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Appendix D D.

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scrutiny of the Special Committee which, with the concurrence of the Colonial, War, and India Offices, was assembled, 1867-68, at the Straits Settlements to value their military stores (Ordnance, Commissariat, and Barrack) to be transferred.

"That Committee, after great labour, and with entire unanimity, valued these stores at rupees 323,535: 7: 1, including the guns that constituted Since slightly reduced by the act of the Colonial Government the armament on the fortifications with their equipment. The in taking over certain stores and Government of India cannot, indeed, conceive the possibility, crediting the Indian Government on any principle of fairness, of putting the Ordnance on a different footing from the remainder of the transferred stores,

with them.

and can see no middle course which the Colonial Government could propose, and the Government of India accept, between paying for the armament on the one hand, or, on the other, returning it to the Madras Ordnance Department whence it was sent.

"The Earl of Kimberley will recollect that this expression of opinion on the part of the Government of India is in accordance with that entertained by the Secretary of State for War and the Duke of Argyll.”

It is submitted that the Indian Government, when answering the above reference, cannot have had present to their minds the real facts of the case, as the allegation that the Special Committee, with the concurrence of the Colonial, War. and India Offices, was assembled in 1867-68 at the Straits Settlements to value the military' stores (Ordnance, Commissariat, and Barrack) to be transferred, is calculated to convey an erroneous impres- sion, both in what it omits and in what it states. In what it omits, because both in reality and in form, as, it is submitted, is evident from the foregoing correspondence, the Committee was appointed to value not generally stores to be transferred, but the stores to be transferred to the Imperial Government, and the words "to be transferred" standing in the India Office letter unqualified are too wide. No question had been mooted on the 6th of November, 1867, when the Committee assembled, as to any payment by the Colonial Government to the Government of India on account of military expenditure, and the first suggestion was due, as has been pointed out, to the War Office letter of the 4th of August, 1868. Secondly, it is submitted that the above allegation is calculated to convey an erroneous impression in stating that the Committee was assembled with the concurrence of the Colonial, War, and India Offices. The only parties to the Committee were the India Office and the War Office. The India Office proposed a Committee of valuation on the 2nd of August, 1867. That Office made the proposal to the Colonial Office, supposing the Colonial Office to be the proper Department to issue instructions on the subject. This supposition, however, was not strictly correct. The Colonial Office does not issue fnstruc- tions in matters lying completely within the sphere of the War Department; and accordingly the Colonial Office transmitted the proposal of the India Office to the War Office, and offered to give any instructions which the War Office might think necessary to the Governor of the Straits Settlements, "so far as his intervention might be required."

The War Office concurred in the proposal of the India Office on the 6th September, 1867, and employed the Colonial Office, and, through the Colonial Office, the Governor of the Settlements, as the channel for conveying instructions to the officer commanding in the Settlements. The War Office dictated the composition of the Committee. The officer commanding in the Settlements caused the Committee to be assembled in accordance with the instructions of the War Office, and expressly stated this fact in the Garrison Order quoted above of 6th November, 1867. The India Office concurred in the valuation by the appointment of Colonel Barrow to co-operate with the Committee. The Committee reported to the officer commanding, and he transmitted their proceedings to the War Office.

If, therefore, the allegation that the Special Committee was assembled with the con- currence of the Colonial Office, as well as of the War Office and of the India Office, to value the military stores, including the Ordnance stores, is intended to imply the argument that the Colonial Office, by such alleged concurrence, admitted liability on the part of the Colony in respect of any part of those stores, it is submitted in reply-First, that liability on the part of the Colony was not in question; and, secondly, that the Colonial Office did not concur in the assembling of the Committee in the only sense in which concurrence could carry with it responsibility, namely, as a principal.

On the 30th of March, 1872, the Under-Secretary of State for the Colonies answered the India Office letter of 22nd November, 1871, last mentioned :--

"Lord Kimberley much regrets that the correspondence which has been going on for so long a time has led to no satisfactory arrangement, and he further regrets that, after full consideration of what is stated in your letter, he is unable to assent to the view taken by

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his Grace the Duke of Argyll, especially with reference to the question of payment for the armaments and stores which were in the Colony at the time of its transfer on the 1st of April, 1867.

"The understanding at this Office at the time of transfer was that the Colonial Government was, on the 1st of April, 1867, to take over the charge of the three settle- ments, and that the Colony was in like manner, except when otherwise provided for, to take over the assets, and assume the liabilities which existed at the time of transfer.

"Lord Kimberley, on the part of the Colony, has no other wish than that the conditions, whatever may be their correct interpretation, should be fairly carried out, and this will, of course, be equally the feeling of the Duke of Argyll and of the Government of India.

"His Lordship would therefore propose that all the questions now in dispute should be submitted to the decision of an arbitrator, to be agreed upon by the Duke of Argyll and himself, whose selection can be decided upon at a future time."

To this letter a reply was sent from the India Office on the 21st of June, 1872, that Appendix E E. the Secretary of State for India entirely reciprocated Lord Kimberley's views with regard to an equitable settlement of the unadjusted accounts between the two Departments conse- quent on the transfer of the Straits Settlements to the Colonial Office, and concurred with him in opinion that the matter under discussion should be referred to arbitration.

In subsequent correspondence, to which it is not necessary to refer more particularly, the Right Honourable W. E. Forster, as already mentioned, was selected as Arbitrator, and the question for his decision was limited, as determined, by the above-mentioned letters of 26th April, 1873, and 23rd May, 1873, to the liability of the Colony for the armaments and stores left by the Government of India at the time of the transfer, exclu- sive of those which have been taken over and paid for by the War Department on Imperial

These last-mentioned letters close the second part of the case.

account.

The facts and correspondence in the case having thus been laid before the Arbitrator, it remains only to submit for consideration some arguments to be drawn from them in support of the contention of the Colonial Office on behalf of the Colony.

I. It has been already submitted that the intention of the parties to the transfer as shown by the negotiations upon the agreement for the transfer ought to govern the case, and that those negotiations showed that the armaments and stores in arbitration were intended to remain with the Colony, free of charge. It is unnecessary to repeat the arguments already adduced, and the Arbitrator is respectfully referred to them as set out above at the end of the first part of the case.

II. With regard to the portion of the armaments and stores in dispute, which consists of the guns on the fortifications with their equipments. It is submitted that this portion from its character, its destination, and the circumstances of the case, ought to be con- sidered as part of the public property of the Colony.

1. As to the character of that portion.

It is submitted that these guns with their equipments must be treated as annexed to and forming part of the fortifications, and therefore as passing with the fortifications, which it is agreed are to be transferred free of charge. Without them the fortifications are practically useless. They are on the fortifications, and such guns once placed in position remain there. They are not attached to any particular corps or moved, like field artillery. with the corps from station to station, but are served in the same place by successive detachments of artilleryinen. Hence their connection with the fortifications is closer than their connection with the troops serving them, and they may be described most correctly as adhering to and an incident of the fortifications.

2. As to the destination of the portion.

It is conceived that the Indian Government, by placing these guns on the fortifications, appropriated them to the Colony, as part of the public property of the Colony. It would be difficult to imagine any administrative act in reference to the guns showing more definitely that that they were destined by that Government to be permanently attached to that locality in the Straits Settlements.

3. As to the circumstances of the case.

I

The Indian Government have already had such benefit and use of these guns as dis- entitle them, according to the principle appealed to by themselves before the transfer as equitable, now to remove them. In the case of the barracks, the India Office, it will be remembered, contended that the Imperial Government ought to pay for their erection on the ground that they were public property, not in use, of which the entire benefit would

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