CO885-11 — Page 377

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PUBLIC RECORD OFFICE

Reference :-

PLLC.O.882/11

PUBLIC RECORD OFFICE, LONDON

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

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20 per cent. of the Colony's assessable revenuc even in war-time. It is also to be noted that while the war lasted the Colony voluntarily contributed 20 per cent. of its assessable revenue toward Imperial expenditure irrespective of the actual cost of its own defence.

7. Again, viewing the question from the standpoint of the Government of the Colony, it is necessary to appreciate the effects which have resulted and must inevitably result from the decision of His Majesty's Government to establish a Naval Base on the island of Singapore. The principal of these effects has been to convert Singapore from an ordinary coaling-station, such as Colombo, Port of Spain, Kingston or Lagos, into a fortified stronghold of great strategic importance. This singles it out from the category of ordinary has hitherto belonged, and makes it an object of enemy attack, colonial ports to which the reduction of which would carry with it great advantages to any nation with which Great Britain might unhappily find herself at war. When, in the course of time, the Naval Base is completed, Singapore may, perhaps, be relieved from the danger of reduction by attack owing to the completeness of that Base's defences. It would be idle to ignore the fact, however, that while the Base is in course of construction, Singapore is exposed to dangers far greater than any which she has had occasion to apprehend in the past. Even when the Base is completed, moreover, Singapore will be in constant danger of reduction by blockade and consequent starvation on the outbreak of hostilities and during a period, more or less prolonged, before relief can be afforded to her. The existence of a Naval Base, the reduction of which would be a matter of real importance, would alone tempt an enemy to undertake operations of the necessary magnitude; but with this danger menacing her, as a consequence of the construction of the Naval Base, the Government of the Colony will be compelled to take steps for the continuous provisioning of Singapore even in peace-time. This must inevitably entail considerable capital expenditure and a material addition to the recurrent expenditure of the Colony, for none of which can she look for relief from Imperial funds. It will, therefore, be seen that the decision of His Majesty's Government to establish a Naval Base at Singapore, while conferring no benefit upon the Colony, has changed its status in a manner which exposes it to dangers of a new description, and must inevitably impose upon it, heavy expenditure which is a direct consequence of that decision. I submit that, having regard to these facts, it is at once inequitable and impolitic to require the Colony to pay annually in addition what amounts to a contribution toward the maintenance and the garrisoning of the Base such as is not asked for from any other Colony and is only sought from her owing to the fact that the Base chances to be being constructed upon Singapore island.

8. It has, moreover, to be remembered that the Colony of the Straits Settlements occupies a financial position which is not at all strong. Her prosperity is so dependent upon the freedom of her ports being maintained, that she is precluded from deriving from an elaborate customs tariff a revenue from this source such as that which forms the back- bone of the fiscal system of most of the Crown Colonies. Approximately one-third of the total revenue of the Colony is derived from opium, which it is the policy of His Majesty's Government gradually to reduce and ultimately completely to extinguish. The recurrent expenditure, more particularly under the Heads Medical Services and Education, is increasing with great rapidity and the expansion of the ordinary revenue has not kept and is not keeping pace with that increase. Already considerable difficulty is being experienced in balancing the annual Budget and in providing annually for even a portion of the public works which are required for the development of the Colony, and for the progressive additions to the Police Force which are necessitated by the increased lawlessness of the Chinese immigrant population attributable to the conditions which have existed in China during the past decade and-a-half. Our entire fiscal system lacks elasticity, and new sources of revenue which will not prove very inequitable in their incidence are exceedingly difficult to devise. In these circumstances an additional contri- bution to Imperial funds amounting to something over 7 per cent. of the annual revenue of the Colony, over and above the actual expenditure which would normally be needed for the Colony's defence, is not a burden that can be lightly undertaken and is likely to prove crippling to the advancement of the Straits Settlements.

