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PUBLIC RECORD OFFICE

Reference :-

C.O. 882

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

9PUBLIC RECORD OFFICE, LONDON

IR,

No. 172

STRAITS SETTLEMENTS.

WAR OFFICE to COLONIAL OFFICE.

(Received 25 May, 1910.)

[Answered by No. 176.]

War Office, London, SW, 24th May, 1910. I am commanded by the Army Council to refer to your letters of the 26th August and 16th October, 1909, numbered respectively 25602/09 and 32524,09,* regarding the exclusion of school fees and recovered medical charges from the revenue of the Straits Settlements assessable to military contribution

The Lords Commissioners of His Majesty's Treasury have forwarded to this Office a copy of a letter addressed to your Department, dated 11th March, 1910,† in which they express their inability to concur in the exclusion of the receipts under these heads from the Colonial estimates, and consequently from the revenue on which the military contribution is based.

In these circumstances the Army Council presume that the Secretary of State for the Colonies will cause such instructions to be issued to the Colony as will ensure the inclusion of these items in the general revenue for the purposes of the assessment. The Council cannot, however, pass without comment the statement in paragraph 3 of your letter of 26th August, 1909, that the Secretary of State for the Colonies cannot admit that the Army Council are entitled to object to the removal from the Colonial Estimates of a class of revenue which was included in those Estimates at the time when the military contribution was fixed at a percentage of the revenue, unless the Army Council are prepared to admit the converse proposition that no class Such a view of revenue which was not then included is subject to the contribution." appears to the Council to be inconsistent with the fundamental basis of calculation of this contribution as a fixed percentage of the total gross revenue. For this purpose it is clearly immaterial whether an increase of revenue is produced by the develop ment of existing or the creation of new classes of receipts; in either case one great object of this mode of calculation, viz., that the contribution should be proportioned On the other hand, the exemption from to the Colony's financial ability, is secured. assessment of a class of revenue which was included at the time when the contribu tion was fixed on its present basis would logically involve an increase in the per

I am, &c..

centage

15857

No. 173.

CEYLON.

WAR OFFICE to COLONIAL OFFICE.

(Received 26 May, 1910.)

[Answered by Nos. 177 and 183.]

E. W. D. WARD.

SIR.

As the Treasury has forwarded to this Office a copy of a letter (dated 11th March. 19107) to your Department, negativing the proposal to appoint an Inter- departmental Committee to reconsider the question of the military contributions of the Eastern Colonies, I am commanded by the Army Council to enquire, with refer- ence to your letter 35139/09, dated 4th November, 1909,§ whether a reply can now be furnished to War Office letter of 25th October, 1909.|| regarding the contribution payable by the Colony of Ceylon.

War Office, London, S.W., 25th May, 1910.

I am, &c.,

R. H. BRADE.

Ns, 158 and 165.

↑ No. 170.

* No. 158.

§ No. 167.

I No. 166.

SIR.

No. 174

STRAITS SETTLEMENTS.

COLONIAL OFFICE to TREASURY.

[Answered by No. 184.]

Downing Street, 26 May, 1910. 1 AM directed by the Earl of Crewe to acknowledge the receipt of your letter of the 11th of March* with regard to the effect on the finances of the Straits Settle- ments of the restrictions imposed on the opium traffic by the policy of His Majesty's Government, and to the proposal that an Inter-departmental Committee should be appointed to consider de novo the question of the military contributions paid by the Eastern Colonies.

2. Lord Crewe regrets to learn that the Lords Commissioners of His Majesty's Treasury accept the view expressed in the letter from the War Office of the 8th of October last, which formed the enclosure to your letter, and that they can find no ground for the appointment of the Committee at the present time. His Lordship adheres to his opinion that the arrangements for the assessment of military contri- bution need reconsideration, and it is with reluctance that he agrees not to press at present for a comprehensive settlement of the question,

3.

Lord Crewe notes that their Lordships are of opinion that if circumstances arise which necessitate assistance being given to a Colony from Imperial funds the question should be treated on its merits and not approached by means of indirect expedients for undermining the basis on which the military contribution has been settled. Proceeding on these lines, his Lordship desires me to offer the following observations with regard to the financial position of the Straits Settlements.

4. The revenue to be derived in 1909 from the rent paid for the opitun farm and from opium shops was estimated at $4,257,300 or £496.685 at 2s. 4d. to the dollar. A revised estimate was made towards the end of the year; and it was then expected that the revenue from these sources would amount to $3,998,956 or £466,544 17s. 4d. Owing to the existence of the farm system these amounts were net revenue. The gross estimated revenue for 1910 is $3,307,929 (or £385,925 1s.), but in consequence of the opium policy initiated by His Majesty's Government the Colonial Government has taken into its own hands the manufacture and sale of opium, and has consequently been compelled to establish the necessary machinery for this purpose, the estimated cost of which in 1910 is $334,950 (£39,077 10s.). The net estimated revenue is therefore £346,847 11s. or £119,697 16s. 4d. less than the revised Estimate for 1909.

5. I am to enclose a copy of the annual Estimates for the year 1910 together with a copy of the Governor's covering despatch.† and to invite their Lordships' attention to Sir John Anderson's remarks in the 3rd, 4th, and 8th paragraphs of the despatch. It will be seen that the deficit on the year's working is placed at $703,176, and that, even taking into account the sums which it is hoped to raise by new taxation and the amounts overpaid in respect of military contribution for 1909, there will still be a deficit of some $300,000 or £35,000.

6. The Lords Commissioners will remember that His Majesty's Government promised a substantial contribution towards meeting the loss to Hong Kong revenue occasioned by the change in the opium policy: and though no such promise has been made to the Straits Settlements, Lord Crewe is clearly of opinion that the circum- stances of the Colony, which has been as much affected by the policy as Hong Kong, deserve equally sympathetic consideration from His Majesty's Government. He desires therefore to urge upon their Lordships that a sum equivalent to half the net annual loss on the revenue from opium should be paid annually for a period of three vears to the Straits Settlements. As explained above, the net loss this year is practically £120,000; but it will in all probability increase as the restrictions on the opium traffic are made more stringent; and Lord Crewe feels that an annual sum of £60,000 for a period of three years commencing on the 1st of January, 1910, would not be more than equitable.

7. In view of the further information afforded by this letter, the enclosed despatch, and the Estimates of the Colony, the Lords Commissioners will no doubt

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• No. 170.