SOUTH AFRICA (SALES AND REFUNDS).

HC Deb 26 June 1905 vol 148 cc106-68

SIR ROBERT REID (Dumfries Burghs)

rose to move, "That the conduct of Hs Majesty's Government in connection with the supply and disposal of stores, and the sales and refunds to contractors in South Africa at the end of the war, and their failure to inquire promptly into and deal with those transactions, deserve the censure of this House." He said: I desire to state with as much clearness and brevity as I can command, the ground on which I have placed this Motion upon the Paper. Between the end of the war in 1902 and the end of the year 1903, there were sales and repurchases of stores in South Africa which were of quite an extraordinary character, the main facts with regard to which have not been disputed, and are not capable of being disputed because they rest upon documents and accounts. There are disputes, no doubt, with regard to the details connected with these transactions and many of the surrounding transactions. There are also disputes in regard to the division of responsibility among officers on the spot, and as regards the character of the contractors who were engaged in these different concerns. I do not propose to enter into those questions. The House of Commons is not the place in which we can enter into the detailed transactions of individuals who are not present, or allocate blame to them in regard to the transactions in which they have been concerned. Nor san we sift minute evidence, or come to a fair judgment as between man and man. Therefore I am extremely glad that the Government has at last, after what I regard as quits an inexcusable interval of delay, appointed a competent and well-qualified Commission to investigate these subjects and come to their conclusions. But when I hear it suggested that the House of Commons should postpone their inquiry into the responsibility and conduct of Ministers of the State because a Royal Commission has been appointed which has the right of considering their conduct as well as that of everybody else, I say that is not only an unconstitutional doctrine, but, upon the face of it, that it is quite inadmissible. Ministers are responsible to the. House of Commons and can answer for themselves, and this is the only place in the British Empire in which they can be called to account and can be constrained to answer for their doings.

It is right that I should state at once the nature of the charges which I put forward against Ministers. Of course there is no suggestion that they intended to connive at corruption, or anything of that kind. But what I do say is that if Ministers had been competent and reasonably attentive to their great duties the things complained of could not have happened, or, if they had happened, must have been detected and stopped at once under any system of reasonable supervision. I say also that the substance of these transactions was well known in the War Office two years ago, and I think there must have been strong ground for suspicion before then; and that by their dilatory action for nearly two years Ministers have postponed the publicity which is so necessary to prevent the recurrence of things of this character, and nave postponed the punishment of those, if there are any, who have been guilty. The subject of this Motion is restricted to a particular class of the transactions, although the loss of money to the State has probably been very great by reason of these transactions, and I propose to limit my criticism within the same compass. But I think it is necessary to remind the House that at the time when these things took place there had been many other transactions which were called and generally recognised to be, in part at least, scandals of an administrative character well known to Ministers and to the House of Commons. This is not an isolated case. There have been the breakdown of the medical service, the hay contracts, the remounts, the transactions of the Cold Storage Company, the questions of forage, of transport, of freight, of jam, and of emergency rations.

There have been many discussions in this House on these subjects. Notably there was the debate on March 17th and 18th, 1902, before the war was ended, in which my right hon. friend the Leader of the Opposition moved for a Select Committee to inquire into the questions of remounts, meat, forage, freights, and transport. He was met by the present Secretary of State for India with the criticism, which was common in those days, that he was encouraging the enemies of his country. The Secretary of State for India beat the big drum in the usual way, but there is a hole in the big drum now, and we do not now hear quite so much of that kind of unjust criticism. But at that time the Secretary of State for India, and the noble Lord who is now Postmaster-General, promised a full inquiry into all the transactions of the War Office in the war—the right hon. Gentleman, indeed, demanded it as a matter of right for the War Office. That was in March, 1902, and we are now in June, 1905. There was, indeed, an inquiry by the Royal Commission of which Lord Elgin was Chairman, but that was limited—I do not say it was improperly limited—in its scope and did not touch the subjects we discussed in March, 1902. Most of these scandals took place before the end of the war; and, therefore, in the summer of 1902, Ministers were well aware of the pitfalls that surrounded them. They knew that, while the people of this country, rich and poor alike, were making sacrifices either of blood or treasure, there were not only honest contractors who were fulfilling a legitimate duty in supplying the troops, but others of another class who were prowling about the Army and the departments of State anxious to make an unclean profit out of the sacrifices of the country. They knew then that there was a necessity for careful vigilance and supervision to prevent fraud.

I will tell shortly the story of what occurred at the time when the war ended. In June, 1902, there were immense Government stores in South Africa, sufficient to supply 300,000 men and 200,000 animals for a period of four months. The troops were being very greatly diminished, and by the end of November, 1902, they had been reduced to 65,000. The country itself was denuded entirely of supplies, and the agricultural stock had been almost entirely destroyed. Accordingly, Lord Kitchener, who is an excellent man of business and who has had a similar experience, I believe, in the Sudan, suggested that, in this promising market, the surplus stores should be sold, and expressed the anticipation that a sum of between £6,000,000 and £7,000,000 would lie realised by the sale. Of course Lord Kitchener thought the benefit of a good market would be obtained by this country. I desire to lay emphasis on the word "surplus," for what was to be sold were the supplies that were not needed for our own purposes. Lord Kitchener also said that the future needs of the troops ought to be, or might best be, provide for by local contracts. That was assented to by the War Office; and they gave directions, in a telegram of July 31st, 1902, that monthly accounts were to be sent home of the totals sold and of the prices and amounts realised. I must say that it was a foolish thing not to send out a special staff of persons properly qualified to deal with this immense mass of material, and that it ought not to have been left to the first comer. It was left to a gentleman whose name I do not wish to bring into the debate—an officer who succeeded Colonel Morgan in the autumn of 1902—because the War Office authority who was called before the Butler Committee stated that he was not qualified personally and-expressed the view that what took place was due to his entire incapacity for the position he filled.

The Army Service officers set about selling the produce, but, as soon as they began doing so, a ring was set up against them so as to prevent good prices being realised. There is a statement, which does not rest upon direct testimony and which I hope may prove unfounded, that the Chamber of Commerce of Johannesburg actually sent a letter round to their members telling them not to bid for the Government stores. I am not going to say it is not true; I hope the Royal Commission will find out whether it is true. Under these circumstances there was no market, but the War Office could not prevail upon themselves to depart from the rule laid down officially that they were to sell this produce. The, officers in South Africa, finding the market closed against them, took this course—a course which would have seemed incredible if it were not attested by evidence. They decided to buy supplies on forward contracts from certain firms and ago agreed to sell the same supplies to the same firms to enable them to carry out those contracts. I do not mean for a moment that all the stores that were sold were resold to us, but a great quantity of the stores that were said by us were resold to us at greatly enhanced prices, and often without being moved from the places where the goods were stored. I will give an illustration without mentioning the name of the firm. The British Government bought from this firm oats for 60,000 horses at 17s. 11¾d. At the same time we were selling them oats at 11s., which they handed again to us at 17s. 11d., without, in some cases, any change in the custody of the stores. That is an illustration, it was the same with other firms, it was the same with other articles, and it was done obviously and admittedly on a large scale. What occurs to one is why should not something else have been done with these stores. There was the Repatriation Department, and the concentration camps had not been closed. Why was not the material handed over to be used by the Repatriation Department? It was stated in evidence that Lord Milner refused to allow this upon the ground, if you please, that it was not fair to the South African merchants?

THE SECRETARY OF STATE FOR INDIA (Mr. BRODRICK,) Surrey, Guildford

Is there any evidence of that statement?