9. There is yet another point to which I would invite your attention. The peculiar circumstances of the Straits Settlements render it impossible to grant to this Colony a Constitution of the liberal character which His Majesty's Government has approved for adoption in most of the leading Crown Colonies. The Government of the Straits Settlements is accordingly endowed with more autocratical authority than would now-a- days be regarded as admissible in the case of any other Colonial Government presiding I submit, however, that this imposes over the affairs of a community equally advanced. upon the Government of the Colony, and also, I venture to suggest, upon His Majesty's Government in a like measure, a very special obligation to refrain from taking advantage

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of the comparative impotence of the Legislative Council to compel its acceptance of decisions to which the Unofficial Members on that body and the public which they repre- sent are strongly, unanimously and even bitterly opposed, unless some question of principle of the first importance is involved. The obligation of the Colony to defray the cost of its ordinary defence may, I think, be regarded as such a principle, but nothing of the sort would seem to be involved in the proposal that, over and above this, the Govern- ment of the Straits Settlements should be made liable for an annual contribution to the maintenance and the garrisoning of the Naval Basc, which is the claim now advanced. I submit that unless all parts of the Empire, and especially those which are considered to have an interest in the Naval Base, are required to make a corresponding contribution towards its maintenance, this Colony will have reason to complain if in this matter it be singled out for special and unfavourable treatment.

10. Again, judging this matter from the point of view of the Colony, there would be much advantage if the suggestion of the Unofficial Members that the Military Contribution annually payable by it were to be a sum fixed by mutual agreement to run for quinquennial periods could be accepted. In framing our local Budget we should know definitely what our liability on this account would amount to during the coming twelvemonth, whereas in existing circumstances no certainty on the point is possible: and five-yearly revision would prevent the basis of calculation for the computation of the amount to be paid getting seriously out of date. It will be noted that in paragraph 15 of their memorandum the Unofficial Members suggest that for the five years from 1929 to 1933 the contribution should be placed at $3,600,000, and that in paragraph 18 they express their willingness to contribute also a small proportion of the cost of the naval defence of the Empire. I think it is probable that they might be persuaded to vote $4,000,000 or even possibly as much as $4,500,000 as the Colony's annual contribution toward naval and military defence of the Colony for the period above named. It is anticipated that the annual assessable revenue of the Straits Settlements during the next few years is not likely to exceed $30,000,000, wherefore, if the full 20 per cent. were to become payable in 1929 the amount for which the Colony would be made annually liable would amount to not more than $6,000,000. This sum exceeds the amount which I have suggested as the voluntary contribution for naval and military defence of the Colony for which I think it is possible that the Unofficial Members could be induced to consent by $1,500,000 or £175,000. The financial relief which would be afforded to the taxpayers of the United Kingdom by the Colony being compelled to assume liability for this additional sum would not be great, but the annual disbursement would be very severely felt by the Straits Settlements.

"the Colony

11. As is noted by you in paragraph 6 of your despatch under reply,

While, of the Straits Settlements has in the past made generous contributions amounting to many millions to His Majesty's Government to assist in their financial difficulties." therefore, it is felt that the Colony cannot be accused of having assumed a niggardly or intransigent attitude in this matter, it is to be noted that the action which it has taken has always been spontaneous. The proposals now put forward, however, amount to a demand that the Colony should assume financial liability for the maintenance and garrisoning of an Imperial work in excess of the cost of its normal defence up to the full 20 per cent. of its assessable revenue in circumstances which the thinking sections of the local population are unable to regard as equitable. The reluctance of the Unofficial Members to comply with this demand is strengthened by the knowledge that, having regard to the Constitution of the Colony, His Majesty's Government is able to enforce its will in this matter in spite of their reasoned and unanimous dissent. It is further strengthened by the conviction that the financial sacrifice demanded of it will materially straiten the circumstances of the Colony, retard its advancement and occasion it con- siderable financial embarrassment while conferring upon the Imperial Treasury an inconsiderable benefit. If, therefore, His Majesty's Government insists upon the acceptance by the Legislative Council of the Straits Settlements of the proposals now put forward, a keen sense of discontent will thereby be engendered; dissatisfaction with a Constitution which virtually surrenders the management of the Colony's affairs into the hands of Officials, who, no matter what their opinions, are compelled to act upon the decision of His Majesty's Government, even in matters which are felt injuriously and vitally to affect the Colony's interests, will be greatly stimulated; the Colonial Govern- ment will be much weakened in its future dealings with the public, whose confidence it will have forfeited; and agitations for constitutional reform, from which the Straits Settlements have hitherto been free, but of the beginnings of which signs are not wanting, will be given a new and very strong impetus.

(C38051)

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