CO882-(8-9) — Page 555

PUBLIC RECORD OFFICE

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C.O. 882

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PUBLIC RECORD OFFICE, LONDON

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

166

3 Iɩ appears to me that the Army Council have good grounds for holding that the maximum contribution paid by the Colony should be the whole cost of the garrison, subject, of course, to the limitation that not more than 93 per cent. of the assessable revenue shall be paid to Army funds The proportion fixed by the Ordi- nance No 1 of 1908 was arrived at, as the Council observe, by taking the whole cost of the garrisons of Colombo and Kandy and half the cost of the Trincomali garrison and, on the withdrawal of the troops from the latter station, unaccom- panied by an increase in the other garrisons, the whole cost of the troops in the island would properly fall on Colonial revenues

4 But while I am bound to accept this view. I consider that it may be possible I assume that it to arrive at a reasonable compromise with the Army Council. would be necessary to employ the official vote in order to carry in the Legislative Council a proposal to raise the limit (or one of the limits) of the amount payable by the Colony, and I should be unwilling to adopt such a course if the question can be settled by other means

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I would suggest for your consideration that Ceylon might agree to pay the whole cost of the troops, subject to the limitation to 93 per cent. of revenue and to the following conditions:

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(1) In the event of Trincomali being unoccupied by troops the amount pay- able by the Colony should again be fixed at not more than three- quarters of the total cost of the whole garrison

(2) In the calculation of the revenue on which contribution is to be paid, revenue arising from sums overpaid to the Colonial Treasury and subsequently paid out again, and from sums paid out and subsequently reimbursed. Should be excluded. I may say that the Lords Com- missioners of the Treasury have agreed that refunds of revenue should be excluded from assessable revenue in Hong Kong, (3) The maximum cost of the garrison that will be paid without previous agreement with the Government of the Colony should be a yearly sum to be based on the average cost during the three years ending the 31st of December. 1910: and, if any change leading to increased expendi ture is made in the garrison, no part of such increase shall be borne by Colonial funds unless the Ceylon Government has been consulted beforehand and has agreed to the change.

I would ask yon also to consider whether the opportunity should not be taken, in negotiating with the War Office, to emphasize the desire of the Colony for a white regiment to be stationed again in the island in place of Indian troops, and what (if any) further concession would be offered in return for such an arrangement.

31600

(No. 585.)

MY LORD.

No. 179

CEYLON.

I have, &c..

CREWE

THE GOVERNOR to THE SECRETARY OF STATE.

(Received 15 October, 1910.)

The Queen's House, Colombo, Ceylon,

26th September, 1910.

I HAVE the honour to acknowledge receipt of your Lordship's despatch, No. 252 of June 10th, 1910,* transmitting a copy of correspondence with the War Office with regard to the Ceylon Military Contribution.

2. The chief document in that correspondence is a letter from the War Office, dated October 25th, 1909,† in which the Army Council criticise the arguments advanced in my despatch, No. 290 of May 23rd, 1908,‡ and again contend that there is no longer any ground for making the maximum limit of the contribution other than the full cost of the garrison, I am concerned to note that your Lordship appears disposed to accept this view, and I trust I may be able to show that such a concession would be fraught with injustice to the interests of this Colony.

‡ No. 135.

• Nu. 178.

↑ No. 166,

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The essential principles on which the Military Contribution of this Colony is fixed are stated with singular lucidity in Sections 3 and 6 of Ordinance No. 2 of 1898, as follows:-

4.

Section 3 A sum equivalent to nine and a half per centum of the Colonial revenues shall be appropriated yearly to the Imperial Government as a contribution for the defence of the Island.

Section 6. The said percentage shall be deemed to be a fixed contribution payable by the Ceylon Government in full return for the annual cost of the Imperial garrison, including the cost of maintenance of all mili- tary works and buildings, but not including any capital expenditure required for military lands and buildings outside Trincomalee, which shall be provided for by vote of the Legislative Council in the usual way, provided that in no year shall the sum paid by way of percentage exceed three-fourths of the cost of the garrison for that year

In

The agreement thus ratified by statute was, as your Lordship.is aware, the direct outcome of Mr. Chamberlain's despatch, No. 198 of July 31st, 1896.* paragraph 4 of that despatch Mr. Chamberlain wrote: As regards the maximum limit beyond which this contribution should not rise, Her Majesty's Government think that it will not be unreasonable to fix this at three-fourths of the total yearly cost to the Imperial Government of the land defence of Ceylon, which hardly seems to be an over-valuation of the advantages which the Colony derives from that defence," and in the preceding paragraph :-"I trust that the proposal of Her Majesty's Government will be regarded as a fair and reasonable compromise, and will accordingly be accepted as a permanent settlement of the question." I would again point out, as I have already urged in paragraph 3 of my despatch, No. 290 of May 23rd, 1908,† that the principal reason which induced the Unofficial Members to accept Ordinance No. 2 of 1898 was the belief that the measure was the final settle- ment of a troublesome question, and I submit that it is impossible to argue, in the face of Mr. Chamberlain's very explicit words in his 4th paragraph, that there was any reservation, express or implied, that if and when Trincomalee was abandoned the agreement to pay three-fourths of the total cost of the garrison was to become void, or that the Colony was to pay the whole of the cost of the garrison of Colombo and Kandy within the 94 per cent. limit. I demur, therefore, most strongly to the contention of the Army Council that the agreement to pay three-fourths was only to be in force so long as a garrison was maintained at Trincomalee, and that in the event of the abandonment of that station the Colony was to pay the whole of the total cost of the rest of the garrison up to the limit of 94 per cent. of the assessable revenue. It is admitted in paragraph 4 of Sir Edward Ward's letter that no such reservation was explicitly made, and it is certain that this Colony was not aware that any such reservation had been suggested.

5. I would urge that if Mr. Chamberlain had intended to admit, as regards Ceylon, the principle that the Colony should bear the whole cost of its defence, and that if he agreed to a contribution of three-fourths only because of the complication involved in the Trincomalee question, he would not have been at such pains to make his settlement a permanent one, and to express it in terms so clear and explicit. The Army Council observe that the principle that the Colony should bear the whole cost of its defence was asserted as early as 1801, but it has never, so far as I can The "defence there referred to was discover, been admitted by the Colony. undoubtedly the internal defence of the Island, and the maintenance of peace within it. Those days have long passed, and the whole garrison might be removed without danger to the preservation of law and order, which is amply secured, if necessary, by Police and Volunteers.

6. With regard to the proper interpretation of Mr. Chamberlain's despatch of July 31st, 1896,* I would ask your Lordship to bear with me while I briefly review some of the previous incidents in this long-standing controversy.

In 1884 the Treasury laid down, in very reasonable terms, the following logical order in which the several elements of the question of Colonial Military Contributions must be considered :—

"(1) The force to be maintained in the Colony (a) for internal and external

defence of the Colony; (b) for purely Imperial purposes.

11155 not printed.

24658

↑ No. 133.

No. 166.

LA