SIR ROBERT REID

Yes, there were two if not three witnesses before the Committee, one of whom said he was present at the conversation, at which Lord Kitchener and Colonel Morgan were also present, and heard the conversation. I am not affecting to treat it as a matter which has been established, but if it were true, what does it mean? We are to find the money, to recruit the men who go out and risk their lives, we are the arsenal to find the materials, and yet the British taxpayer is not even to be considered to the extent of being allowed to use his own stores for his own purpose. A natural suggestion is, why should not these stores have been used by our troops? They were perfectly good stores, only the good ones were sold, the contracts provided that. It seems almost incredible that that course was not followed. Colonel Buist, the officer commanding the Army Service Corps in the Transvaal, stated in evidence before the Committee (page 222)— We could have gone on issuing from our stocks perfectly well without a contractor. And when asked— How did it strike you … that we should sell the Government supplies one day, and buy them back afterwards at an enhanced price? Colonel Buist replied— The only reason I could possibly think of was that they wanted to get into the contract system as soon as possible, and there was no one in a position to contract; local stuff was unprocurable, and the result was that they practically had to make contractors. I think that was the object. I think they wanted to slide from the old system and get into the contract system, and to do that it was necessary to make contractors by selling them supplies. Let us see what sort of contractors were made by this process. These are descriptions of several of them—one was a butcher by trade, a person of undesirable character; another was a very difficult man to get money from; and another was a racing man who was somewhat addicted to drink. These contractors, after they had got the goods, made large claims for refunds, and refunds were paid which, according to the Butler Committee were without equity or foundation, and some of the transactions seem to be-extraordinary. And all this time, while we were making contractors by selling, them supplies, in order that they might, resell them to us when we had abundance of stores, fresh cargoes kept; pouring into South Africa—though not from Great Britain—to the end of. November, 1902. Cargoes of oats were sent up from Durban, mostly to Pretoria, and when they got there they played their part in the making of contractors. In one case oats, coming, I believe, from Australia, were brought to Durban, the freight thither paid and the Customs dues, and then the railway charge from Durban to Pretoria was 1s. 10d. per 100 1bs., and that was paid. What happened? The price realised for the cargo at Pretoria was 1s. 6d. per 1001bs., 4d. less than the railway rate from Durban to Pretoria!

This is very strange and painful reading. I omit details, I only take broad facts; but I ask the House to fix its attention on the broad fact, and upon the proceedings and conduct of Ministers in connection with it. To sell stores to a man at low prices which he was to resell to us at high prices—how can that transaction be justified under any possible conditions? It was a time when Ministers knew by former experience the necessity of vigilance, and the transactions were upon a very large scale. The total expected to be realised by Lord Kitchener was between £6,000,000 and £7,000,000, and it can hardly be said that so large a transaction was beneath the notice of a Secretary of State. This system of sale and resale bore the badge of suspicion—I do not think I should be going too far if I said it bore upon it all the badges, of fraud. It would have aroused suspicion in most people. To buy at one price and to sell at a 50 per cent, lower price, and to be doing that repeatedly and upon a large scale, was a transaction at the first inkling of which any man of business would prick up his ears and set. about making the necessary investigations.

Well, all this time monthly returns, were being made to the War Office- There was an order on July 31st, 1902, that monthly returns should be sent stating the amount sold and the prices realised in the month. That order was not obeyed after about the month of September, 1902. I do not find any steps or action taken by the War Office to insist upon those particulars being furnished in accordance with the order, though there may have been other returns which came month by month. I gather that these were the cash and supply accounts; at all events, some materials came to the War Office. In April, 1903, Colonel Dunne, the Assistant Quartermaster-General in London, was— Amazed to find that they were using the contracts when they had such large stock on hand."(p. 498.) Colonel Dunne could not understand it, nor. could any one else. But there was no further action of any kind.

In October, 1903, the present Secretary for War took office, and the right hon. Gentleman told us last Friday that the day he became aware that any charge was levelled against the contractors he caused a Committee of inquiry to be appointed. The right hon. Gentleman has also told us that it was in January, 1905, that he became of opinion that there ought to be a special inquiry, and then the Butler Committee was appointed. I think, however, there must either be a lapse of memory on the part of the right hon. Gentleman, or else he puts a very different construction upon facts to that which I myself put. I should be inclined to say that from the very first day on which the present Secretary of State for War took office he must have known that there were grave circumstances of suspicion in connection with these transactions in South Africa. Before October 1st, 1903, the War Office knew enough to telegraph to General Lyttelton— Central supply account June last shows large sales of hay, bran, and meal to contractor and purchase of same class articles from same persons at higher prices. I should have thought that pretty good proof that the War Office in September, 1903, knew the substance of these transactions. The answer was to the effect that this business saved money to the State. But the report which was asked for by post does not seem to hive been sent. It was quite evident the War Office took a very serious view of the business in 1903, because Sir Fleetwood Wilson, head of the Finance Department of the War Office, was called to give evidence before the Public Accounts Committee and he said the first case of buying and selling by the same firm was taken up by the War Office in September, 1903. Suspicion was aroused in his mini that there might be something wrong and that thing required further-investigation. He added that in September, 1903, he first began to realise that it was a serious thing, and he added, in reply to the hon. and learned Member for South Longford, that he then knew of two out of three of the cases which figured in the Butler Report. Consequently, this information was available for the right hon. Gentleman the very day he entered the War Office. I do not for a, moment suppose the right hon. Gentleman will say he was not informed of. these things by his officers at the time. According to the statement of Sir Fleetwood Wilson, from September, 1903, onward, they kept on inquiring, but it was not until December, 1901, that he thought a special inquiry was needed, the reason being because, he said, all he could do was to look at and examine documents. He could not examine witnesses. After a period of sixteen months the War Office came to the opinion that some inquiry should be made by persons who could ask questions. Sir Fleetwood Wilson's explanation of delay ought to be given in justice to him. He said considerable delay in all case in regard to South Africa was inevitable, and that six months was a perfectly reasonable time for elucidating one point. If this is the pace at which the War Office goes in regard to South Africa, all the more necessity for a prompt and early inquiry by some Select Committee. In September, 1903, the War Office admittedly knew quite enough to make the appointment of a competent inquiry necessary; and there was no excuse for postponement until January, 1905.

But all this time other things were happening also. An action was brought on in South Africa; and there were some severe comments by the Chief Justice of the Transvaal, and Colonel Morgan brought an action against The Times newspaper. My sympathies are not especially tender with regard to The Times, nor do I wish to say a word-with regard to Colonel Morgan's action; but one danger of putting these things before the public in this way is that comment is so dangerous as to be impossible. All criticism is suspended by the peril of having to pay damages for an action. In March. 1904, the Comptroller and Auditor-General sent a query to the War Office containing quite a list of sales and repurchases from the same firm, but no answer was sent. This query referred to a former query of the year 1901–2, and therefore the knowledge of these things may be somewhat earlier than we suppose.

MR. GIBSON BOWLES (Lynn Regis)

The query of December, 1903, is still unanswered.

SIR ROBERT REID

The first query was in December. 1903, and the other was in March, 1904.

MR. GIBSON BOWLES

I am wrong; there has been an answer to it.

