CO882-(8-9) — Page 605

PUBLIC RECORD OFFICE

Reference :-

C.O. 882

9 PUBLIC RECORD OFFICE, LONDON

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

sired to the remark of the Colonial Defence Committee in the Defence Scheme for 1899, and observed :—

A perusal of these remarks will satisfy you that time requirements of local defence, as governed by con- -elerations of naval strategy and by recent developments in the Far East, alone havé guided the recommendations of the Committee."

་་

This passage is of importance as bearing on the position taken up by the Colony that the garrison was not there for purely local purposes, but that its size, and consequently its cost, was dictated by considerations of Imperial strategy.

Ceylon and Mauritius were informed of the arrangement had at the same time and instructed to amend the law. ordinances were duly passed in the Straits Settlements, Ceylon, and Mauritius. As Hong Kong at that time had to railway or other productive undertaking the question lid not arise.

These

41032 447

The questions of the profits from the issue of currency notes arose in the Straits Settlements at the same time as the Governor had advocatel reconsideration of the military contribution. In forwarding, by despatch of the 1st fit. October, 1903, the estimates of the military contribution: 3208613, for 1994, he had included amongst deductions from gross revenue the sum of $118,000 in respect of reimbursements of the cost of the currency note issued, The Secretary of W., State enquired the reasons for the adoption of this course, and was informed that the deduction had been made because it was considered that the reimbursements should be treated as if they were the result of productive under- takings. The Secretary of State explained to the War Giov Office that, under the Currency Note Issue Ordinance, 1885 0301. 1899, the Colony was entitled to deduct expenses of the That. issue from the interest on investments before carrying the the expenses balance to general (and assessablej revenue ; had originally been met by advances, subsequently re- imbursed, and the Colony had gone on following this arrangement blindly. But as there had been a profit in 1903 over and above the expenses of the issue, and us there would probably be a profit in 1904, the whole $118,000 should not have been deducted from gross

revenue.

This was explained to the Acting Governor on the Ibid. 29th January, 1904, and he was requested to deduct from the sun the expenses of the issue and charge the remainder as profit under the head of interest.

In September, 1905, the War Office asked why there W.O.. had been an onission in the contribution of 1904 of a sum 33129 05.

The Governor Gov.. representing the net profits from the issue. explained that the profit had been charged to the head of 41074 05. interest, and had accordingly been included in assessable

revenue.

In August, 1905, the Governor asked that refunds of Gov. revenue collected in excess of the proper amount and 30986.05. refunded after the accounts of the year had been closed

The War W.O.. might be deducted from assessable revenue. Office on being consulted had no objection to the proposal. 33129.05.

Early in 1905 the question of the military contribution

was again raised in Ceylon owing to the decision to abandon Trincomalce. On the 2nd of January, 1905, Gov., Sir H. Blake reported by telegram that a telegram, 57:05. apparently from the Admiralty, had instructed the Chief Ordnance Officer to dismantle the fortifications and get the guns ready for transport home, and the Governor enquired whether it had been decided to dismantle the

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53

fortifications as neither the General Officer Commanding Both departments nor himself had heard anything,

(Admiralty and War Office) denied having given tele- graphic instructions to dismantle the fortifications, but Admiralty, the War Office said that, as the Admiralty saw no need to maintain any fixed defences or garrison in time of peace, they proposed to withdraw the garrison and dismantle thé fortifications.

18205

711105.

ISH10.

26327 05. But,

WO., 30881J05.

The

but

In March, 1905, the Committee of Imperial Defence formally notified the Colonial Office that it had been decided to withdraw the garrison of Trincomalee. Admiral Commanding the station, backed by the Governor,

port, demurred to the proposed abandonment of the the Committee of Imperial Defence adhered to their previous decision, and the Governor was so informed by despatch of the 3rd August. As the General Officer Commanding raised the further question of what would happen to Trincomalee in time of war, he was informed by the War Office that there was no reason to think that it would be reoccupied in time of war.

These details are of some importance, because the great importance of Trincomalee as essential to the defence of the Colony, as well as to the defence of Imperial interests, had been the standing dish at all discussions on the ques- tion of the liability for the cost of its garrison. The evacuation of the port in favour of Colombo really shows that at last the home experts conceded the point for which the Colony had always fought, viz., that the place was by no means essential to the defence of the island and bad been kept up solely in Imperial interests. The change to Colombo was dictated by the fact that the Colony had spent, and was still spending, large sums in making that port the chief port of the island as a base for His Majesty's ships.

In September, 1905, Sir J. Anderson, as in duty bound, 37662/05. revived the question of the payment of military contribution on the revenue from Christmas Island. He pointed out that a considerable profit was now being made and ad- mittel that the Straits Settlements could not claim exemp- tion from the contribution altogether in respect of those profits, but "inasmuch as it is a new source of revenue which the Colony has gained since the arrangement as to the military contribution was made, I think that it "will be only fair that the calculation should be made on "the net revenue derived from the Island."

Gov.,

Ibid.

W.0., 588/06.

Treasury, 39185/03.

Gov.,

5982,06.

The War Office and Treasury, being invited to regard the proposal as reasonable and to agree accordingly, concurred, though the Treasury, ex abundanti cautela, said that "should it be found expedient in the future to main- "tain a garrison on the island this arrangement would fall to be reconsidered.”

It may be remarked that, although no reference was made by either of the two Departments to the Governor's argument as to "a new source of revenue," it might reasonably be assumed that, since they took no objection to the phrase (a copy of the despatch was sent to them), they accepted the reasoning. This becomes of importance in connexion with the views on such questions expressed by (see W.0./13724/10, the War Office at a later date printed as No. 172 in Eastern No. 123).

In a

The next step was taken in connexion with the im- portant harbour improvements which the Government of the Straits Settlements were carrying out. telegram of the 18th February, 1906, Sir John Anderson reported that the annual charges for interest and sinking