392
1
6
permitted. This proposal involves withdrawal of the privilege granted in 1928 and extended by Regulation published early this year to enhance pensions of officers retiring under the Order in Council. Adoption of it would be regarded by public servants As regards second and third proposals see your of all grades as a breach of faith. telegram of the 22nd October, 1931, No. 198,* and your despatch of the 10th June last. No 299*†
I am of opinion that arguments already accepted by you against reduction of passage concessions still hold good. Reduction of expenditure resulting from reduction of holiday warrants would be purely nominal as railway revenue would be reduced by corresponding sum without reduction of railway expenditure. Financial Secretary has urged strongly following objections to Ministers fourth proposal. It involves serious departure from one of the essential principles of the scheme for separation of railway finance from the General Budget introduced at your request in 1928. Its effect on the General Budget would be purely temporary and in the case of the Railway Renewal Fund illusory as that Fund has been employed by the Railway as working capital and invested in stores. Once dissipated neither Fund is likely to be recreated and future of both commercial concerns would be seriously jeopardized. Order in Council does not empower me to prevent the introduction of the fourth proposal into the State Council and I could prevent its actual adoption only by the use of reserve power under Article 22. As regards the fifth proposal I am disposed to agree to reduction of con- tributions to the two Funds for 1932-33 to amounts actually required for renewals in that year.
I have urged on Ministers the unwisdom of the first four proposals and have pointed out to them the possibility of other measures which would secure balanced Budget. An increase of import duty on rice from one rupee per cwt. to one rupee 50 cents would produce rupees 4,000,000 without seriously affecting retail price of rice, which is now cheaper than it has been for the last thirty years and has actually dropped in price by about one rupee per cwt. since January. An increase of inland postal rates estimated to produce rupees 1,500,000 has already been approved in principle by the Board of Ministers. Ministers unwilling to propose increase of duty on rice and have abandoned proposal for increase of postal rates. They apprehend that adoption of these proposals by themselves would lead to rejection of the Budget and to a constitutional impasse from which dissolution of the Council and a General Election would provide no escape.
The position as regards increased postal rates is that these can be effected by the exercise of my statutory powers, but Executive Committee in charge of the Postal Department has refused to advise the exercise of these powers without prior consent of the State Council which Ministers expect to be refused. I advise that you should' approve my informing Ministers that I am unable to give my sanction for the intro- duction of their first, second, and third proposals, that I agree to fifth proposal and that I shall not take active steps to prevent the adoption of the fourth proposal though I consider that Ministers will be taking grave responsibilities if they persist in a measure of such obvious unwisdom. I tender this advice in the conviction that the time has come to indicate plainly to the State Council that repeated inroads on salaries and allowances of public servants will not be permitted by you as substitutes for additional taxation, that the State Council must accept the position that public servants are entitled under the Order in Council to the protection of the Government and the Secretary of State and that it will be impossible to continue to work the present Constitution if the Council creates a political crisis on every occasion on which the Governor's protecting powers are used. It is plain that if I agreed to the first, second, and third proposals a further inroad on the conditions of the service would be suggested next year as the fourth proposal is an expedient which once adopted cannot be repeated.
I must emphasize that Ministers have definitely declined to be a party to any form of additional taxation as an alternative to their proposal. This attitude which I have been unable to change despite every effort is dictated by purely political considerations apart from which it is in my opinion entirely unreasonable. There is the possibility therefore that the decision which I have asked you to signify may lead to breakdown of the present Constitution, but the alternative of permitting the State Council to exercise powers which have not been conferred on it means in effect a transformation of vital features of the present Constitution.
C. 98105/32 [No. 2].
7
No. 4.
SIR S. WILSON (COLONIAL OFFICE)
to
1
SIR P. CUNLIFFE-LISTER (SECRETARY OF STATE FOR THE COLONIES).
(Extract.)
*
***
[Answered by No. 5.]
*
Downing Street, 29th July, 1932.
*
I AM enclosing in this letter a copy of a telegram* which has been received from Graeme Thomson in connexion with proposals for meeting the deficit in the Budget for 1932-1933. You will see that Ministers again want to attack the officials. I am of opinion that we should support the views of the Governor and approve of his refusing to sanction the proposals, but as this will probably lead to a constitutional crisis I think I must ask you to approve the proposed reply† of which I enclose a copy. I must apologize for bothering you with it when you have so many important things to deal with, but if you would not mind looking at the proposed reply and getting Clauson to telegraph to me if you agree I will be much obliged, and then I can have it sent off at once.
C. 93105/32 [No. 3].
No. 5.
THE HIGH COMMISSIONER IN CANADA FOR HIS MAJESTY'S GOVERNMENT IN THE UNITED KINGDOM
tu
THE ACTING SECRETARY OF STATE. (Received 4.10 a.m., 5th August, 1932.)
TELEGRAM.
[Answered by No. 6.1
4TH AUGUST. Imperial Conference, No. 258. Secretary, of State for the Colonies:-
Following for Wilson from
Begins-Your letter of 29th July, Ceylon. What is reduction already made in salaries and/or allowances and how does this compare with similar emergency cuts in other Colonies where Budget deficit has necessitated -Ends. combination of salary cuts and new taxation?
C. 93105/32 [No. 4].
No. 6.
*
THE ACTING SECRETARY OF STATE
to
*
THE HIGH COMMISSIONER IN CANADA FOR HIS MAJESTY'S GOVERNMENT
IN THE UNITED KINGDOM.
(Sent 8.15 p.m., 5th August, 1932.)
TELEGRAM.
[Answered by No. 7.]
IMPERIAL Conference. No. 298. Your telegram No. 258.§ Following for
Secretary of State for Colonies from Wilson:-
Begins: Salary levy in Ceylon is equivalent to 2 per cent. on salaries below £34 per annum increasing by stages of 5 per cent. and 7 per cent, to This is more severe than scale of 10 per cent. on salaries exceeding £360.
* C. 83227/31 [No. 21]: not printed.
+ No.. 47.
* No. 3.
+ See No. 10.
† No. 4.
§ No. 5.
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