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PUBLIC RECORD OFFICE

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2 PUBLIC RECORD OFFICE, LONDON

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expenditure than is requisite for the present purpose, there can be no doubt that an increase of contribution of 35,0001. a year will still leave a considerable charge on the Imperial exchequer on the lowest possible estimate of the force and total charge, assuming every There is therefore no reason why this increase of practicable reduction to be made. contribution should not take immediate effect as proposed. But, to guard against over charge to the Colony in the further arrangements, Her Majesty's Government propose that before the further increase begins a full and detailed investigation shall take place into every part of the Military Expenditure, as desired by the Legislative Council, with a view to settle a definite scale of military force and military works and buildings, to be chargeable to the Colony in time of peace, and also with a view to determine how far the administration and detailed payment of the services should rest or not with the Colonial Government, (as is the case with many of the services at present,) and what should be the amount and mode, whether by fixed sums or by capitation rates on the This troops employed, of assessment for services undertaken by the Impal authorities. investigation will be made in the Colony, so far as it admits of being pursued there, either by a Committee of the Legislative Council or a Commission, and steps will be taken as soon as a report from this Committee or Commission is received (or it may be in anti- cipation of it) to complete their enquiries by obtaining a report from competent authority in this country on that portion of the expenditure to which local knowledge would not extend, and which, though taking place at home, may be considered fairly chargeable to the Colony. The true extent of the Imperial expenditure on account of the Colony is on some heads an open question of some difficulty, involving, for instance, as to arms and clothing, the rate of out-turn from the Government manufacturing establishments, and as to non-effective list, the proportion of army retirements due to service in Ceylon. It will be among the purposes of the proposed enquiry to arrive at some fair principles and specific sums or rates for assessing such charges as these against the Colony.

17. Her Majesty's Government propose that the construction fund of 30,0007. shall not be used pending the enquiry, and it will be a part of the duty of those who conduct it in Ceylon to report on the whole subject of re-construction of buildings, and re-distribution of stations and troops, and, moreover, to suggest as far as possible the specific works to which it will be advisable to appropriate the 30,000L

18. On this whole subject, however, of the form and extent of the local enquiry, whether it shall proceed by Committee or Commission, and to what points of detail it should be more especially directed, further instructions will be given by Her Majesty's Government to the new Governor of Ceylon, for whose arrival in the Colony the enquiry will be deferred.

19. Without waiting for the result of these future enquiries, Her Majesty's Govern- ment consider that a great improvement may be at once made in the existing relations between the local Government and the military authorities by taking the immediate increase of contribution from the 1st January 1865, in the shape of a total fixed payment to the War Department at the rate of 100,000l. a year for the following joint purposes:----

(1.) Contribution to Imperial pay and services voted by Parliament.

(2.) Colonial pay and allowances (including travelling allowances) of military officers and others in the Imperial service, excepting Governor's aide-de-camp and mounted orderlies,

(3.) Contingencies (including any travelling or occasional allowances of the Colonial establishment attached to the force) of regiments, staff, and military departments, excepting contingencies of Governor's aide-de-camp and mounted orderlies.

(4.) Any expenses heretofore borne by the Colony for recruiting or for arms and clothing of any kind for native troops except for mounted orderlies (which will transfer to the War Department the business of supplying clothing and boots to the gun lascars). (5.) Expenditure on military works and buildings for repairs, and for new constructions also so far as these may be required pending the proposed enquiry, the results of which will be waited for, as explained, before using the fund of 30,0001.

(6.) Rent of buildings hired as quarters for officers or for other occupation by the troops or Imperial military departments (the last five heads all referring to services heretofore defrayed in detail by the Colony). The buildings at present occupied by the officers, troops, or military departments, so far as these are Government property, would be made over rent free to the War Department as part of the arrangement. The War Department would then assign out of this 100,000, a year, whatever annual or travelling allowances it might think fit, with or without right to quarters, to officers and others under military orders, and it would hire out of the same sum whatever buildings it might require in addition to those made over by the Colonial Government, and would devote whatever portion of the sum it might think fit to repairs or construction of works and

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buildings, but with the understanding, which Her Majesty's Government think would be fair to the Colony, that the buildings taken over should be kept in a reasonable state of repair, as it would be necessary still to consider them Colonial property (at all events pending the proposed enquiry).

