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PUBLIC RECORD OFFICE

Reference :-

TRICO.

TITĮ

-882

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- | COPYRIGHT PHOTOGRAPH—NOT TO

2 PUBLIC RECORD OFFICE,

LONDON

Mr. Dundas,

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4. The Legislative Council in assuming that even so rich and improving a Colony as Ceylon ought to be permanently relieved of a large portion of the Military Expenditure incurred for its benefit, appear to rely on the existing practice in the case of other Colonies. Setting India aside, it has undoubtedly been the practice of Parliament heretofore to relieve Colonial dependencies of a greater or less portion of Military But this Expenditure even when incurred exclusively for purposes of a local character. practice by no means exists as one which the Colonies are entitled to as a matter of right. It rather exists as a matter of discretion on the part of the Imperial Government, and there is no reason why Parliament should not discontinue it on fitting occasion in each case as this or that Colony increases in wealth and power, in the same way as it has discontinued to a great extent the similar practice of granting votes in aid of Colonial Civil Government. That Possessions acquired by the military power of the Empire should be expected as soon as acquired to sustain their own military establishments, cannot of course be asserted as a general proposition. But with the due development of the resources of such Possessions, Her Majesty's Government consider that at all events the more favouraby situated Dependencies ought sooner or later to cease to be a burden to the Empire in time of peace, if not to become a support to it in time of war.

5. In the case of Ceylon it may be said that at no time has the Imperial Government maintained military establishments there beyond those considered to be necessary for local purposes. Until, therefore, a different policy is adopted in that respect, there is no reason why Ceylon, if considerations of finance admit of it, should not defray the entire charge of its entire military force and military works, upon whatever scale it may be It is to be observed, however, that the expedient for local reasons to maintain them. Legislative Council contend that the fortifications and troops, at Trincomalee, if not at Galle as well, ought to be looked upon as Imperial works and garrisons, on the ground of the protection which they afford to harbours frequented in the one case by the royal navy (the Admiralty having a dockyard establishment at Trincomalee) and in the other by the eastern mail steamers. Her Majesty's Government are not prepared to admit the justice of this view. These forts or batteries may protect Imperial property or shipping, but they form part of the general defences of the island of Ceylon. And in the same manner the 500 or 600 troops at the two stations can scarcely be regarded as Imperial garrisons, but are rather detachments from the island brigade, which are as much available for general service in the Colony, in case of emergency, as the troops in Colombo or Kandy. With respect to Galle, it is difficult to understand the supposition that it is not the province of the Colonial Government to secure against local disorder or piratical surprise, a port upon which the Colony depends for so vital a matter as its mail communications with other countries. As regards Trincomalee again, it may be ques. tioned whether the Colonial Government could leave unoccupied that important point, the key of the eastern districts, even if the Admiralty establishments were withdrawn. But, however this may be, the troops of the post could not be safely withdrawn from the island itself, or at least no large portion of them, and it is impossible to believe that the colonists could ever grudge the moderate expense which may be really due to the maintenance of this detachment at Trincomalee, merely because its presence there is an accommodation to the Imperial navy-that navy which renders such incalculable services to the Colony.

6. It will be seen from the extracts of former correspondence sonexed to this memo- 13th March randum, that in holding Ceylon liable for the entire cost of the military force and works 1801, par.62 maintained in the island, Her Majesty's Government are merely reverting to the In the very first Despatch Lord Hobart, principles laid down by their predecessors in former times.

and 60.

8th Feb.

1808.

Earl

Bathurst,

21st Aug. 1821.

written to Ceylon by a Secretary of State, on the Crown taking over the government of the maritime provinces from the East India Company in 1801, it is explained by Mr. Dundas that this is done by the Crown on the supposition that the Colony will before long not only pay the whole cost of its government, civil and military, but yield a surplus besides of 100,000l. a year, to be paid into the Imperial Exchequer. And again in 1821, British possession of the island being now completed by the acquisition of the Kandyan provinces, it is pointed out by the Secretary of State, Earl Bathurst, that as soon as the finances admitted of it, Ceylon would be expected to take over the entire charges of the military force. This force it should be borne in mind, both in 1801 and in 1821, was about double what it is now. For the present purpose it is unnecessary to inquire how the anticipations of 1801 came to be disappointed, and how the result on the contrary was that very large sums were annually drawn from this country in aid not Suffice it to merely of the Military Expenditure but of Civil Expenditure as well. observe that modern policy and progress, and the liberality of Parliament in preferring the permanent improvement of the Colony to immediate relief from military charges,

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have at length brought about a greatly improved state of the finances, at the same time that the absence of discontent among the natives and the laying open of the hills and jungles by roads and plantations have made it safe to make a great reduction in the military force, the combined effect of the improved finances and diminished force being to admit of Her Majesty's Government returning, without injury to the Colony, to the original intention of requiring it entirely to support its own charges, civil and military.

