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C. 83227/31 [No. 22].
90
No. 44.
THE GOVERNOR to THE SECRETARY OF STATE.
(Received 10.25 p.m., 21st October, 1931.) TELEGRAM.
[Answered by No. 45.]
No. 223. 21ST OCTOBER. Secret. Your telegram of 19th October, No. 196, Secret.* Current year revenue and expenditure now estimated at rupees 83 millions and rupees 104,250,000. Deficit of rupees 21,250,000 can be covered as to rupees 10,500,000 by surplus balance and general savings, and as to rupees 10,750,000 by increase of Customs, Postal, and other revenue which would be financially possible and reasonable in the present circumstances.
I assume that no loan in London market possible but that investments held on account of surplus balance can be sold end of January. If Income Tax Bill passed Amount uncertain but end of January at the latest, yield expected in 1932-33.
No yield from income tax possible current year. possibly rupees seven millions. Cuts ranging from ten per cent. to five per cent. in salaries and wages of all ranks above bare subsistence level might produce in full year rupees three millions includ- ing railways. Outline of scheme which, as stated in my previous telegram, will not affect pensions will be submitted for your approval in due course, but it is essential that decision on principle of cut should be announced immediately on reassembly of the State Council.
Cannot give assurance that cut in salaries absolutely necessary for current year on financial grounds alone. Forecast of financial situation in 1932-33 extremely difficult, but still my considered opinion that cut in salaries will then be fully justified on purely financial grounds:
Impossible entirely separate financial from political considerations and my recom- mendations based on combination of both. Refusal of demand for immediate cut in salaries would lead to rejection by State Council of measures for imposition of income tax and increased Customs and Postal charges even in unlikely event of Board of Ministers consenting to propose them. Enactment of these measures without salary cuts could not be secured without successive exercise of my reserve power, resulting in breakdown of Constitution and immediate return to some form of Crown Colony Government without the slightest prospect of unofficial co-operation. Cannot guarantee immediate cut in salaries would ensure passage of revenue measures, but if breakdown of the Constitution inevitable, I consider it preferable that decisive issue should be my insistence on measures for ensuring financial stability rather than resistance to a measure which public opinion outside public service unanimously approve, and for which apparently relevant precedents elsewhere are quoted.
I have emphasized to Ministers danger of exodus of public servants involving serious financial and administrative consequences, but they appeared completely in- different to these considerations.
I adhere to my recommendation after careful reconsideration of all the circum. stances, and with full appreciation of the seriousness of the steps involved.
I realize that immediate cut in salaries on partly political grounds will demon- strate inadequate provisions of the Order in Council for safeguarding right of public servants and review of these safeguards will be essential at the earliest opportunity.
C. 83227/31 [No. 26].
No. 45.
THE SECRETARY OF STATE to THE GOVERNOR.
(Sent 12 noon, 29th October, 1931.)
TELEGRAM.
[Answered by No. 46.]
No. 207. SECRET. Your Secret telegram of 21st October, No. 223.† I have carefully weighed all arguments set out by you and have come to the conclusion that I have no alternative but to agree to principle of salary cut, though it is with great
* No. 43.
† No. 44.
91
reluctance that I do so. I shall be glad to have opportunity of considering details of proposed scheme as soon as possible, and I must again emphasize necessity of framing it on a comprehensive basis so that all ranks and races hear their share. I am of opinion that cuts should be regarded as of a temporary nature, designed to tide over the present emergency and that they should be subject to reconsideration when the effects of the working of proposed income tax begin to be felt.
You may inform Civil Service Association and other bodies that I have given most earnest and sympathetic consideration to their representations, but that I am satisfied that the stringency of the financial position is such as to make it necessary to call on them to make some sacrifices similar to those which have been demanded of their colleagues both in this country and in other parts of the world. I am con- fident that they will meet these demands in the proper spirit, and that they will be ready to take their share cheerfully in the sacrifices of which all classes must of necessity bear a part.-THOMAS.
C. 83227/31 [No. 28].
No. 46.
THE GOVERNOR to THE SECRETARY OF STATE. (Received 8.15 p.m., 30th October, 1931.)
TELEGRAM.
[Answered by No. 47.]
No. 231. 30th OCTOBER. Secret. Your telegram of the 29th October, No. 207. Secret.* With reference to the form of salaries cut referred to in my telegram of the 21st October, No. 223,† I consider it important that cut should take the form of a temporary levy contributed to revenue from salaries, which would remain at the present level. This will preserve pension rights and emphasize the temporary nature of the cut. I am advised that legislative authority is necessary to enable a levy to be imposed in that form.
I consider it essential that the necessary legislation should take the form of ary Ordinance enabling me to inpose by Order subject to your approval a levy of such amount or percentage as I may think fit. Legislation in this form will emphasize the constitutional position that Public Service is under your control and not under that of the State Council and will make it plain that sole reason for requesting legislative authority is the possibility of successful claim by public servants in the Courts if levy were imposed by Executive Order alone.
To maintain constitutional position as well as confidence of servants it is essential to avoid making either principles or details of levy the subject of debate in the State Council.
I accordingly propose that a purely enabling Bill shall be introduced in the Council by officer of State at the proper time.
If the Council refuses to pass the Bill in endeavour to secure substitution of a measure by which the principles or details of the levy may be determined by the Council I request your authority to declare the Bill to be of paramount importance under Article XXII of the Order in Council.
C. 83227/31 ([No. 29].
No. 47.
THE SECRETARY OF STATE to THE GOVERNOR. (Sent 12.55 p.m., 17th November, 1931.)
TELEGRAM.
No. 214. SECRET. Your telegram of 30th October, No. 231. I approve of proposal that Bill should be introduced in the State Council by Officer of State at the proper time enabling the Governor to impose by Order such temporary levy on salaries, as I may approve. As regards the last sentence of your telegram on the understanding that Ministers acquiesce in introduction of Bill proposed I approve of your declaring
* No. 45.
+ No. 44.
‡ No. 46.