CO882-(8-9) — Page 556

PUBLIC RECORD OFFICE

Reference :-

C.O. 882

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PUBLIC RECORD OFFICE, LONDON

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

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(2) The cost of that force divided as above in the Colony and at home. (3) The amount of contribution that ought to be demanded of the Colony, having regard to its resources and to its obligations towards itself and towards the Empire, whether the amount should be the same in peace and war; for what period it should be fixed," &c ride page 18 of Sessional Paper X11 of 1885)

At the end of the same letter the Treasury write

My Lords have wished

the Military Expenditure in each Colony to be divided between Imperial and Colonial purposes, because this affords a guide to what ought to be the minimum contribution. It does not follow that a Colony ought to pay nothing towards Imperial expenses, on the contrary, my Lords hold it to be the duty of every portion of the Empire to make some contribution towards those expenses according to its means

*1

"

The contribution of Rs 600,000 which was subsequently fixed was regarded by the War Office as the whole cost of the 400 men kept for Colonial service, and in consideration of the further advantages which the Colony will derive from the retention of the force for Imperial purposes (800 men) (ride page 20 of Sessional Paper XIII of 1885) The whole of the correspondence in that Sessional Paper shows how strenuously Lord Derby strove for a definite declaration of the principles on which it was then understood the contribution should in future be levied. In 1891, it is true, Lord Knutsford abandoned the position taken up by Lord Derby, and agreed to the principle that the Colony should pay an amount based on the estimated minimum cost of the garrisons at Colombo and Kandy (ride his despatch, No 223 of July 23rd, 1×91).* But three years later Sir Arthur Havelock, in a des- patch of great force (No. 444 of December 10th, 1×94),† reopened the whole question, In paragraph 6 of that and urged a reversion to the principles laid down in 1884-5 despatch Sir Arthur Havelock submitted that the only satisfactory and equitable principle on which this question of Military Contribution can be settled is that the Colonial Government should pay the amount which represents its fair share of the cost to the Imperial Government of the privileges and advantages in the matter of defence which the Colony needs, both in its own local interests and in its interests as a part of the Empire, and which it actually enjoys. This fair share of cost should, I submit, be the result of a calculation based on the actual facts of the expenditure incurred in the Island by the Imperial Government, and on the consideration of what share of that expenditure may be equitably charged to the Colonial Govern ment. The Colonial Government should in fairness be made aware of such actua] facts and of the calculation based upon them." Lord Ripon, in his answer to that despatch (No. 39 of February 2nd, 1895),‡ said that the question was under con- sideration," and the next pronouncement on the subject is the famous settlement pro- pounded in Mr. Chamberlain's despatch of July 31st. 1896. § I submit that, reading Mr. Chamberlain's reply in its relation to Sir Arthur Havelock's statement of the case, it is a logical indeed I might say the only possible-inference that he accepted once for all the principle that the contribution should represent "a fair share of the cost to the Imperial Government of the privileges and advantages in the matter of defence which the Colony needs." The very words used by Mr. Chamberlain, viz., 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," conclusively prove indeed that he had in mind at the time Sir Arthur Havelock's exposition of the principle.

7. Having thus re-stated the position as it appears to me, I proceed, in accord- ance with your Lordship's request, to examine the arguments advanced in Sir Edward Ward's letter of October 25th, 1909.||

8. Paragraphs 2-4 have been practically answered in the preceding part of this despatch.

Firstly, it is not denied that the principle (that Ceylon should bear the whole cost of its garrison) has been repeatedly asserted since 1801. But it is contended that the principle was abandoned in 1898, when it was agreed that the Colony should pay three-fourths of the total cost of the garrison.

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No. 166.

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Secondly, the agreement accepted by this Colony was based on paragraph 4 of No mention Mr. Chamberlain's despatch, No. 19 of July 31st, 1896.* was made in that agreement of any reservation regarding the abandon- ment of Trincomalee. The Colony agreed to pay three-fourths of the total cost of the garrison as a fair and reasonable compromise and as a permanent settlement of the question." It was left to the Army Council to decide what garrisons should be maintained, the Colony agreeing to pay three-fourths of the cost of those garrisons. Thirdly, the plain question is, whether the Army Council accepted a limit without indicating that it was not regarded as a definite and final limit This Colony was led to believe, in the absence of any such reservation, that the limit of three-fourths was a permanent arrange-

ment

In paragraph 5 Sir Edward Ward writes :-" Trincomalee was a naval base, and was abandoned because it was decided that such a base was no longer necessary

in those waters. Colombo, on the other hand, was, and remains, a fortified coaling station I have reason to believe that the Admiral of the East Indies Station agrees with me that with Trincomalee abandoned, and with a graving dock and proper workshops (in addition to coal and stores depôts) at Colombo, the latter port is distinctly a naval base, and the only base for trade routes to the Far East, and that the points of exit for an enemy's cruiser or armed merchantmen from the Straits of Malacca and of Sunda have to be commanded by such naval base at Colombo. It is also gradually being recognised that, by virtue of its geographical and strategical position, Colombo must become, in the event of the outbreak of war, with Trincomalee abandoned, the principal naval base for His Majesty's squadron in I consider, therefore, that I am justified in contending that part of the defence of Colombo is a fair charge on the Imperial Treasury. In this connection I may add that by its provision of three-fifths of the cost (£408,022) of the graving dock the revenue from which does not even pay its working expenses the Colony not only contributed a large subsidy to naval requirements, but incurred in effect a heavy annual charge of some Rs. 144,000 for interest and sinking fund, which is practically a standing naval contribution.

East Indian waters.

10.

In paragraph 6 of Sir Edward Ward's letter it is assumed that the garrison will not be increased. If the Colony paid the whole cost of the garrison, it would even now pay an enhanced contribution in proportion to the cost of the garrison, and if the garrison is increased a matter over which the Colony has no control-it might have to pay an actually enhanced contribution.

11.

As regards the comparison with Hong Kong and the Straits Settlements, referred to in paragraph 7 of the War Office letter, it seems sufficient to remind your Lordship that the chief reason for fixing a lower percentage for Ceylon than for Hong Kong and the Straits Settlements was stated in paragraph 3 of Mr. Chamberlain's despatch of July 31st, 1896,* viz., that certain sources of revenue exist in Ceylon to which there are no corresponding receipts in the other two Colonies.

12. In paragraph 8 of Sir Edward Ward's letter the Army Council dilate on the actual saving that would accrue to the Colony even under the proposed ruling when the present cost of the garrison is compared with the average cost for the four years 1900-1 to 1904-5. (Incidentally I may here remark that the average cost of the garrison between 1900 and 1905 was abnormally high, because the Boer prisoners were here during the first part of that period; the actual cost of the garrison in 1906, when a British regiment was still here, was only £191,500.) This argument can only be admitted on the understanding that the liability of the Colony is limited to the cost of the present garrison. Moreover, the Army Council ignore the fact that the Imperial Treasury will effect a larger proportionate saving than the Colony. contention of the Colony is that the reduction in the cost of the garrison should inure to the benefit of the Imperial Treasury and the Colony in equal proportions. Further, the real secret of the saving is not the reduction in the number of troops, on which the Army Council appears to lay stress, but the substitution of Indian for British troops. If a British regiment were substituted for an Indian regiment, the saving of £21,000, which the Army Council assert has been overlooked, would immediately disappear. Consequently, the claim that the Colony has saved money by the abandonment of Trincomalee is not a valid one. In this connection I may repeat the statement in

• 11135 : not printed.

The

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