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PUBLIC RECORD OFFICE

H

Reference :-

C.O.882/11

PUBLIC RECORD OFFICE. LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-|

COPYRIGHT PHOTOGRAPH-NOT TO

13060/33 [No. 7].

SIR,

48

No. 32.

AIR MINISTRY

to TREASURY.

(Copy received in Colonial Office 31st May, 1933.)

Air Ministry, W.C.2, 30th May, 1933.

I am commanded by the Air Council to refer to your letter of the 21st April, 1933, No. S.3486/3, transmitting copies of Colonial Office letter of the 28th February, 1933* and War Office letter of the 13th April, 1933†, relating to recent proposals regarding the military contribution of the Straits Settlements. In reply I am to offer the following observations for the information of the Lords Commissioners of His Majesty's Treasury.

2. In Colonial Office letter of the 28th February, 1933, it is stated that the offer of $4,000,000 for five years is" in full return for the annual cost of the Imperial Garrison and all other military, naval and air charges whatsoever "and the Council, therefore, consider that a share of the contribution might, not unfairly, be allocated to Air Funds. In War Office letter of the 13th April, 1933, however, it is assumed that the whole amount of the contribution will be credited to Army Funds and in all the circumstances the Council are not disposed to challenge this assumption.

3. The Air Council understand that the present agreement relates only to service expenditure and that it has no reference to expenditure by the Colony in connexion with the development of civil aviation.

4. The question of the proposed limitation of expenditure on local forces to $500,000 annually has been dealt with semi-officially.

5. Copies of this letter have been sent to the Admiralty, the Colonial Office and the War Office.

13060/33 [No. 8].

(Secret.)

SIR,

No. 33.

STRAITS SETTLEMENTS.

I am, &c.,

J. A. WEBSTER.

THE SECRETARY OF STATE

to

THE GOVERNOR.

[Answered by No. 35.]

Downing Street, 11th July, 1933. In continuation of my Secret despatch of 31st of May, 1938‡, I have the honour to transmit to you a copy of a letter from the Air Ministry dated the 30th of May, 1933 §, regarding the proposals for a settlement of the basis of the military contribution of the Straits Settlements.

2. The settlement which the Unofficial Members of the Legislative Council have suggested is in the following terms:-

In consideration of the Government of the Straits Settlements agreeing to the follow- ing clauses:-

(a) as regards the Imperial Government and for the purposes of Clause 2 of the offer to the Imperial Government, agreement on the part of the Colony means a resolution passed by a majority of the Unofficial Members of the Legislative Council, i.e., Official Members will abstain from voting;

(b) as regards the Imperial Government and for the purposes of Clause 3 of the offer to the Imperial Government, a majority similar to that in (a) above shall determine whether the right shall be exercised; and

* C. 92052/32 (No. 25]: not printed.

↑ No. 28.

‡ 13060/83 [No. 6]: not printed.

§ No. 32.

49

(c) that the expenditure on local forces (land, sea and air) shall in no year

exceed $500,000;

the Unofficial Members of the Legislative Council agree to the following offer being made to the Imperial Government:-

(i) The Colony of the Straits Settlements offers the yearly sum of $4,000,000 for five years from the 1st of April, 1933, to the Imperial Government as a fixed contribution payable by the Colony for the said period of five years in full return for the annual cost of the Imperial garrison and all other military, naval, and air charges whatsoever.

(ii) At the end of the first or any succeeding quinquennial period the said yearly sum of $4,000,000 may be increased or decreased by mutual agreement between the Imperial Government and the Colony, but except by such mutual agreement shall not be increased or decreased.

(iii) Provided always that the Colony shall have the right (not necessarily to be exercised) to limit the sum payable by the Colony in any particular year to a sum equivalent to 20 per cent of the Colonial Revenues computed in accordance with the provisions of Section 3 of Ordinance No. 64 (Defence Contribution).

(iv) Payment to the Imperial Government shall be made by monthly instalments

in the same manner as hitherto.

(v) It is agreed that the revenues of the Colony on which the above mentioned

20 per cent shall be computed, shall be the subject of discussion; in particular in regard to the question whether or not interest or income arising from accumulated revenues of the Colony shall be included therein for the purpose of such contribution.

3. His Majesty's Government understand (1) that the Government of the Straits Settlements are willing to agree to conditions (a), (b) and (c) above subject to a proviso being added to (c) permitting the sum of $500,000 to be increased after five years if a majority of the Unofficial Members agree, and (2) that you are satisfied that for the next five years the sum of $500,000 will enable the requirements of the local forces, including the contingent of the Royal Naval Volunteer Reserve, which is to be raised during the current year, to be met.

4. As you are aware, the question of the military contribution has been under discussion with the Unofficial Members of the Legislative Council from time to time during the last 30 years without any agreement being reached. In recent years my predecessors and I myself have always refused to agree to any proposals on the part of the War Office or Treasury which were unacceptable to a majority of the Unofficial Members of the Council, and we have in consequence always refrained from authorizing the use of the Official Majority to pass through the Council any such measure which Unofficial Members regarded as unreasonable.

In the circumstances, and to meet conditions (a) and (b) of the proposed settlement, I approve of your giving an assurance on my behalf that I will not agree to any proposal of the nature contemplated in Clauses (ii) and (iii) of the Agreement unless I am satisfied that it is in conformity with the wishes of a majority of the Unofficial Members of Council. As regards (c) I am prepared to accept this condition also, with the proviso that the limitation of annual expenditure on the local forces to $500,000 shall not apply if the local forces are mobilized during an emergency, since the understanding is that, in default of any special arrangement to the contrary, the Colony will continue to pay for local forces when mobilized.

5. His Majesty's Government observe also that the contribution is payable in dollars. They do not wish at this stage to press for payment in sterling, but they consider that there should be an understanding that the rate of contribution will be subject to review in the event of any material change in the sterling value of the Straits dollar.

6. As regards No. (v) of the items in the proposed settlement, His Majesty's Govern- ment understand that the discussion as to the revenues to be included in computing the 20 per cent will take place only if at any time the Colony wish to exercise their right under item No. (iii).

7. Subject to these understandings, His Majesty's Government consider that the offer of the Unofficial Members of the Legislative Council represents a reasonable compromise, and I have to request you to inform the Unofficial Members that His Majesty's Govern- ment accept it subject to the observations set out above.