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PUBLIC RECORD OFFICE

Reference :--

PLEC.O. 882/11

PUBLIC RECORD OFFICE, LONDON

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

$6

of State for the Colonies that They would be glad to be assured that the reservations recommended by the Special Commission on the Constitution of Ceylon will cover the Naval, Military and Air Force interests in wireless and other communications in Ceylon, including the Naval Wireless Station at Matara, and that legislation affecting submarine cables, wireless telegraphy, wireless telephony and other forms of communication con- nected or ancillary to Naval, Military or Aerial operations, will also be considered as reserved matters.

2. My Lords would be glad to be consulted in due course when the Royal Instructions are drafted.

C. 63363/29 (No. 13].

No. 64

I am, &c.,

ALEX. FLINT.

THE GOVERNOR to THE SECRETARY OF STATE. (Received 5.25 p.m., 1st August, 1929.)

TELEGRAM.

[Answered by No. 68.]

1ST AUGUST. Following from Ceylon National Congress :

Begins-Resolution passed at last Executive Committee Meeting held on 27th July, 1929: "The Executive Committee of the Ceylon National Congress protests against action of Governor in imposing on 5th July, 1929, taxation by exercise of his power of certification against unanimous vote of Unofficials and appeals to the Secretary of State to refuse sanction."-Ends.

C. 63363/29 [No. 14].

No. 65.

THE GOVERNOR to THE SECRETARY OF STATE. (Received 5.41 p.m., 2nd August, 1929.) TELEGRAM.

2ND AUGUST. Finance. Your telegram of 19th July,* was communicated to the Unofficial Members. I had previously intimated to them my willingness to meet them or a delegation of them for discussion of the situation but hitherto my invitation has not been accepted. Written protest was forwarded to you under cover of my despatch of 14th July,† which should reach you by next incoming mail.

It is understood that the Unofficial Members have decided to demand in the Budget Committee cut in the Estimates amounting approximately to Rs. 7,000,000, mainly on Public Works. I am not aware at present what other proposals may be contemplated.

Debate on the 2nd Reading of the Supply Bill which had been adjourned on 5th July, was resumed 25th July, continued on the 26th July, 30th July, and 31st July, and concluded yesterday evening. Thursday. Second Reading was passed without Division and consideration of the Estimates in Budget Committee will begin on 6th August. During Debate Government was pressed to withdraw increase of Import Duties but declined to do so. We agreed to re-examine the whole financial position with Unofficials in the Budget Committee but made it clear that we considered it improbable that the Budget could be balanced or even nearly balanced by retrench- ments only.

Close observation has heen kept on wholesale and retail prices of imported articles since increase of Import Duties. Price of rice and other imported necessities appears to have remained unchanged.

* No. 61.

† No. 66.

C. 63363/29 [No. 15].

87

No. 66.

THE GOVERNOR to THE SECRETARY OF STATE.

(Received 5th August, 1929.)

[Answered by No. 68.]

(No. 635.) MY LORD,

On Tour, Ceylon, 14th July, 1929 In my telegram of the 5th July,* I had the honour to report that the Resolution which the Government had on that day introduced into the Legislative Council, increasing the Customs duty leviable on imports by an addition of one-twentieth of such duty, had been declared, under the provisions of Article LIV of the Ceylon (Legislative Council) Order in Council of 1923, to be of paramount importance. In the same telegram I transmitted the full text and the signatures of a message of protest which I had received for telegraphic communication to Your Lordship from 18 Unofficial Members. They asked you to disallow the Resolution which I had declared to be of paramount importance, and they added that a written protest would follow.

I attach a copy of my telegram* for convenience of reference.

print

2. Under cover of my despatch No. 606 of the 9th July,† I forwarded a (uncorrected) of the Hansard Report of the proceedings in the Council on the 5th July. 3. I now have the honour to enclose a copy of the written protest referred to above. It bears date of the 11th July. This document was originally signed by twenty-three Unofficial Members, but I have since received copies signed by five other members and I have caused their signatures to be added to those of the original There are at present twenty-three in the copy which I am forwarding to you. thirty-six Unofficial Members, the vacancy created by the recent death of Mr. Canaga- ratnam having not yet been filled. The time limit prescribed in the Order in Council for the submission of such protests has expired, but I should not wish to take advan- tage of the strict letter of the law, and if, before the mail closes, I receive from any of the remaining eight Unofficial Members a request to add their signatures, I shall do so. Your Lordship will observe that two Riders are attached to the Protest-one signed by three European Members, the other by Mr. Wille, the First Burgher Member.

4. The decision to impose the additional Customs duties to which exception is taken was the result of anxious consideration by myself and my advisers. It seemed to us essential that further procrastination in facing the unpleasant facts of our financial position and in dealing with them should not be contemplated, especially in view of the contingency that important constitutional changes might be impending at no distant date. It might perhaps have been possible, by depleting the whole reserve balance of our surplus funds (which it had been settled policy to maintain at not less than approximately Rs. 10,000,000), and by reducing below what we regarded as the economic minimum our expenditure on the maintenance of buildings and other works, to postpone the raising of a loan and the imposition of additional taxation for another twelve months, but that device did not seem to us consistent with the requirements of sound finance. By putting off the evil day in this fashion we should only have prepared the way for a situation next year of considerably greater difficulty than that with which we are now confronted. Last year we still had in hand surplus balances sufficient to cover the anticipated excess of expenditure over revenue during the current financial year without undue depletion of a reasonable reserve balance; this year we are not so happily placed.

5. Even last year I felt uneasy at the growing disparity between the rate of expansion of our expenditure and the rate of expansion of our revenue, and I informed the Council that the growth of our commitments was causing me some anxiety. A few months ago, when it had become clear that the financial situation was developing less favourably than we had hoped, I published a note by the Colonial Treasurer which set forth the facts and prospects so far as they were then ascertainable. I summoned a meeting of the Heads of Departments. The Treasurer explained the financial position to them, and he and I impressed upon them the need for economy in the preparation of their estimates. They were not instructed to abandon work which was in progress or lines of policy which had previously been prescribed, but subject to this, they framed their estimates with strict regard to the injunctions which they had received. It is the usual practice for the final revision of the draft

* No. 59.

+ C. 63363/29 [No. 8]: not printed.