SIR ROBERT REID

The query of March, 1904, was unanswered in January, 1905, and there was a later query in 1904, to which no answer was made. There was still a third query in 1904. and the Comptroller and Auditor-General asked to see the contract. I cannot understand what possible objection there could be to his seeing the contract, but in his Report he says it had not yet been transmitted to his Department, On January21st, 1905, the Comptroller and Auditor-General published his Report; and it stated in substance the very same things which are stated over and over again in the Butler Report. Why was not a Committee appointed before? In December, 1903, at least, the facts were known, but not till June, 1905, was any officer dismissed, censured, suspended, or relieved, and the same contractors were still being employed and no investigations of any competent character were made. Would any private firm carry on its business in this manner? Could it possibly exist outside the Bankruptcy Court for more than six months if it did? Suppose any of our municipalities with whom we are so particular were to carry on business in this fashion, what should we say about it in the House of Commons? I think I can hear the indignant rhetoric of hon. Gentlemen on both sides of the House. From September, 1903, down to January, 1905, Sir Fleetwood Wilson and the War Office were making a sort of internal examination, but they were powerless because they could not examine witnesses. Then Sir William Butler's Committee was appointed; and it lasted four or five months. It made only a partial Report; and in substance all it said was known before, and now we are to have a Royal Commission. At first the Commission was not to have power to inquire on oath, or to procure documents, or to compel witnesses to attend, but under pressure of Questions the Government consented that those powers should be bestowed, which I think is perfectly right.

THE PRIME MINISTER AND FIRST LORD OF THE TREASURY (Mr. A. J. BALFOUR,) Manchester, E.

Only if the House is going to give them without prolonged controversy.

SIR ROBERT REID

It is not for me to advise the Government, but if the Ministry put any difficulties in the way of the most complete and searching inquiry it will not enhance its credit. I speak with the authority of a private Member only, but for my part I do not see the least reason for anticipating any difficulties in regard to the clauses to be inserted in the Bill provided they are of a usual and formal kind. I do not think the Government are at present in a position to force terms on the Opposition in regard to this matter. How long is this new Commission to take? They have an immense field to cover. They have many cases to inquire into, because we are told that at present we have not obtained nearly all the information upon all the cases of this character, and their sittings will last for six, twelve, or even eighteen months. If it proceeds at the same rate as Sir Fleetwood Wilson estimated that the War Office proceeded it will last to eternity, or even beyond that, till a general election. In the meantime can anyone suppose that this Royal Commission with the inquiries it has to make ought in the slightest degree to fetter the action of the House of Commons in dealing with the responsibility of Ministers? My only doubt is whether there is such a thing as the responsibility of Ministers. At one time the responsibility was real, and the penalties for neglect very severe, but that was in the olden days. We have left all that. Ministers are expected to make use of businesslike habits and to be competent and vigilant in the administration of their Departments; and when a matter of importance is raised and facts are brought to their knowledge they ought to make businesslike arrangements for the public and, above all, to safeguard the public against imposition.

I have confined myself to a statement of the facts in this matter. I have endeavoured to put my own view before the House, which is that the system under which this vast amount of stores was disposed of must be inexcusable and the delay in dealing with it equally inexcusable. I do not think the Government have been fair to the country or loyal to the House of Commons. Some of my hon. friends are sanguine that the House may be prepared to condemn these transactions. I do not in the least entertain any such idea, for whatever may be the state of efficiency of the War Office, there is no doubt about the efficiency of the Department over which the Patronage Secretary presides. The right hon. Gentleman has introduced a system of discipline into this House which is unknown in any Continental army, and that is the reason for my apprehension that, notwithstanding the plain character of the transactions to which I have been referring, the majority of the House will, as they have done so often before, again shield the Administration from the just displeasure of the country.

Motion made, and Question proposed, "That the conduct of His Majesty's Government in connection with the supply and disposal of Stores and the Sales and Refunds to Contractors in South Africa at the end of the war, and their failure to inquire promptly into and deal with those transactions, deserve the censure of this House."—(Sir Robert Reid.)

MR. BRODRICK

In rising to reply to the indictment of the hon. and learned Member, I desire to notice at the outset the moderate terms in which his speech has been framed and his obvious desire to restrict himself to a fair consideration of the position, excluding so far as he could the consideration of those cases which wall shortly come within the purview of the Royal Commission. But, Sir, I hope the House will not forget that no moderation in language can blink the fact that this indictment is a Motion of censure on the Government on matters on which the Government have never been heard, on the Report of an inquiry which has reflected upon men who were never called to give evidence before the Committee. Sir William Butler's Committee has dealt in very trenchant language with a number of cases of officers. Some of them have been called before the Committee, but I am not sure whether others have and the Committee have indulged in reflections. which found their way into the speech of the hon. and learned Gentleman this afternoon, on the conduct of the Government. Why have we, who were always available to give evidence, never been I allowed to place before Sir William Butler's Committee and the country—[OPPOSITION laughter.] This is not a laughing matter.

SIR H. CAMPBELL-BANNERMAN (Stirling Burghs)

You appointed the Committee. Why do you complain?

MR. BRODRICK

Does the right hen. Gentleman think that the Secretary of State who appointed Sir William Butler's Committee, could also dictate what evidence was to be called? Is it his view, after such a long experience of administration, that on appointing a Committee you should proceed to tell the Chairman what witnesses he should call? This is a serious indictment, and I am on my defence before the House on the charge of alleged incapacity and want of supervision. [OPPOSITION cheers.] Reserve those cheers till you have heard the facts. I have never been asked to give one single word of evidence in answer to the case, and I have never been allowed a single opportunity of stating my case in this House or elsewhere.

It is not rational that we should be discussing here a portion of the case which should be left to the Royal Commission. I do not believe there is a precedent for such a proceeding in the history of this House. There is no date in these transactions which I welcome so much as I do this afternoon, when I can come forward before the House; and I say that so far, as was suggested by the right hon. Gentleman opposite, from its being cur desire to shelter ourselves behind the Commission, our anxiety is that all these questions should be examined, and promptly examined, that the evidence which I shall bring before the House of Commons this afternoon should also go before the Commission, and that every person who can be brought to account, should be punished.

I have in the last few days had access to documents, and I can see perfectly clearly why it will be impossible for me to mention names and to bring; the action of individuals before the House. ft is obviously clear that such a course on my part would be most improper. But, en behalf. of the Government, I undertake to make as full a disclosure as it is in my power to make. The hon. and learned Gentleman said that nobody is imputing to us any sympathy with fraud, but indifference to the waste of public money. Who could suppose that any Minister would be indifferent to the waste of public money? Is it to our advantage or to the advantage of anyone that the Estimates should be swelled, that the difficulties of the Chancellor of the, Exchequer should be increased? Nobody, not even the bitterest antagonist, can impute to us any in difference as to the waste of public money.

The suggestion now is that we have been slow in following up the irregularities. I will endeavour to show the House what the condition was in South Africa when these arrangements were made, what the extent of the losses might have been, I what steps we took to pi event the country being flooded with supplies, what arrangements we made for their disposal, what was the supervision we attempted, and, in such cases as came before us, what were the penalties we inflicted. The hon. and learned Member made a statement as to the number of horses and men in South Africa at the close of the war. He said that there were 327,000 men to be fed, 268,000 horses, and there were 19,000 officers as well. In addition, we had to provide for 116,000 people in concentration camps. For all these people we had been keeping, up, according to their numbers, for nearly two years a constant supply and a reserve for four months. In view of the great dispersion of the troops that reserve had got even beyond a four months supply. The war terminated on May 31st, and on July 8th, when the reserve stood at its highest, there were seven months supply of breadstuffs, five months of wheat-stuffs, seven months of preserves, three and-a-half months of hay, and three and-a-half months of grain.

SIR ROBERT REID

For all that number?

