CO129-624-14 Finances- relief stores- Hangover stores and Siamese free rice 1-7-1948 - 31-12-1951 — Page 107

103

Aytion

55397/48

The Church House,

Great Smith Street,

S.W.

1.

5th July, 1948.

Would you please refer to our telegram No. 301 of the 16th April to the Secretary General, Singapore, and to our telegram No. 467 of the 19th April to the Governor of Hong Kong, about the financial settlement with the Far Eastern territories ? At the end of paragraph 2 and in paragraph 3(a) of the former telegram and in paragraph 6 cf the latter, it was stated that further discussions would take place between His Majesty's Government and the Colonial Governments concerned on the apportionment of the expenditure incurred on gocds supplied by His Majesty's Government after the end of the period of Military Administration. It is on the subject of these goods that I am now writing. I regret not having done so carlier, but the subject is confused and complex, and I was most anxious to see clearly in the matter before committing myself to paper. must also apologise for troubling you personally with this tiresome question, rather than allowing it to be further discussed between our two Departments at a lower level. The sums involved, however, are large and the political implications are extremely important.

I

2. I enclose a copy of a memorandum which has been prepared in cur Financial Department, and which endeavours to set out as concisely as possible the tangled history of the whole matter. In order to present the problem in its proper context, the memorandum includes references to various different categories of stores shipped to the Far Eastern Colonial territories after liberation, but cur present concern, of course, is only with the limited category mentioned in paragraph 4: that is to say, with those supplies which were ordered by the War Office as part of their programme but for various reasons not shipped until Civil Government had been restored. There is no difficulty about War Office goods shipped before that time, since the net cost to His Majesty's Government of such goods was included in the net costs of the Military Administration, which His Majesty's Government have generously agreed to take on their own shoulders. Nor is there any difficulty (except over certain relatively minor matters, mainly in connection with cancellation charges, with which I need not bother you in the present context) as regards goods procured by the Colonial Office itself, over and above the War Office programme.

But as regards what I may call the "hangover" military supplies which are the subject of the present letter, there has been a long standing difference of view between our two Departments, in that the Treasury have insisted that the Colonial Office should call upon the Colonial Governments concerned to hand over to His Majesty's Government, if not the full cost to the latter of stores shipped, then at least a good deal more than the receipts from sales (which have, incidentally, now been paid over in full).

3. After consulting our files, I am bound to say that in my view there are cne or two points on which the Treasury have endeavoured to push

J.I.C. CROMBIE, ESQ., C.M.G.

their