275
4. It is not proposed to depart at present from the arrangements which were reported to you in Sir Laurence Guillemard's despatch of 25th November, 1925, in
of the other Unfederated Malay States.
respect of
any
I have, &c.,
HUGH CLIFFORD,
Malayan Civil Service,
High Commissioner for the Malay States.
Enclosure in No. 237.
713
STRAITS SETTLEMENTS.
THE SECRETARY OF STATE to THE OFFICER ADMINISTERING THE GOVERNMENT.
(Confidential.)
Downing Street, 20th December, 1928:
SIR,
I HAVE the honour to refer to my despatch No. 551 of to-day's date* on the subject of the Opium Revenue Replacement Reserve Fund. In addition to the financial considerations set out in that despatch I have also been impressed by the public un- easiness evidenced by paragraph 6 of the Committee's report as to the possibility of the Fand being diverted from its original purpose by the Imperial Government.
2. While I have already explained the constitutional difficulty of giving a pledge which would be absolutely binding on my successors, I am anxious that every possible measure should be taken to reassure public opinion on the subject and to convince all concerned that there is no intention of using the Fund for any purpose other than that for which it was established. If you or the Unofficial Members of the Council can suggest any additional safeguards such as a statutory trust to ensure the proper use of the Fund, I shall be very glad to consider them.
I have, &c.,
C. 62382/29 [No. 1].
No. 237
UNFEDERATED MALAY STATES.
L. S. AMERY.
THE HIGH COMMISSIONER to THE SECRETARY OF STATE.
(No. 37.) SIR,
(Received 15th April, 1929.)
[Answered by No. 238.]
Government House, Singapore, 20th March, 1929. WITH reference to Sir Laurence Guillemard's Unfederated Malay States Confi- dential despatch dated 25th November, 1925,† on the subject of the establishment of Opium Revenue Replacement Funds in certain of the Unfederated Malay States, I have the honour to forward a copy of a letter from the General Adviser, Johore, enclosing a memorandum by the Financial Commissioner, Johore, setting forth certain proposals for altering both the rate of contribution to and the method of utilizing the Fund in Johore, and to inform you that I have given my assent to these proposals. 2. It will be noticed that, even with the diminished contributions proposed in the second paragraph of the General Adviser's letter, the Fund will, by January, 1933, have reached a figure equivalent to more than three years' net revenue from opium. In this connexion I would refer to the eighth paragraph of your Straits Settle- ments despatch No. 551 dated 20th December, 1928, wherein the attainment of a similar position is held to be adequate to meet the probable needs of the Colony during the fifteen years of progressive diminution of revenue from opium.
3. The difficulties of devising means to replace a declining opium revenue are in my view not likely to be so grave in semi-developed and expanding States such as Johore as in the more stable conditions of the Colony. This constitutes to my mind an additional reason in favour of the modification which it is now proposed to adopt in Johore.
* No. 235.
† No. 275.
SIR,
Office of the General Adviser,
Johore Bahru, 23rd February, 1929. In reply to your letter dated 6th February, 1929, I have the honour to say that this Government has had the question of the Opium Revenue Replacement Fund in the most serious consideration for several months. I annex a memorandum by Mr. A. S. Small, M.C.S., Financial Commissioner, which he prepared in November, 1928. The special circumstances affecting Johore may shortly be stated as follows:- Our surplus balance on the 1st January, 1929, was $244 millions: in addition we have the Opium Reserve Fund which has now reached $10 millions. Normally our revenue for the next few years should not average less than $17 millions.
Johore is entirely dependent on agriculture, rubber being pre-eminently the main crop. Other forms of cultivation are advancing. We have now 30,000 acres alienated for oil palm. Coconuts and miscellaneous forms of cultivation are being extended but the strength of the rubber market must for many years remain the measure of our prosperity.
2. For the reason that Johore would (comparatively) be a greater sufferer than any other State in the Peninsula, were rubber to slump, I trust that His Excellency will approve of the recommendations contained in Mr. Small's memorandum and of the continuance by Johore of contributions to the Fund as follows:--
$
750,000 in 1930. 500,000 1931. 250,000 1932.
3. With these contributions the Fund would in January, 1933, amount to approximately $14 millions. By operation of the scheme set out in paragraph 7 of the memorandum we would provide ourselves with a sum of $24 millions a year which would be available in such sums as may be required from time to time as capital expenditure for development purposes until 1943, when it is reasonable to suppose that accretions of revenue from other sources will already have appeared. At any rate by 1943 the development of Johore should have been assured by expenditure of the funds which are already visible or which can be counted on without unreasonable optimism.
4. His Highness the Sultan has been provided with a copy of the attached memorandum. He has discussed it with me and is in agreement.
The Secretary to the High Commissioner
for the Malay States,
Singapore.
G. E. SHAW,
I have, &c.,
General Adviser, Johore.
MEMORANDUM-ON THE OPIUM RESERVE FUND.
IN correspondence G.A. Confidential 19/25 the policy of establishing an Opium Reserve Fund was adopted and a minimum annual contribution of $14 millions fixed (subject to the reservation that the whole position be reviewed every year). The contribution was to continue at that rate until 1930 and then to decrease by $150,000 per annum until it disappeared in 1939. It was calculated that this annual rate of contribution together with the initial lump sum contribution of $4 millions would
PUBLIC RECORD OFFICE
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