MR. BRODRICK

Yes. From that date the supply began to decrease. As the hon. and learned Member said, the last supply ship left this country on July 5th. I assert that any commission or committee of business men who went into the attempts made to reduce these contracts and to account for them, would claim that my noble friend acted promptly in this respect and did everything a man could do in order, without loss, to cancel contracts which were running to provide supplies for this vast number of people. We cancelled at some loss very nearly all the contracts in this country, and if we could have cancelled all those that came from abroad. we would have done so on similar terms. But we could not. We were subject to foreign law; we were subject to the fact that freights had been taken up already, and we found that in many cases one-half or three-fourths of the sum which we would have to pay would have been lost if we had not allowed the contracts to be carried out. We, therefore, felt that it was better in these cases to allow the contracts to go forward. I am not going to attempt to follow out in detail any of these special contracts to-day. All I say here is that although I declare that there never was brought to my notice that a system of dual purchase, or buying from and selling to the same contractor, was about to be set on foot, and that if I had known that it had been set on foot, the duty of financial criticism would have been placed on some one, and any such contract would have been dealt with personally, and certainly never allowed to pass, it has been as a matter of fact assumed that all these supplies which were in South Africa at the close of the war have been sold. That is not the case.

The hon. and learned Member alluded to the case of oats. There is any amount to be said about the contracts made in reference to oats. As a matter of fact the cost of the oats landed in South Africa from this country after the war was 20s. per quarter, and the oats were sold in South Africa for 35s. per quarter. Although I am well aware, from circumstances recently brought out, that some contractors bought from us at a figure and sold to us at a higher figure, it must be remembered, in all fairness to those who transacted the business, that the amount bought was small compared with the amount sold In other words, the contractors bought in Pretoria 15,000,000 1b. of oats and they sold back to the Army 3,000,000 1b. of oats, having to dispose of the other 12,000,030 1b. to private buyers. If we had sold £100,000 worth of staff and bought it again for £150,003 we should have made a very heavy loss, but if we sold £500,000 worth and bought £103,000 worth at an increased price it might still have been a bargain; subject to the fact that these contracts, except with one or two remarkable exceptions, were made from the sale of good and bad alike, I say it might have been a perfectly fair and useful commercial transaction.

I beg the earnest attention of the House to a very grave mistake which figures in the speech of the hon. and learned Member and in the Report of Sir William Butler's Committee which I should like, if I can, to dispel from the minds of hon. Members. And that is an exaggerated idea as to the loss which the country may have sustained from these transactions. Lord Kitchener sent a telegram Oil June 18th in which he roughly estimated that the money involved in these sales might amount to £6,000,000 or £7,000,000. That was based on a suggestion or a rough estimate made to him by Colonel Morgan which is to be found in Question 5101, in which Colonel Morgan said— Lord Kitchener sent that telegram, and I did not see it until afterwards, but he asked me then to make an estimate of what I thought the surplus things would fetch, and I think I estimated about £8,000,000. He said, 'Do you expect to get that? If you got half I should think you would do very well."' I cite that for the purpose of pointing out that this was a rough-and-ready estimate. Now what deduction was it subject to? Lord Kitchener then did not know and could not know the amount of sales to Lord Milner that would be agreed, as they were agreed a month later for £1,400,000. Lord Kitchener on June 18th, when he sent that telegram, was under the impression that local contracts for supplies would very shortly be brought into working. He put forward these contracts on May 25th for approval; he put them forward again on June 3rd, and he pressed us on June 10th, and evidently believed that before long, having sold a good deal of our own surplus stores, which he well knew to be deteriorating in the open—because, save medical comforts and a few others of all this vast amount which had to be landed in South Africa and held in readiness for the troops, there was not a single pound housed under shelter—I say that Lord Kitchener with that knowledge contemplated early sales and local contracts, but those contracts were not begun for seven months, and after those seven months three months more of perishable supplies were received, the whole of which came out of the £6,000,000 or £7,000,000 which Lord Kitchener roughly estimated. Again, Lord Kitchener was under the impression, and well might be, that the concentration camps would be broken up very rapidly. But, as a matter of fact, as the hon. and learned Member stated, those camps were kept on for nearly another six months, and we had to provide all these people in their own homes with food and necessaries, and we had also to supply food and necessaries for the 25,000 Boers who were repatriated during the next eight months. All these came in. 140,000 men to be fed for eight months came in as a deduction from Lord Kitchener's estimate.

Then there was the question of deterioration, which even a man of Lord Kitchener's great knowledge and organising power, sitting at Pretoria, could not possibly, estimate in connection with these 150 or 160 supply depots left out in the open throughout the whole of the Transvaal and Orange River Colonies. What are the figures? I give them to the House with every reserve, but if they should have, as I believe they will, the effect of convincing the public that an amount of great public concern as to millions of loss has been altogether unreasonably incurred and that the transactions are on a totally different scale, I think at least the labour bestowed on them will not have been in vain. It is impossible to give absolutely accurate figures. I give the best I can. I give what the War Office has been able to work out on the returns sent them from South Africa. But be it observed no man can say the precise cost of each of these lots of provisions; you cannot tell distinctly when they were landed or to what particular landing they belonged, or where they came from. All I can say is this: the actual sales to the public which are the subject of the inquiry by Sir William Butler's Committee realised in all £718,000. The actual cost of these articles taken at the contract price at which they were being received at Woolwich (I will say a word about freight afterwards) was £1,028,000. The loss on that account was £310,000. What may I add for freight? I have done my best; I have taken authority and I have gone, I believe, to the extreme limit when I add a quarter of the whole value for freight. That would add another £250,000 to the sum. Therefore you arrive at this result. The stores sold cost us something like £1,270,000, the money made by them was £718,000. The loss due to those stores, which had in some cases not only travelled to South Africa, but in most cases had been in the open and carried about to every part of South Africa, was about 40 per cent, of the value. That is the whole extent of the less which we are discussing so far as I can possibly make it out. Have I not some right, on behalf of the Government, to ask this question, why Sir William Butler's Committee, having the opportunity of calling officials before them, and having access to all the official Papers, did not make some computation of this kind, such as I have made in the few days which have intervened since the Report of the Committee came into my hands? Why, these being the facts, have they led the public of this country to think, by continual iteration, that the loss was due to inefficiency and lack of supervision? Why did they not temper their criticism by allusion to facts to proof of which they had ready access and into which they were appointed to inquire?

I have endeavoured to give the House the figures as I have received them. Now let me say what steps the War Office took day by day. Do not let it be quoted against me that a loss of £100,000 or £50,000 took place through inefficient supervision. I do not depreciate the amount, and I say it was our duty to exercise supervision, but I shall prove that we have exercised such supervision as had never been exercised over any Army in the field before, either in this or any other country. The war ended on May 31st. On June 2nd I met my right hon. friend the late Secretary of State for the Colonies, and with his concurrence appointed a Committee for the purposes of repatriation and sale of stores to the Colonial Government. That Committee met on June 4th and it included Lord Onslow for the Colonial Office and my noble friend the Postmaster-General for the War Office, with an officer of each Department. Lord Milner was telegraphically approached on June 4th, and the whole question of the distribution and sale of stores to Lord Milner was settled by July 18th by this Committee. We induced Lord Milner to take over all stores he could accept; and yet Sir William Butler's Committee, in paragraph 44 of their Report, say— They cannot refrain from adding that they have never been able to understand why a method of meeting all the civil and military requirements at the end of the war was not adopted, handing over to the Repatriation Department the whole surplus Army stock at a joint valuation. This simple stroke-of-the-pen administrative method between two Departments of the State would, the Committee think, have saved much money and placed an. effective barrier against the various activities alluded to in this Report. They were not able to understand ! Very probably they were not. Why? Because they had my noble friend the Postmaster-General, Lord Onslow, the late Secretary of State for the Colonies, and myself within easy reach, but they never asked us a question before they engaged in this damaging crusade, before they made this attack which is not sustainable by any jot or title of evidence.

