, from the funds of the Colony, as a gift towards the cost of Imperial defence of the Empire. They are not prepared to merge this gift in the Ordinance covering (a) or to decide its amount in advance.
3. No discussion has yet taken place by the Unofficial Members as to the proposed amount of the voluntary payment referred to in 2 (b).
4. The Unofficial Members of Council regret that the draft Ordinance placed before them on 6th instant is not in conformity with the principles already stated and to which they still adhere. The Unofficial Members cannot therefore approve of or support the introduction of the Ordinance submitted for their consideration.
5. The Unofficial Members of Council are unanimous in their attitude towards the proposed Ordinance and have requested me to inform you of their views on their behalf.
I have, &c.,
His Excellency Sir Cecil Clementi, G.C.M.G., K.C.M.G.,
Singapore.
SIR,
Enclosure 4 in No. 21.
J. BAGNALL.
Government House, Singapore, 14th August, 1931.
I have the honour to acknowledge the receipt of your letter of the 16th July, 1931, on the subject of the military contribution.
2. You say that the Unofficial Members of Council still adhere to the view that:-
"The Colony is liable only for the cost of a garrison sufficient for local defence,"
and you add:-
"Before the inception of work on the Naval Base and its defences the cost averaged less than $3,600,000 annually (1920-24). The Unofficial Members' of Council are prepared to agree to a new Ordinance providing for a payment of $3,600,000 annually for five years.'
In the sum total of $5 million provided for by the draft Ordinance this amount of $3,600,000 is included as part of the Fixed Annual Contribution and it would appear that to this extent at least the proposed terms of settlement are very favourable to the Colony, because the period 1920 to 1924 was not a normal period: it was too soon after the Great War. During and since the War such development has taken place in the means
37
and methods of warfare, that forces and armaments which were considered sufficient for local defence in pre-War days would be totally inadequate now. There is a tendency for all modern military weapons, equipment and instruments to become more and more complicated. Expenditure must inevitably increase to meet this continuous development. The five years' period 1926 to 1930 shows how such increase has taken place. The total expenditure on military contribution for that period (excluding all expenditure on the Naval Base) was $20,408,000, giving an average of just over $4,000,000 a year. The attached note by the Colonial Treasurer gives details of this amount.
Heavy guns and ammunition of the existing defences must be kept up to date. 1 am informed that new designs of both guns and projectiles have recently been sealed, and that there will be extra expenditure on these items during the next few years. It is, therefore, certain that the expenditure on the defence of the Colony in the future will show an increase over the expenditure for 1930, which was $4,239,728.
3. I annex a graph*, prepared by the Colonial Treasurer, showing the amount of defence contribution which would have been payable by this Colony from 1910 to 1930, had we paid the full amount of 20 per cent of revenue for which we are liable under the existing Ordinance. You will see that the peak of $6,830,126 was reached in 1927, and that last year we should have been liable for $5,657,726. It is the opinion of the General Officer, Commanding the Troops in Malaya, and of the Local Defence Committee, with whom I fully concur, that the existing garrison at Singapore is not sufficient for local defence, quite apart from any question of defending the Naval Base now under con- struction. Were an additional battalion to be provided by His Majesty's Government for the defence of this Colony, as is asked for in the Local Defence Scheme, we should at once become liable for our maximum contribution of 20 per cent of our revenue. The proposal now made will, therefore, actually be of pecuniary advantage to us in the event of the recommendations, now under consideration by His Majesty's Government for the adequate defence of the Colony, being approved.
4. You say that, subject to, and after, satisfactory settlement of the amount for which the Colony. is liable, namely, the cost of a garrison sufficient for local defence, "the Unofficial Members are prepared to consider making an annual payment from the funds of the Colony as a gift towards the cost of Imperial defence of the Empire." The suggestion that the Colony should pay a fixed annual contribution, subject to quinquennial revision, towards the cost of its defence in place of a percentage contribution of its revenue came originally from the Unofficial Members, and it was entirely in order to meet their wishes that negotiations for a settlement on these lines were opened. There is no suggestion of imposing such a settlement upon the Colony: on the contrary in the personal letter dated 19th May, 1931, written to me by Lord Passfield (a copy of which has been supplied to you) it is clearly stated that, if a final settlement is offered by the Legislative Council on the terms proposed, His Majesty's Government will accept it without further discussion. The initiative therefore remains with the Unofficial Members, and in my opinion a serious mistake will be made if advantage is not taken of the opportunity which now presents itself of arriving at an amicable solution of this question.
In the same letter Lord Passfield goes on to state that it is understood that the sum proposed as the fixed annual payment represents the cost of the Singapore Military Garrison (exclusive of expenditure, capital or maintenance, on the new defences of the Naval Base), plus a supplementary voluntary contribution to the cost of Imperial Defence generally, and will remain unchanged for five years and thereafter be variable by agree- ment. You emphasize that the voluntary part of the contribution is a gift and that it should not be merged in the contribution fixed by the proposed new Ordinance. In my view, and particularly having regard to the passage of the letter above quoted, the voluntary part of the contribution still remains a gift, and is subject to reconsideration in precisely the same way as that part which represents the cost of the military garrison, at the end of the five-years' period. Unofficial Members were fully aware of the amount suggested as the voluntary part of the contribution in Sir Hugh Clifford's personal letter dated 9th June, 1929, to Lord Passfield (then Mr. Sidney Webb), and no alteration of that amount has been made in the terms now proposed. Sir Hugh wrote as to the views of the Unofficial Members at that time:-
I think it is probable that, if their proposal to pay annually during the next five years $3,600,000 on account of the latter (i.e., local defence) were accepted, they would be prepared to add $1,400,000 to that sum annually as a voluntary
* Not reproduced.
(C38051)