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all the Rulers which he had held at Singapore before coming on leave; they had got on very well together and there was a realization that various questions affected the Peninsula as a whole.

DR. SHIELS asked if the proposals involved more expenditure on staff. SIR CECIL replied that they would mean less not more staff. It was intended to set up Malayan Departments for certain subjects (e.g., Medicine and Public Works) for the whole of Malaya, instead of having separate Colony and Federated Malay States Departments as at present. The heads of these Malayan Departments would have executive power in the Colony only; in the Malay States their functions would be merely advisory. He admitted that under the proposed system there would be a loss of efficiency in the present Federated Malay States.

SIR S. WILSON asked how the proposals would be received by the local European community. Six CECIL thought that only a section would object. As regards the other communities, the Malays would of course be pleased, and the Chinese would probably accept the change in silence.

THE SECRETARY OF STATE said that, in reading the papers, he was surprised at the suggestion that Singapore was to be a free port SIR CECII. said that that was not contemplated. His proposals related to the Malay States only, but he wished the new agreements to be drafted in such a way that it would be possible for the Straits Settlements to come in later.

DR. SHIELS suggested that from the democratic point of view it would be a retrograde step to enhance the position of the Rulers in the Federated Malay States, who were at present without power. THE SECRETARY OF STATE pointed out, however, that it might be argued that there would be more of the democratic machinery under a system in which the powers of the separate State Councils were enlarged. SIR CECIL explained that the State Councils were not merely collections of officials: they repre- sented every section of the community.

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DR. SHIELS inquired whether Sir Cecil Clementi thought that a Parliamentary Commission was necessary before changes of such importance were approved. SIR CECIL thought not. He said that the first step would be to summon a Durbar of Rulers of the present Federated Malay States, to find if his proposals met their views. they did, he would then discuss them with a Durbar of all Malay Rulers. Finally, he would consult the Unofficial members of the Legislative and Federal Councils privately, and then, if there was a favourable consensus of opinion, he would introduce into the Federal Council legislation devolving powers on the State Councils. He hoped that the Unfederated States would then agree to join the Federation. No Act of Parliament would be required.

THE SECRETARY OF STATE pointed out that there would be certain tangible advan- tages to induce the Rulers of the Unfederated States to come in, e.g., the obvious advantages of a customs union (provided that they received a sufficient allocation from Federal revenues to compensate for the loss of State Customs receipts). Besides, Sir Cecil had already ascertained at his Durbar that they would probably be favourable to his proposals. DR. SHIELS feared that there might be opposition from the State officials, who would object to the loss of their independence. SIR CECIL said that he intended that the prestige of the Rulers should be upheld in the new Federation; there would be a Royal Council of Rulers apart from the Federal Council.

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LORD PASSFIELD suggested that the system of local government in this country provided an instructive example in considering the Malayan problem. It was argued that from the point of view of sheer efficiency much of the business now done by local authorities could be done better by Whitehall. He thought, however, that it was worth while to pay that price in return for the advantages of keeping alive local enthusiasm and interest. Thus in education most reforms were initiated by the enthusiasm of progressive local authorities; under a centralized system that local urge would be lost. DR. SHIELS thought that the answer to that in Malaya was that the local Rulers were so lacking in progressiveness.

LORD PASSFIELD said that perhaps the trouble was that the Malays were lacking in acquisitiveness. SIR CECIL said that there would always remain the Adviser by the side of each Ruler, and SIR SAMUEL WILSON suggested that, if necessary, the High Commissioner could put on the screw," though it was agreed that that should only be done in very exceptional circumstances. DR. SHIELS recalled that in the Indian States things had to go very far before such intervention was approved. It was pointed out that the High Commissioner would always have the allocation of grants from the Federal revenues as a lever; besides he had absolute control over the succession in each State.

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MR. ELLIS was asked for his opinion. He said that he thought it a mistake to bolster up the power of these petty Rulers. The future of Malaya lay in the hands of the Chinese and Indians. He thought that we should aim at a single centralized colony. Malaya, smaller than Ireland, was too small to have so many separate adminis- trations.

LORD PASSFIELD suggested that there were advantages in having a number of centres of administration even in a country so sinall as Ireland.

MR. ELLIS, continuing, pointed to the complexity of the legislation involved if all the States were to legislate separately. SIR CECIL replied that we were only adding three legislatures to the number already existing.

In reply to Sir Samuel Wilson, SIR CECIL said that no difficulties would arise from local jealousies and animosities such as had been known to hinder co-operation between neighbouring territories in other parts of the Empire.

MR. ELLIS asked what would become of the representation of Indians and Chinese if the Federal Council were abolished. SIR CECIL said there was no intention of abolishing the Council. It would be enlarged to include representatives of the present Unfederated States, but the non-Malay communities would still be represented.

DR. SHIELS asked if the production of these proposals would not give rise to a great deal of political agitation locally. SIR CECIL. said that there was agitation already. LORD PASSFIELD pointed out that the subjects in which there might be loss of efficiency, e.g., education and medicine, were not the subjects in which the European commercial community was most interested.

DR. SHIELS expressed anxiety regarding the medical proposals and the probable loss of efficiency in the existing Federated Malay States. SIR CECIL CLEMENTI said that there would be compensating advantages of uniformity throughout Malaya, and referred to the instance of the construction of a joint lunatic asylum to serve the needs of several States as an example of the advantages of greater co-operation.

THE SECRETARY OF STATE brought the discussion to an end by stating that Sir Cecil Clementi had had the better of the argument, and that he might, on his return to Malaya, proceed with his sounding of the Rulers and others concerned. Clearly it was necessary to proceed gradually, and each step would have to be taken after discussion. Sir Cecil might at once begin with the first steps towards the formation of a customs union and the establishment, where desirable, of Malayan Departments. It was too soon to consult the Cabinet until a little more sounding had been done in Malaya, and until the scheme as a whole had been submitted to the Cabinet it would not be approved by the Secretary of State. Meanwhile appointments, e.g., that of Chief Secretary, should be made on the understanding that there was a prospect of Sir Cecil's proposals being carried into effect.

SIR GILBERT GRINDLE asked what line was to be taken in answering the Parlia- mentary Questions which were sure to be received as soon as wind of the proposals got abroad. LORD PASSFIELD said that the reply could be that nothing had been settled, but that the matter was being inquired into from the point of view of bringing the Unfederated States into closer co-operation with the Federated States, especially as regards such affairs as a customs union.

C. 82395/31 [No. 7].

No. 5.

FEDERATED MALAY STATES.

THE SECRETARY OF STATE to THE HIGH COMMISSIONER. (Confidential.)

SIR,

Downing Street, 5th June, 1931. I HAVE the honour to inform you that I have discussed with Sir Cecil Clementi, while on leave in this country, the problems of federation and devolution in Malaya.

2. I agreed with Sir Cecil's views that the existing Constitution of the several com- ponent parts of the Malay Peninsula is capable of improvement and that, as a pre- liminary measure, it was desirable to explore the question of how far the defects of the existing relations between the several States and Settlements in the Peninsula could be remedied.