7. What then is the precise extent of this improvement in the state of the Ceylon finances at the present time? The Colony is without debt, except that now being incurred for the construction of the railway, which stands at present at 350,0001. of per cent. debentures. This Government work, which is expected to be finished about the beginning of the year 1867, at a total capital cost of between 1,000,000% and 1,500,000/., exclusive of interest on debt during construction, is to be provided for partly out of capital raised by issue of Ceylon Government debentures, and partly out of drafts from the colonial balances and revenue. The export duties imposed for railway purposes when the Colony first engaged in the enterprise, are formed into an accumu- lating fund, the balances of which, after meeting annual interest on debt, go to con- struction. To judge, therefore, of the real surplus of revenue it is necessary to deduct the export duties from revenue, and the payments on railway account, including interest on debt, from expenditure. It is further necessary to deduct from revenue the pearl fishery receipts, which are too uncertain to be reckoned in an estimate of the annual surplus, and from expenditure the special charges for certain public works (of no large amount in the last two or three years), placed on balances or surplus funds by the Surplus Funds Ordinances," passed some years since. In the year 1861 the total revenue was 751,9971.; the total expenditure, exclusive of charges on balances or surplus funds, 635,2307.; the surplus revenue, 116,767. Deducting from the revenue, for the reasons above stated, the sum of 40,5631., the receipts from the export duties, and also the small sum received in 1861 from the pearl fishery, 1464, and deducting on the other hand from the expenditure the sum of 15,9551. paid on railway account, the net or effective surplus of 1861, independent of railway funds and payments and pearl fishery, stands at 92,013. In the year 1862 the total revenue was 759,135%, the total expenditure, exclusive of charges on surplus funds, 626,6544; the surplus revenue, 132,4811. De- ducting as before, on the one hand, the export duties, 38,498/., and the receipts again nominal in 1862 from the pearl fishery, 621., and on the other hand, the railway payments, 12,030, the effective surplus of 1862 amounts to 105,9517. For the year 1863 the actual results have not yet arrived from Ceylon (except returns of export duties and pearl fishery); but the supplementary or revised estimates of the year make the total revenue 983,7007.; the total expenditure, exclusive of charges on balances, as before, 776,3037., and therefore the surplus 157,3971, reduced to a corrected surplus of 149,5117. by deducting from the estimated revenue the export duties, 51,2781. (the actual receipts) and pearl fishery, 51,1007. (also actual receipts), and from the estimated expenditure the railway charges, 84,4921.

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8. Without relying on this comparatively imperfect information for 1869, except as confirming the results of 1861 and 1862, Her Majesty's Government have before them an ascertained surplus at the clear rate of from 90,000l. to 100,0007. a year, and this has been realized after fully providing for the Civil Establishment, the scale of which has been liberally increased during the last few years, and for all the other services and requirements of a civil character, and also after providing liberally for public works and improvements, a sum of about 135,000, or not far from a fifth of the total revenue, without the export duties, being included, for the establishments of the Public Works Department, and outlay on roads and civil works and buildings in the above return of expenditure for 1861, and about 125,000l., or a full sixth of the similar total of revenue, in the return for 1862, to which sums was added an expenditure, under the Road Ordinance, at the rate of from 15,000 to 20,000l. a year more. At the same time, the revenue which has yielded the above rate of surplus appears to be steadily rising. Deducting, however, a sum of from 20,000l. to 30,0001. from the ascertained rate of surplus to cover contingencies, whether of revenue falling below or civil expenditure rising above the scale of 1861 and 1862, Her Majesty's Government comider that the annual surplus of the Colony available in the present year and for some years to come for increase of military contribution, or for paying interest on the railway debt, and contributing to the railway construction funds, in aid of the export duties, may be safely placed at a sum of 70,000l. a year, this being exclusive of pearl fahery receipts, which, as already observed, are of too camual a character to be taken into account.

9. The estimates of the Ceylon Government for the present year 1864 are framed to some extent in accordance with the same conclusion, provision being made in them from A 2