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STRAITS SETTLEMENTS.
Sir,
40248
477
26
APPENDIX No. 5.
Colonial Office to War Office.
Downing Street,
28th February, 1895.
With reference to the letter from this department of the 24th ultimo, I am directed by the Marquis of Ripon to transmit to you, for the consideration of Mr. Secretary Campbell-Bannerman, copies of further despatches from the Governor of the Straits Settlements, on the subject of the Military Contribution.
2. Mr. Campbell-Bannerman will observe that the Governor and the unofficial members of the Legislative Council, with the exception of Mr. Hüttenbach, whose memorandum is enclosed in Sir C. Mitchell's despatch of the 15th ultimo, appear to have somewhat misunderstood Lord Ripon's despatch of 6th November last, in overlooking the fact that the proposed amounts for the contribution in 1896-98 have only been provisionally fixed, and are subject to reconsideration during this year, when a more trustworthy forecast of the financial condition of the Colony can be made.
3. Lord Ripon is disposed to think that in view of the further fall in silver, which has already taken place in the last few months, and in view of the signs, indicated below, that the Colonial revenue is not likely to materially expand during the next three years, there are grounds for reconsidering at the present time not only the amount of contribution for 1896-98, but also the amount fixed for the current year.
4. As regards the rate of exchange, I am to observe that the rate adopted in paragraph 10 of the despatch of 6th November last was about 9 dollars to the pound sterling, or 2s. 14d. the dollar, but the dollar has since fallen below 2s., and is now about Is. 11 d., or 6 per cent lower than it was three months ago.
In other words, the proposed contribution of 90,000 instead of being met by a payment of about 855,000 dollars will probably cost the Colony over 900,000 dollars.
5. As regards the probability of the expansion of the revenue, I am to state that his Lordship has learned by telegraph that the actual receipts last year amounted to 3,863,000 dollars, or only about 1 per cent. above the original estimate. The revenue for the current year is estimated at 3,973,521 dollars. This estimate only exceeds the estimated revenue for 1894 by about 150,000 dollars, and the actual revenue of last year by 110,000 dollars, not- withstanding the imposition of additional taxation under various heads of revenue, specified in the letter to the Treasury, a copy of which was enclosed in the letter from this department of 10th October last. The increase would have been larger, had it not been for a material reduction in the amount for which the Opium Farm has been let for three years from 1st January last.
6. These figures lead Lord Ripon to conclude that little material expansion in the revenue is to be looked for during the next three years, and as the prospects of future years are in any case problematical, there would seem to be many advantages in adopting the suggestion that the contribution should in future be fixed annually, on the basis of a certain percentage of estimated
revenue.
7. When the contribution was fixed at 100,000l. a-year for the four years 1890-93, Her Majesty's Government estimated that it would amount to about 17 per cent. of the revenue, but it will be seen from the above figures that the proposed contribution for 1895 will probably amount to over 22 per cent., and if the higher contributions provisionally fixed for 1896-98 were adhered to, the ratio might rise to as much as 30 per cent, in the year 1898.
27
8. Lord Ripon thinks that it would be reasonable to lay down that the Colony should not be asked to contribute towards its defence more than at the outside 20 per cent, of its revenue, as suggested in Sir C. Mitchell's despatch of the 29th December last, including in that percentage all sums required to be spent on the building of barracks. It will be noted that this latter expen- diture will amount in 1895 to 5 per cent, of the revenue.
9. Ilis Lordship desires to urge the extreme importance of bringing to an end, if possible, the controversy that has gone on so long over this question, and he thinks that the suggestions now put forward to adopt a fixed percentage of revenue and to avoid periodical revisions, which only lead to continned friction and discontent, afford a convenient opportunity for arriving at a satisfactory compromise.
10. Lord Ripon has promised to lay before Parliament the correspondence which has passed with the Governor of the Colony on this subject, subsequent to the correspondence published in 1891 (C. 6290), and as it would in every way be desirable to include in such correspondence (which will be laid next month) the answer of Her Majesty's Government to the despatches enclosed herewith, I am to request you to invite Mr. Campbell-Bannerman's early attention to the suggestions made in the present letter.
11. A similar letter has been addressed to the Treasury.
(No. 428.)
My Lord,
No. 5a.
EDWARD FAIRFIELD,
Sir C. B. H. Mitchell to the Marquis of Ripon. (Received 4th February, 1895.)
Government House, Penang,
29th December, 1894.
I have the honour to acknowledge the receipt of your Lordship's despatch, No. 365, of the 6th November, relative to the Military Contribution to be paid by the Colony for the quinquennial period 1894–98, which despatch I laid duly before the Legislative Council and published.
2. It would appear from paragraph 15 of this despatch that your Lordship considers the question as definitely settled, and beyond the reach of further argument. I have, therefore, some hesitation in doing more than merely acknowledging the receipt of the decision of Her Majesty's Government. But it occurs to me that, as further papers are to be presented to Parliament, it might be well that I should suppleinent my acknowledgment by a few remarks on a subject which I have endeavoured to approach with an open mind unbiassed by local views or prejudices.
3. I would commence by saying that I am strongly of opinion that the time bas come when all Her Majesty's Colonies should contribute, iu proportion to their resources, to the cost of the system which has been organized for the defence of the Empire, and that the immunity which most of them have enjoyed in the past cannot be reasonably expected to continue.
4. Her Majesty's Government appear to me to have approached the subject of the contribution that might be expected from the Straits Settlements with two dominant ideas, namely:
(a) That the Colony committed itself when it was separated from the Indian Government to defraying the whole cost of its defence, whatever that might be; and,
(b.) That the community of the Straite Settlements is much less heavily burdened by taxation than is that of Great Britain, and, therefore, that it is not unreasonable to increase its payment for defence proportionately to its reserve of tax-bearing capacity.
5. As regards the first point I can add little or nothing to what has been so well
said in paragraph 5 (et seq.) of my predecessor's despatch of the 19th February, 1890.† The circumstances under which the undertaking was given by the Colony have so entirely changed, that I think, had a similar undertaking been given in a contract
* No, 18966.
† Page 14 of C. 6290.
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