20. The Colony on the other hand, under the arrangement proposed by Her Majesty's Government, besides paying this commutation of 100,000l. a year for the military services above enumerated, would continue to defray in detail, as at present, the annual expenditure whatever it might be for the following military services.

(1.) Colonial pay and allowances and contingencies of Governor's aide-de-camp and mounted orderlies, together with the arms and clothing and horses of the latter, which several items ought obviously to be regulated by the Ceylon Government rather than by the military authorities.

(2.) The annual pay and salaries (but not any travelling or other occasional allow- ances) of the colonial establishment, wholly paid by the Colony, and auxiliary to the establishment voted by Parliament, consisting of the gun lascar corps, of native attendants on regiments, and clerks, messengers, and others belonging to the military office estab- lishments, which body of troops and civilians, as it appears to be rather in the service of the Colonial than of the Imperial Government, it is not considered right to make dependent for their annual pay and salaries on the War Department, at least not without further enquiry, though they will remain under the orders of the Ceylon military authorities.

(3.) The pensions to native troops (and gratuities on discharge) on the existing scale, which the Colonial Department has recommended that of War not to disturb, pending the proposed enquiry, which should no doubt embrace the subject of these pensions. There would be an obvious convenience and propriety in transferring these pensions on the com. mutation system to the War Department, which pays the greater part of the native troops, but it would be far from easy to settle the terms of doing so with that Department in the present state of the subject.

(4.) The services at present defrayed by the Colony under the head of colonial com- missariat, including the expenditure for European rations and rice to native troops, but excepting all expenditure for hire of officers' quarters, or other buildings for military occupation, which as already stated would devolve on the War Department out of the 100,000l. a year, and excepting also any items falling under other heads (as above speci- fied) to be covered by the same sum. It will be for consideration in the proposed enquiry whether a general transfer of the business of commissariat supply and equipment should not be made to the War Department on the commutation system. But such a change could not be effected without much consideration and previous arrangement, as it would require a new establishment of imperial officers, outfits of stores, and at stations where the colonial commissariat premises could not be conveniently given up, the erecting probably of new buildings.

21. Her Majesty's Government propose that the War Department shall not be subject to the charge of the assessment tax on buildings in public military occupation, and that the Ceylon Government shall also bear the charge or loss arising from the remission of colonial duties on wine and beer consumed by the military, (of which items the former has been heretofore provided for under the head of colonial commissariat, and the latter under that of colonial pay and allowances). It is accordingly not intended that there shall any refund of these taxes or duties by the military department out of the 100,0001. a 22. It appears to Her Majesty's Government, on comparing the expenditure on the above plan with that incurred by the Ceylon Government for military purposes in the years 1861 and 1862, that the additional charge to the Colony will correspond with the assumed rate of increased contribution of about 35,000l. a year beyond the rate of Military Expenditure in those years.

be year.

23. It is not improbable that the proposed enquiry may lead to the introduction of some greatly modified arrangements before the 1st of January 1867, but in the event of no material change being made by that date, the future increase of contribution would be taken in the shape of simple additions of 10,000!., year by year, to the contribution of 100,000l. till it reaches 135,0001, for the same joint purposes, except that new works and buildings, which are only to be considered covered by the commutation pending the enquiry, will no doubt be transferred before the 1st January 1867, by the conclusion of the enquiry, to the reserved fund of 30,000, or whatever other provision for new constructions may result from the enquiry.

24. In order to secure the Ceylon Government against undue demands on account of troops not actually maintained in the Colony, Her Majesty's Government propose that the colonial obligation as regards the commutation of 100,0007. shall be subject to a proviso

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