Then we are attacked because local contracts were made. I have told the House already why local contracts were originally proposed by Lord Kitchener. The Committee call attention to the fact that on June 3rd Lord Kitchener recommended a system of local contract, and that— The War Office do not appear to have approved these general principles for some days. This is indeed an indictment. We did take some days to consider when, how, and where local contracts for the supply of an Army of 300,000 should begin. I think we were wise in taking time for consideration; and we sent orders that seven months supply should be kept up of perishable and ten months supply of non-perishable stores, and we arranged that local contracts should not begin until January 1st of the following year, and we hedged round these contracts by every conceivable barrier we could. I hope the House will not mind my reading the actual telegrams. I do not think they have seen the light, and I think they should be known. On July 3lst we telegraphed to the General Officer Commanding at Pretoria— Send by mail full report of action taken as to disposal of surplus stocks of supply, showing what reserves proposed to retain. Cable brief reply. Render monthly reports by mail of sales and amounts realised. The General Officer replied— Reference to supplies. Sold to general public at actual cost plus percentage referred to in paragraph 7 of allowance regulations, plus Customs dues, plus civil railway rates. Will report fully by post as to sale and results. Reserves are being maintained for all troops to December 31st, and for sixty days additional of unperishable stores. On August 18th we telegraphed— It is thought three months reserve of meat, biscuits, flour, rum, lime juice, groceries, and medical comforts should be maintained in South Africa on account of time required to obtain them from England. Please reconsider the matter. Unless surplus supplies can be sold at prices to prevent any loss whatever, it is thought they should continue to be utilised as far as possible till expended, subject to-running no risk of deterioration by keeping. The General Officer replied on August 27th— Three months supply of articles mentioned will be retained. Procedure indicated in last part of your telegram is precisely that which is being followed. Those were the orders. The situation on July 31st was this. We had sold to Lord Milner all the stores he could take. General Lyttelton had received orders that sales were to proceed at not below fixed prices, and returns were to be rendered monthly. The question is—how were our orders carried out? What supervision did we maintain? It was the misfortune rather than the fault of the hon. and learned Member that he had not seen evidence on this point; he would have seen it if it had been in the Report. He says, "You asked these men to carry out work for which you gave them no additional staff, you threw upon them labour they could not be expected to perform." Something of this kind the hon. and learned Member said, and he is justified by a paragraph in the Report of the Committee, which says— It appears to the Committee that a great error was made in not having sent to South Africa at the conclusion of the war a specially-trained selected officer of high rank and a small but very capable staff of civil and military officials, who would have taken in hand the entire business of winding up the war, dispoing of surplus stock by sale or by shipment to-England, and, generally speaking, replacing the haphazard and always wasteful ways of war by regular methods of peace administration. Well, I challenge those remarks, which I say were made without calling the Quartermaster-General or any of the officials who might have proved differently. We knew there would be pressure in winding up the war; and the moment that peace negotiations took a favourable turn my noble friend and I engaged, under contract to go out to South Africa to assist in these operations, some 600 additional capable clerks. These, between 500 and 600 in number, left England within a few days of the declaration of peace, and were available for a year's service in winding up affairs and dealing with a vast mass of documents. We are told we ought to have sent out specially-trained officers; but where were they to come from? The-whole Army Service Corps was in South Africa, and of about 350 officers some 250 were on active service. These men were conversant with the work, they knew where the supplies were, they could judge of deterioration, they had the whole work at their finger ends Were we to replace them with men who had not that knowledge and experience, who did not know where the 150 depôts were, who did not know what they contained and what was the effect of the South African climate? Why, if we had done this, if we had supplanted them by civilians accustomed to buy and sell in times of peace, we should have done much to bring about failure and have acted in the face of Lord Kitchener's advice, who on the spot had chosen men to deal with these stores. I venture to say we should have laid ourselves open to the gravest censure for disregarding the advice of the man to whom we were continually urged to give a free hand in that very department of the service in which he was well known to be the. greatest master. Did we supervise the operations, or did we leave them to take their chance?

I am sorry to say I shall have to trouble the House for a few moments with another part of the case. The hon. and learned Member says I had warnings during the continuation of the war. I had, and was not likely to forget them. When a man has had to deal, as I had, with case after case of officers who had failed in the field, he will know there is no more ungrateful task; and when he has had to deal with officers who had not necessarily been guilty of corruption, but had failed in judgment, and whose errors had cost the country large sums, he is not likely to forget the lesson. It is easy to talk t bout these matters here in Parliament, but when you come to penalise an officer who under pressure of work made contracts that involved a loss of many thousands to the country, you have. against you all the good-intentioned sympathy of his superiors, and you have to fall back, as I had to fall back on my colleagues and ask whether I should or should not impose the penalty of leaving tie service upon officers who had lacked judgment but not honest I had a body of auditors in July, 1902, auditing all the ordinary stores accounts, and that was quite enough to put me in touch with the necessity of not allowing those long delays upon which the hon. and learned Gentleman spoke so eloquently and forcibly. The hon. and learned Member pointed out that it would take six months to get an answer from South Africa and that it was impossible to carry on business in that fashion. What did we do? We asked the Treasury in November; 1902, to incur the very large cost of sending out a special audit staff to South Africa in order to audit on the spot the whole of the accounts that were coming in, and in that way to get rid of the difficulty of sending queries to and from England, and so having to wait for months before a decision was come to. We did not stop there. We asked the Treasury to use its influence with the Comptroller and Auditor-General himself, the officer of this House, the man who is there not merely to check irregularities in our accounts, but to check irregularities on the part of the War Office auditors, to send out also a staff of auditors in January, 1903. These two sets of auditors were sitting in the buildings adjoining the buildings in which the whole of these transactions took place, having been sent there for the purpose of keeping a watch over the accounts.

Now I shall anticipate the question—Why did you not get a report from these auditors sooner than September, 1903, the date mentioned by the hon. and learned Gentleman? The fact is that I had brought to my notice in December, 1902, that there was difficulty about the canteen department in South Africa. I mention this transaction for three purposes; firstly, because I want to bring it within the purview of the Royal Commission; secondly, because I want to show the steps that were taken by the Government at home; and thirdly, because I want to do justice to the auditors who went out and who might otherwise be accused of not having looked after the business they were sent specially to do. The canteens are stores which are run for the benefit of the soldiers by the officers. The profits go to the soldiers or the regiment. The canteens have always been run under the control of the General Officer Commanding. Lord Kitchener instituted a system of regimental field force canteens in South Africa. They provided for the soldier during the period of the war a great number of necessaries which he was prepared to purchase, and which were in excess of the official list. The profits shown in December, 1902, were over £700,000. I thought it my duty to call the attention of the Commander-in-Chief to these enormous profits and to ask, although they were not Government funds, whether he was satisfied with the manner in which it was proposed to use these profits. The whole Army was coming back from South Africa and all sorts of questions arose as to whether the regiments should take their share of the profits away with them—whether the money should be used in South Africa or taken for regimental purposes at home. A telegram was sent to General Lyttelton asking him among other particulars what large services were charged to the canteen fund, and what the balance of the fund was at that date. The answer which we received from Pretoria was a very unsatisfactory one. I directed Mr. Flynn, the auditor who went out in December, 1902, to address himself to a review of the canteen funds. I got his report in July, 1903. Mr. Flynn estimated that owing to the enormous purchases made since the conclusion of the war by those responsible, an avoidable loss to the extent of between £250,000 and £300,000 had occurred. He reported that the mistake referred to began when a certain officer took over the charge and ended when that officer left. He pointed out that that officer employed a relation of his own and a relation of another officer who was also in charge. He made reflections on both officers for having employed relations in direct contravention of the regulations for the management of these supplies. Just before I left office I urged that both of these officers should be brought before a Court-martial. Lord Roberts sent the papers to a particular authority, and after both of the officers had been heard it was decided that no Court-martial would be held, though a grave error of judgment had been committed, and we were forced to leave that case with the censure of the officers by the Commander-in-Chief. I think that case ought to come within the purview of the Royal Commission. I mentioned this case also because it may be in some degree a reason why the auditors never came upon the question of dual contrast until September, 1903, two or three days before I left the War. Office. I have already condemned this system. I have already told the House that I cannot attempt, speaking with a Commission impending, to state who were, in my opinion, responsible for these mistakes, but I am bound to say that this system was known to certain persons in the War Office in September, 1903, and was never made known to my noble friend, or myself, or to my right hon. friend who succeeded me. It is a question for the Commission to settle where the responsibility for that lies.

I will endeavour to make my story as brief as I can with regard to the question of returns. Certain returns were ordered. These returns were not tendered up to September, 1902. think I have reason to complain that this subject is still in doubt before the House. We appointed Sir William Butler's Committee, and what does it say? It says that these returns were noticed in a Departmental Minute. The fact that they were not rendered was known. Why do we not know to whom they were known? Why was not the responsibility fixed by Sir William Butler's Committee? He had all the facts before him; he had the Papers before him; and he had the names before him. Why was not a full disclosure made on a subject which he knew to be vital, and which he said was vital, for the discovery of the whole of these transactions? Why did not he follow it up when he had got the full facts before him? Why were we never told about this? Why was the hon. and learned Gentleman allowed to get up. and state that there was no supervision, in ignorance of the fact that there were audit officers of the War Office and of the Comptroller and Auditor-General? Why were all these facts kept back in this Report? Why were we not told one word of these things?

SIR ROBERT REID

I am most reluctant to interrupt the right hon. Gentleman. I said that the order of July 31st had not been complied with, and I said also tint there were evidently other sources of information before the War Office which I conjectured to be the cash account and the supply account.

MR. BRODRICK

I recognise that, but it does not affect my point. There were returns sent to the Quartermaster-General showing that at one moment there were 200 days supplies, and that at the next moment there were 180 days supplies, but the returns we wanted, and the returns I ordered, were returns showing the persons concerned in the transactions. These were the returns which were not rendered. [An HON. MEMBER: Why not?] These are the returns which were noticed in the War Office Minute. These are the returns which Sir William Butler says, and I believe rightly says, would have gone to stop a process which we all regret. [An HON. MEMBER: Did you know they were not rendered?] I only ask for a full disclosure. I have not been heard. I never was allowed to come before the Committee. But why did not Sir William Butler with these facts before him give us what we wanted—a full disclosure on the one hand, and a judicial finding in the measured language of the bench? Why in place of that have we been treated only to vague suspicions secured by methods of melodrama. I have detailed what occurred in this matter up to the very date at which I left the War Office, and I have shown that in spite of the most complete and rigorous precautions no suggestions of any of these facts were brought to our notice so that we could deal with them.

The hon. and learned Member impeaches my right hon. friend for having neglected the business when he became responsible. I think his statement was prejudiced in a manner to create a most unfair impression. What motive does the hon. and learned Gentleman imagine that my right hon. friend could have in a matter in which he is not really responsible for obscuring these issues and pursuing the course he suggests? Was it to his interest to hush up malpractices of this character? It is not the fact that the laxity which the hon. and learned Gentleman speaks of took place. The chief contract on which these questions have arisen is the Meyer contract. That contract, was received in the War Office in November, 1903. It was referred to South Africa for examination, and the answer came in April, 1904. It was sent to the Auditor-General in April, 1904, and apparently the Auditor-General accepted the local explanations—erroneously as we think—which were given of the manner in which the contract was entered into. Therefore, in this case this contract, which we all feel to have been undesirable, was cleared by the auditor in the War Office and apparently passed by the Comptroller and Auditor-General. The second case was the Stepney refund, which originally escaped the notice of the auditor in the War Office. On June 2nd, 1904, the Exchequer and Audit Department was aware of it. The South African authorities were consulted. They corresponded with those responsible who had come back to this country. My right hon. friend got the facts in full for the first time in his possession on December 17th last year. Sir William Butler's Committee was appointed on January 17th this year.

I do not think that, in appointing Sir William Butler, my right hon. friend showed any desire to appoint a passionate partisan. If there is anyone who has to complain that Sir William Butler's Report has been placed before this House in an incomplete state, and in a hurry, and without all the evidence having been taken, surely it is those of us who have been reflected upon by that Report; the officers whose characters have suffered in every newspaper in the Kingdom, and who may yet be able in many instances to right themselves before a real judicial inquiry. I think it is quite possible that Sir William Butler, in making that Report in the language he did, thought he was only dwelling on the malpractices of certain contractors. I think it is quite possible that it never occurred to him that such a Report, so obviously lacking in all that goes to make a fair starting point for Parliamentary discussion, would have been seized upon by the Opposition, and that it would have been used for the purpose of prejudicing a judicial decision—[OPPOSITION cries of "Oh"]—by a Party attack in which the hon. and learned Member has not been able entirely to keep himself free, as he tried to do, from attacks on the officers in question. What is the use of telling the House that Mr. McGee was a drunkard, or same other person was a man of low character who formed a company to whom the contract was given in South Africa by officers whose conduct would not come under the review of His Majesty's Government for many months afterwards. What is the use of doing that and then saying, "I am making no accusations against these officers; I confine myself entirely to the responsibility of Ministers." But that is what the hon. and learned Gentleman has been forced into by the unfortunate and anomalous position in which he finds himself this afternoon. I say if that part of the argument is good; if we are to blame, we are to blame only on this ground that in every department of life we must trust somebody. If we take the best advice we can; if we take Lord. Kitchener's advice; if we surround officers with a competent staff and a large body of auditors, and have auditors to audit these auditors, and if. ail we have done is to commit our fortunes to men who for two and a-half years had proved themselves efficient in dealing with supplies for an Army of 250,000 men—I put it to this House that we have exercised due supervision and due vigilance. I know it may be said that the Secretary of State is responsible for the action or inaction of all, even the least of those employed in his Department. I do not want to put off from myself one atom of responsibility; but any man who controls an office which is in receipt of 4,000 letters a day, who has hundreds of clerks for auditing millions and tens of millions of pounds in two and a-half years, is bound to have confidence in those who had served him well before under stringent regulations and had proper authority to represent him. Who will stand up in this House and say that you can pin the individual responsibility of the Secretary of State for any two or three failures of judgment, or even in duty, amongst those-subordinates who had been supporting him for two or three years, and had been representing him in all these capacities.

Now, I cannot help feeling some degree of indignation that we have not been allowed a better opportunity than we have had of meeting these accusations before the public had formed, as I think, an entirely false impression of them. I have a special feeling myself on this matter on these grounds. I ventured just now to say that the operations which the Minister for War has to carry out during the progress of a campaign are probably the most ungrateful that can fall to the lot of any man. I came to the War Office in the middle of great trouble, when the war had been going on for more than a year, and when everybody believed that it was coming to an end. The best proof of that was that the whole machinery of war was being checked; and I had to set it going again; and keep it going for another year and a half. I think that we may boast at least that during all that time Lord Kitchener did not complain of our efforts to keep him supplied. But during that time we had endless troubles of this kind to meet. As stated just now, there were auditors for the stores in the Ordnance Department. I found that the demands from Cape Town for ordnance equipment were on an unprecedented scale. I called Lord Kitchener's attention to these demands and sent out Sir Fleetwood Wilson as his financial adviser. Lord Kitchener eventually reduced these demands very largely and instituted an inquiry through Sir Fleetwood Wilson which showed that the buying and selling of these officers had been unwise, and that the loss to the public had amounted to many thousands of pounds. His Majesty's Government were accused of laxity in these matters. That telegram first stopped that sort of thing all over South Africa. These officers were sent home, and the usual course was pursued in regard to them. The good nature of every man who could be brought to bear was brought to bear on me to say after the inquiry that these officers had been proved to be incompetent, no doubt—I could read Lord Roberts' own Minute on the subject—but that they had not been proved to be dishonest, and that they should not be debarred from being employed. The view I took, after consulting my colleagues and adequate legal authority, was that in high positions connected with the Ordnance Department, the country had a right to expect something beyond honesty; that they had a right to expect capacity; and that men should not place themselves in such a position as to bring well-merited criticism and discredit upon the department to which they belong. I believe that is the only single occasion on which on a military question I over-ruled the whole of my military advisers at the War Office. I had behind me the pressure of men of the highest character who urged that these officers should be re-employed in Various commands at home; but I insisted that the senior officer should be put on retired pay, and that the second officer should be told that he would never be promoted in any capacity. I mention these facts because I am indignant that, in every single point of this character that has been brought forward, having taken the unpopular line—you may say the evere line, but which I believe was the just and necessary line—it is assumed, forsooth, when I never had an opportunity of saying a word in my own defence—that I should have carried out the course which the the hon. and learned Gentleman suggests, for laxity and neglect, and want—I think he said—of due regard to the important interests that were committed to me.

What were the circumstances not only of myself, but of my right hon. friend, and of nearly every man in the War Office at that time? I went there in November, 1900, and left in October, 1903. I can honestly say that for the first two years I was at the War Office, when the war was going on, and when we were winding up the war, I never had one day's holiday. I rarely left London more than a few hours at a time. I was constantly on these benches in this House answering questions or defending my Department from two o'clock p. m. until midnight; after having been engaged the whole morning either in Cabinet Council or in Committees. And on more than two or three days of the week I returned to the War Office after midnight and remained; here till the early hours of the mornings I am sure the hon. and learned Gentleman will understand the feeling of a man who has spent every ounce of his power in the service of the office to which he was proud to belong, when le is accused of want of supervision and want of. due regard to the interests committed to him. I remember on these very subjects Lord Kitchener, when he came home, desired to have conferences with me on all the events that had been going on during all the eighteen months which we had been corresponding before he came home. I devoted every lour I could to him before he left England, but he found it so impossible to get uninterrupted conversation with me that on many occasions he asked me to meet him before nine o'clock in the morning, and I did so. I can only say this—that soar from I, or any one of my colleagues, having anything to conceal in regard o these matters, I have made a clean breast of all that had taken place during my time at the War Office to the House his afternoon. I invite inquiry into very single transaction; and I wish for nothing better than that every Minute ever wrote should be placed before Parliament. I say that without doubt or hesitation, but with absolute conviction hat the inquiry-and the more extended to purview the better—will be a vindication not only of the honour, but of the opacity of those who administered this service and of those who served with them; and when the result is known the greater will be the regret of the Party opposite for having embarked on this Party attack. It can only tend, whatever pain it may give to the people affected,; o a revulsion of feeling in favour of the Party who are doing all they can to sub-nit their entire action, not only to the judgment of the House, but of the country.

MR. SAMUEL EVANS (Glamorgan-shire, Mid)

No hon. Member will deny that the right hon. Gentleman has exhibited in every office he has held a versatile industry which ought to be expected from every public servant. It is, however, not merely industry that is required, but also capacity not only as far as individual Ministers are concerned, but also from the Government of the country. The right hon. Gentleman reduced the whole matter to an ad hominem argument which was entirely unworthy of the spirit in which my hon. and learned friend introduced the Motion. To employ a legal phrase, the right hon. Gentleman's speech was one of "confession and avoidance." Why did the right hon. Gentleman for a whole year not obtain the returns he ordered.

MR. BRODRICK

Have I not replied to that? How can I fix responsibility on others?

MR. SAMUEL EVANS

I should be-the last to ask the right hon. Gentleman to make any farther attack on his subordinates than he has already made; bat who was responsible for neglecting to supply the returns? If the right hon. Gentleman were as vigilant as he is industrious, and as capable as he is honest, he would have elicited the information. What is the use of asking for returns if they are not supplied. The right hon. Gentleman, and the Government of which he is a member, have no excuse" whatever for their laxity and want of vigilance. In the extraordinary debate on March 17th and 18th, 1902, the Government and the right hon. Gentleman particularly were warned—the t's were crossed, and the i's were dotted—that what did subsequently happen in South Africa would happen. The right hon. Gentleman has made a most extraordinary attack on Sir William Butler. Sir William Butler was appointed by the Government of which the right hon. Gentleman is a member; and, forsooth, the right hon. Gentleman is the Gentleman who complains of men being attacked behind their backs without any opportunity of replying. What is the complaint against Sir William Butler? First of all, that he did not demand the attendance of the right hon. Gentleman. Why did not the right hon. Gentleman offer his evidence?

MR. BRODRICK

I never heard in my life of a Committee being dictated to. My evidence was at the disposal of the Committee.

MR. SAMUEL EVANS

I did not suggest that the right hon. Gentleman should dictate to the Committee; although the result of his conduct and his action towards Sir William Butler on this occasion is something like dictating to every member of any future Committee that might be appointed. But did the right hon. Gentleman proffer his evidence? Did he know the Government of which he was a member was being attacked; and was he told by Colonel Morgan and other witnesses that observations were being made as to the conduct of the War Office?

MR. BRODRICK

I never had any conversation with any witness or with any member of the Committee while it was sitting. I had not the slightest idea that any subject which concerned my administration was under review.

