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PUBLIC RECORD OFFICE

Reference :-

C.O. 882

8 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

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the shape of present and prospective pensions equivalent, according to the best actuarial calculations, to the assets taken over, supplemented by the contributions of officers, and on the basis of the six per cent. compound interest at present allowed by the Government on the fund's balances. I adhere to the view expressed in that despatch that the fund should be transferred to the Government, but I cannot sanction the proposal to devote the assets to be taken over under the proposed Ordinance (which I understand has been introduced into the Council of Government) to meeting the expected deficit in the revenue. As I have stated above, the measures to be adopted for this purpose must, in my opinion, be such as will result in a permanent, and not merely a fictitious, improvement of the position. I should feel obliged to insist that the assets of the fund, if taken over by the Government, should be held as a separate fund, and the interest only paid to revenue.

16. In his despatch, No. 239, of the 2nd of July, Sir Graham Bower has described certain steps which, after the vote of the Council against fresh taxation, he had taken to reduce expenditure. These measures comprise a reduction to the extent of Rs. 85,000 in the amount of rolling-stock to be purchased for the railway, the postponement of the erection of certain quarters on the Rivière du Poste Line, the discontinuance of the unremunerative theatre trains, and of the grant to the Mahébourg Yacht Club. It is also proposed to postpone for the present the carrying out of the Public Works Extraordinary provided in the Estimates.

17. These economies would result in a saving of about Rs. 154,000. I under- stand, however, that Sir G. Bower subsequently agreed to the payment of the subscription to the Yacht Club, and the measures generally can hardly be regarded as more than a slight palliation of the situation. The Public Works Extraordinary Vote is already very small and cannot be dispensed with altogether, while more rolling-stock for the railways appears to be badly required, and must be obtained before long. I see, however, no reason to object to Sir G. Bower's measures, and trust you may find it possible to effect still further economies. It has already been decided to defer the establishment of a bacteriological laboratory till a more favour- able opportunity, and this will cause an additional saving of some thousands of rupees.

18. Having now placed my views somewhat fully before you, I have, subject to the foregoing observations, to convey to you my approval of the Estimtes, and to inform you that His Majesty the King will not be advised to exercise his powers of disallowance in respect of Ordinance No. 3 of 1904, entitled, An Ordinance for making provision for the Public Service for the Financial Year 1904-5,” transcripts of which were transmitted by Sir G. Bower in his despatch, No. 238, of the 1st of July.†

19. I shall await the reports on the possibility of reducing expenditure and increasing revenue, as well as on the general position, which you should send home when you have been in the Colony long enough to arrive at definite conclusions on the various questions involved. I do not conceal from you that a difficult task lies before you, but I rely upon your ability and experience to guide the Colony through a critical period of its history.

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SIR,

No. 212.

I have, &c.,

ALFRED LYTTELTON.

MR. LYTTELTON to GoVERNOR SIR C. BOYLE

(Confidential.)

Downing Street, September 10, 1904. IN the ninth paragraph of my public despatch of to-day's date, ‡ dealing with the financial position of the Colony, I have informed you that the raising of the Re-afforestation Loan must be postponed until considerable improvement in the financial position of the Colony has been effected.

2. I desire to point out that the situation as regards this loan is somewhat complicated by the fact that, under Ordinance 25 of 1901, authorizing the loan, a

‡ No. 211.

• No. 193.

† 27496: not printed.

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surtax of per cent, on customs duties is imposed, and that, according to the preamble of the Ordinance, this surtax is levied to meet interest and sinking fund charges on the loan.

3. I am aware that the issue of this loan has already been considerably deferred, and that according to the correspondence recorded in the Minutes of the Woods and Forests Board, Nos. 3, 8 and 11 of 1904, Sir G. Bower declined to allow the proceeds of the surtax prior to the raising of the loan to be devoted to re- afforestation purposes, and decided that they must be treated as general revenue, but it seems to me doubtful whether the continued collection of the duty after it has been decided to posupone indefinitely the issue of the loan, should not strictly be validated by an ordinance re-imposing the surtax for general purposes.

4. You will, however, doubtless consult your legal advisers on this point.

I have, &c.,

ALFRED LYTTELTON.

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No. 213.

MR. LYTTELTON to GOVERNOR SIR C. BOYLE.

(Secret.)

SIR,

Downing Street, September 13, 1904. I HAVE the honour to acknowledge the receipt on the 5th ultimo of Sir Graham Bower's secret undated despatch* on the financial crisis in the Colony.

2. You will observe from my public despatch,† which goes to you by this mail, that I have adopted generally Sir G. Bower's recommendations.

3.

As regards the question of sending a Royal Commission to Mauritius, I note that in your cipher telegram of the 29th ultimo,‡ you mention that you think that such a course will prove inevitable; but at present I will defer consideration of the proposal until I receive full confidential reports from you on the situation when you have had an opportunity of coming to definite conclusions on the questions

involved.

4. Since my public despatch was written, I have learnt from your cipher telegram of the 9th instants that the deficit on last year's working was even greater than was estimated by Sir G. Bower.

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(Paraphrase.)

No. 214.

I have, &c.,

ALFRED LYTTELTON.

MR. LYTTELTON to GOVERNOR SIR C. BOYLE. (Sent 5.30 p.m., September 23, 1904.) TELEGRAM.

[Answered by Nos. 215 and 221.]

A despatch on the estimates leaves by next mail on 30th September.

I cannot sanction loan in aid of revenue until extra taxation has been tried, nor can I sanction the application of special funds to cover ordinary expenditure. In my despatch I have suggested income tax, which must produce additional revenue, if only from officials' salaries, and which, being applicable to the whole community, is preferable to what might otherwise be necessary, viz., a general reduction of all salaries paid by Government.

I am anxious to avoid a constitutional crisis, if possible, but it may be necessary to remind the Council of Government that under Letters Patent, by exercise of the power of suspension of required number of unofficial nominated members and the substitution of officials, Government majority can be immediately assured. despatch from the Secretary of State of January 9th, 1886. ||

See

• No. 194.

↑ No. 211.

‡ No. 205.

§ No. 210.

See p. 31 of [C. 7454].

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