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7. As regards the renewed proposal for an Inter departmental Committee to consider de noto the whole subject of Colonial military contribution, I am to invite their Lordships attention to War Office letter of 8th October, 1909, in which the Council defined their attitude towards the proposal when first made by the Colonial Office in 1909, and 1 am to inform you that their objection to any such disturbance of the present arrangements is strengthened by the frank disclosure now made of the object in view, viz, the total abolition of the contributions.

In view of this, the other reasons advanced in favour of a new Committee call With regard to the suggestion which might seem to be implied for little comment. in paragraph of the Colonial Office letter, that the War Office and the Treasury have taken up a new attitude on the question, I am to point out that the Army Council have simply adhered to the policy laid down by the Imperial Government many years ago, and that any recent departure from that policy has been due to the action of the Colonial authorities in failing to carry out the engagements entered into, after the fullest discussion, between the three Departments. The complications and difficulties of detail referred to by the Colonial Office as forming one of the reasons for assembling a new Committee present no serious impediment if those engagements are fully observed on all sides.

X In conclusion. I am once more to point out that the present scheme of Colonial contributions was devised, by agreement between all the Departments concerned, to carry out the long-settled policy of the Imperial Government, by which a Colony making no contribution to the cost of the Navy pays such contribution to the cost of its land defence (not exceeding their full cost), as its means will allow; and that the system automatically reduces the expenditure on defence, in years of falling revenue. in a way that any State in Europe might well envy. But if this no longer remained the accepted policy of the Imperial Government in all its Departments, and the contributions were to be used as a means of yet further adjusting Colonial hudgets from time to time to meet eircumstances and considerations having no relations to defence, the contributions must become, like subsidies, a question of the general fiscal relations between the Imperial and Colonial Governments, with which the Army Such a system would involve divorce Council would not be competent to deal.

For these reasons, between the responsibility for the policy and the incidence of its financial effects, and must be expected to lead to inter-departmental controversy.

the Army Council must decline to agree to the institution of a Committee having for its avowed object the reduction of their resources on grounds of which they have no knowledge, and in furtherance of objects with which they have no concern.

I am, &c.,

R. H. BRADE.

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The Secretary,

Treasury, S.W

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PUBLIC RECORD OFFICE

Reference :-

CO. 882

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PUBLIC RECORD OFFICE, LONDON ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO