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PUBLIC RECORD OFFICE

Reference :-

C.O.882/11

PUBLIC RECORD OFFICE, LONDON

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were understood to refuse to attend unless they were summoned, and to have endeavoured, unsuccessfully, to dissuade other members from attending. There were a few other absentees, but so far as I am aware their absence was clue to other causes. The proceedings were supposed to be private. In view of this, I told those who were present that I would speak quite freely and take them fully into my confidence. In order that they might know what was in my mind, I began by reading to them the Message which was to be delivered to the Council on the follow- ing day. I enclose a copy of that document for Your Lordship's information. I also read to them the full text of your despatch No. 501 of the 27th August*—(containing your observations in regard to the imposition of the surcharge on import duties by the use of my reserve powers)-of which only the message conveyed in the fourth paragraph had been communicated to them in writing, and I then proceeded to address them at some length and with great candour in regard to their relations with the Government. Inter alia, I pointed out-quoting chapter and verse-the irreconcilable inconsistency of some of the pronouncements made by the same Members on different occasions, and the consequential difficulty of gauging their real wishes when policy had to be framed, and I protested against the levity with which bad faith and improper motives were imputed to the Government, and against the countenance which appeared to be given to platform speakers who indulged in personal abuse of the Governor. My remarks appeared to have a chastening, though not perhaps a placatory effect. I need not trouble you with details of them or of the subsequent discussion. The upshot was that the Unofficial Members present, unanimously or almost unanimously, urged me not to let my proposed Message be delivered and published, and in any event to delay my decision as to delivery and publication until they had been able to confer further among themselves. For this purpose they requested that the presentation of the Select Committee's Report might be postponed until the 23rd September. I agreed to such a postponement on the understanding that if inability to pass the Supply Bill before the end of the financial year 1928-29 should thereby be involved, a Vote on Account for the next month or two would be granted, and I said that I would suspend my decision in regard to the Message until the situation had become clearer.

17.

As might have been expected, it was not long before some more or less sensational and not very accurate accounts of what had taken place at the "Confer- ence leaked into the Press, and this was not, of course, conducive to amiability of temper. There were rumours of disagreements and recriminations among the Unofficial Members, but finally I was given to understand that, if I would withhold my Message, there would be a reasonably sure prospect of all the restorations for which the Govern- ment had pressed being effected in open Council. I withheld my Message, the restora- tions were effected, and the Bill passed its Third Reading,

1

18. With a view to the risks of unemployment I should have been disposed to insist—and in the conditions then prevailing my insistence might have been successful -on the restoration of further items to the Estimates, had not a new and unexpected complication emerged. I had been relying on the vield of the proposed income tax becoming available to assist in the halancing of the Budget for 1930-31. Our expert adviser. Mr. Huxham, however. now stated that there was no prospect of revenue accruing from that source before 1931-32, and I was constrained, therefore, to exercise even greater caution than would otherwise have been necessary in undertaking com- mitments for 1929-30 which would react on the next subsequent Budget.

19. Since the passage of the Supply Bill a certain amount of propaganda, in which the influence of Mr. E. W. Perera may probably be discerned, has been carried on in the columns of some of the newspapers and through a few public meetings of no great importance. This agitation may be presumed to be inspired partly by hostility to the Government and a desire to make capital against the acceptance of the Donough- more Constitution, and partly by the hope that it may frighten the more moderate section of the Unofficials into the camp of the extremists. What measure of success There may be a trial of strength when the Loan may attend it cannot be foreseen. Bill comes up for Second Reading on the 31st October, but in the meanwhile your despatch on Constitutional Reform will have been received and published, and this may change the whole situation. Until we know whether the Loan Bill will pass and assure us of funds sufficient for the requirements of the year, I am instructing Heads of Departments not to make any of the new appointments, or start any of the new works sanctioned in the Estimates. without special reference to the Government.

20 I cannot conclude this despatch without recording my great obligation to Mr. F. G. Tyrrell, C.M.G., Acting Colonial Secretary, and Mr W. W. Woods, C.M.G.. Colonial Treasurer, for their services, within the Council and without, during the whole of the Budget proceedings. Mr. Tyrrell, as the chief spokesman of the Government,

* No. 68.

He performed it with good temper,

was confronted with a task of peculiar difficulty sound judgment, and firmness. Mr. Woods lias, as always, proved himself a tower of strength.

I have. &c.,

H. J STANLEY,

Governor.

Enclosure in No. 69.

MESSAGE FROM HIS EXCELLENCY THE GOVERNOR TO THE LEGISLATIVE COUNCIL..

THE Governor has had under consideration the Report of the Select Committee of the Legislative Council on the Bill to make provision for the public and railway services for the financial year 1929-30.

He is in full accord with the observations which the Official Members of the Select Committee have submitted to the Council in their note of dissent from the Committee's recommendations. He apprehends that so drastic and sudden a reduction of expen- diture as would result from the adoption of the Committee's Report would be less likely to conduct to lasting economy than to cause widespread hardship and discontent. He does not think it necessary or right that the risk of creating unemployment on a large scale should be incurred by a hasty and imperfectly considered change of the policy which for several years has been followed with the approval, and in some par- ticulars at the instance, of the Unofficial Members of the Council. He does not contend that the draft Estimates of expenditure, as originally framed by the Government, were insusceptible of any modification. The principle on which the Governinent proceedled in the preparation of those Estimates was explained by the Governor in his address to the Council on the 4th July. The Government was then, and still is, ready to consider, in consultation with the Unofficial Members, whether and to what extent any reasonable economies could be effected without serious detriment to the permanent interests of the country, and without unfair or inconsiderate treatment of any class or section of the community.. The question at issue is one of degree and of method.

With a view to mitigating in some measure the very grave consequences which the acceptance of all the recommendations of the Select Committee might be expected to produce, the Official Members of the Committee invited their colleagues to restore, in some cases the whole, and in other cases a part, of the provision for a few of the items which had been reduced or excised by the Committee. The Unofficial Members of the Committee having declined to effect these restorations, the Government will now submit them to the Council in open session. The reasons why the Government regards them as of special importance and urgency will then be explained, but the Governor thinks it his duty to refer forthwith to the three items proposed for restoration under Head 66 of the Estimates. These relate to leave passages, holiday warrants, and con- cession tickets in respect of the Public Service. It was the Governor's hope that he would not be compelled to make any public announcement as to the contingency of the use of his reserve powers in this matter, and with a view to avoiding any such necessity he instructed the Acting Colonial Secretary to explain the position to the Unofficial Members in what is supposed to be the confidential environment of the Select Committee.

The attitude adopted by the Committee precludes, however, the possibility of further reticence. The statement made by the Acting Colonial Secretary to the Com- mittee was in the following terms :—

"The Governor has been in communication with the Secretary of State, who has intimated that the proposed reduction, without inquiry and without warn- ing, of the votes for passages and for holiday warrants should, if necessary, be resisted by the use of the Governor's reserve powers. The Secretary of State added that he would regard the withdrawal of passage privileges without com- pensatory revision of salaries as an unjustifiable impairment of the conditions of service of Government officers.'

The Committee refused to reconsider its previous decision, and the Governor therefore feels constrained, not only to give publicity to the foregoing statement. but to supplement it by informing Honourable Members that the Secretary of State has authorised him, at his discretion, to indicate to the Council that drastic action of the nature contemplated by the Select Committee must necessarily prejudice the considera- tion of the proposals for the reform of the Constitution arising from the Report of the Special Commission and produce an atmosphere unfavourable for the grant of con-