MR. SAMUEL EVANS

That last statement is astounding. I assume the terms of reference to the Committee were settled by the Cabinet; the general reference was to investigate and report on the terms of contracts and sales and refunds to contractors after the end of the war. The right hon. Gentleman was then at the War Office. Moreover, the Butler Committee were expressly instructed to deal with six specific cases; and we now have the statement of the right hon. Gentleman that there were other cases quite as bad, if not worse. Is it not extraordinary that the right hon. Gentleman should now complain that he was not summoned by his subordinates to attend the Committee, when he must have known they were investigating certain matters at the end of the war for which he himself was responsible? Did not the right hon. Gentleman in the debate on March 17th and 18th, 1902, demand an inquiry as a matter of right. On March 17th the Leader of the Opposition said— Whoever may have suffered it is clear that the contractor has done well out of the war. He has not only done well out of the war, but he is doing well out of the war; and judging by the syndicates and combinations which reach from the River Plate to the meat factories of Queensland, embracing the mining corporation of De Beers, great firms of shipowners who also turn out to be horse-dealers and meat producers, embracing also English—for the most part naturalised English—meat contractors and Johannesburg financiers whose names for good or for evil ring throughout the world—judging by these indications the contractor means to go on making a good thing out of the war. Then the right hon. Gentleman pointed out with foresight and in wise and statesmanlike language that the object of the Opposition was to protect the interests of the taxpayers, and that that could only be done by an inquiry to take place immediately and that delay would be most mischievous. These were some of his words— What we want to do is to protect the taxpayer's interest, which is our prime duty; and that protection can only be given by inquiring now while the matter is red-hot—now, before those who have acted as agents either for the Government who use or the contractor who supplies, have dispersed and passed out of sight. We want to know how the taxpayer has been treated, and how he is going to be treated in the future. … These are cases that if not inquired into now will pass into obscurity, and information will not be reached. The hon. and learned Member for Dumfries in the same debate pointed out exactly the difficulties of the Government if the advice of the Opposition were not accepted. On that occasion the right hon. Gentleman demanded and the First Lord of the Treasury promised definitely that at the end of the war there should be an inquiry. What, then, was the meaning of the delay which occurred during the latter part of 1902, and the whole of 1903 and 1904? And the results which were foretold have taken place. To show that, I. will read to the right hon. Gentleman what General Lyttelton said in a note after the evidence was read over to him. It is on page 429 of this Blue-book. It is not put as a question, but he explained in a note, as I have said, his own position. This is what he writes— It was very unfortunate Colonel Morgan going away, as he had all the strings in his hands. As long as he was with us everything went splendidly. This adverb he alters thus— Well so far as I could see, but he did not stay long. Then this is the note by witness— I should like to say I have no wish to shirk responsibility or to shelter myself behind my subordinates. —a sentiment which I would commend to the right hon. Gentleman But I do not wish to answer for transactions which were not referred to me. I am sorry my recollection is so vague, but the fact is there was an enormous mass of business connected. with sales of stores. Army Service Corps force canteen, and ordnance, involving large sums, and it is difficult to avoid mixing things up. The sales were taking place as far back as 1902, and I had to do business between four different Directors of Supplies. It is unfortunate that I was not examined before when South African affairs were fresh in my memory. I have been engaged in very different work since, and my recollection as to these matters is now not at all clear. Could there be anything which would be a stronger justification for the action which we on this side take, than that note by General Lyttelton, and can we be surprised that in the Committee's Report, as we see it at the bottom of page 20 we read— There can be little doubt that an extensive loss or destruction of documents has occurred, and it is to be noted in the evidence given by the officers and non-commissioned officers who were connected with the Director of Supplies Office in Pretoria, that defective memories are more the rule than the exception, whenever the salient or critical points of any questions are reached. What is the right hon. Gentleman's excuse and the excuse of the Government? He has drawn, as he often does, very skilfully, a red herring across the path. We are not discussing whether sufficient supplies were sent out to Lord Kitchener during the war. The Government have waved that flag long enough, and the right hon. Gentleman has given, himself quite often enough a certificate of good character. What we are asking the House to condemn is the conduct of the authorities at the end of the war in regard to sales, contracts, and refunds. The right hon. Gentleman called for monthly Returns; so far he himself was vigilant, and if it be the fact that he, though vigilant, was not able to obtain this information in regard to the fraud or the capacity of his subordinates, we cannot go further. But what can be the explanation of his not insisting on seeing and examining the Returns which he deemed it necessary to order? Does he say now that he did not know of the system of dual contracts, as he calls it? Does he mean that he and his colleagues in the Cabinet did not have their attention drawn to the fact, until 1904, that this system prevailed. I could show, by going through the evidence, that it was asserted over and over again that the War Office were being made aware of the things now complained of. I think it was in November, 1902, that Colonel Morgan came to this country. He then went to the War Office—he had been there before with regard to the Bergl contract, but he came over a second time in November, 1902, and told the War Office what was going on. He arranged for percentages. I do not know if he said what percentage he had arranged but he unquestionably said that he told the War Office that the system of dual contracts was going on in South Africa. Did the right hon. Gentleman see Colonel Morgan when he attended at the War Office?

MR. BRODRICK

No, I did not; as a matter of fact, at the time Colonel Morgan came back I did not see him, although I was at the War Office. The hon. Member is aware that when an officer has come back from active service, he does not come necessarily to the Secretary of State for War.

MR. SAMUEL EVANS

I should have thought the right hon. Gentleman, knowing what was going on in South Africa, and especially if he had not seen the overdue returns, would have made as point of seeing Colonel Morgan and knowing more of these operations to which Colonel Morgan was a party. The right hon. Gentleman gives various figures, showing what the valuation was with regard to Lord Kitchener, and he gives certain figures as to the actual result. But, again, he goes back from the point to which we are holding the Government. The point to which we are holding the Government is selling those things which they required and buying them back at 60 or 70 per cent, more than the price at which they sold them. The particular case I have in mind is a perfectly simple one. The right hon. Gentleman gave us the figures and said, dealing with the oats contract— After all, you must remember we sold 15,000,000 1bs. of oats and we bought back only 3,000,000 1bs. What does this single transaction represent? It means that the Government sell oats, knowing they require them, at 11s. and they then buy them back at 17s. 11d., or, in other words, that on the 3,000,000 1bs. of oats that they had to buy back, the Government lost £10,500 in one transaction. The right hon. Gentleman could not justify a thing of that kind and did not attempt to. Of course we cannot go into all these details, but it is quite clear from the Blue-book that with regard to the biscuit transaction, on which a refund of £1,761 was made, it was such a large quantity of biscuits that references home were constantly being made. It is in these respects, on these matters, illustrative of War Office confusion and in capacity, that we say that His Majesty's Government has proved so lax that they deserve the censure of this House. These cases disclosed in the Blue-book by reason of the efforts of Sir William Butler and his Committee are only a few in number, and we know now from the Government that there are others quite as bad if not worse. Nobody knows what the country has lost by these transactions.

But the right hon. Gentleman said he demanded an inquiry and would emerge from it scathless. Who has got the inquiry? Have we got it for Party purposes? We are fully justified in what we have done. But the Government have done their best to frustrate proper inquiry, until they were forced by us and the public opinion. In the first place, the Report of Sir William Butler's Committee is dated May 22nd. We hear nothing about it until the House meets, when, as a result of the interrogations that take place across the floor—it might be called a cross examination—we were offered a Select Committee. But a Select Committee could not properly investigate such cases. It could not command the attendance before the Committee of any witness, and no witness could be prosecuted for perjury if he made any misstatements. So the Prime Minister then said, "I will give you a Royal Commission," which would have the like disqualifications. That was on Wednesday. The right hon. Gentleman the Leader of the Opposition asked whether it was to be a Statutory Commission, and the Prime Minister in answer gave a laconic "No." On Thursday he promised a Royal Statutory Commission, and finally, before this debate takes place, at the eleventh hour, he appoints the Commission, in order to strengthen some of his weak-kneed supporters, and says, "I have done this and nobody could ask me to do more. I have given a Commission of the widest kind." But that is our justification. If the Commission is necessary now it was necessary at the end of the war, and we demanded some such inquiry in the year 1902. We demanded it in 1903, and you ascertained in 1903– 4 facts whereby alone, if you were doing your duty, you ought to have offered to the country the Commission which now has been wrested from you. The very fact that a Statutory Commission has been granted is the most solid argument in favour of the indictment against the Government, and if the House were left to vote according to its convictions I feel sure that a large majority would say that you have now done what you ought to have done long ago, and that therefore a vote of censure for want of vigilance and for want of attention to duty in the past is fully merited.

MR. GIBSON BOWLES

I do not think this is a debate into which acrimony or personal considerations should be largely introduced, as we are in the preliminary stage of an inquiry which the Government has not only accepted but invited, and which the speech of the right hon. Gentleman the Secretary of State for India shows to be of vastly greater extent and of more importance than anybody has yet supposed. I have some sympathy with the right hon. Gentleman's remarks condemnatory of the Butler Report. The literary style of that Report does not commend itself to me, and some of its statements are such as I do not think are entirely warranted by the evidence. But there is a great residuum to warrant inquiry in South Africa, and to that residuum the right hon. Gentleman has added in a most remarkable way.

First of all, let me say that this House, the Butler Committee, and the Public Accounts Committee, have been at a great disadvantage in consequence not only of the disappearance and destruction of documents alleged to have taken place in South Africa, but also of the non-production of documents which certainly do exist. There is, for instance, that most important document, namely, General Lyttelton's report on these very sales from October, 1902, to December, 1903, which has never been presented, as far as I know, either to the Butler Committee or to any other body. I intend to quote from that document, and I am able to do so for the reason that I am not subject to the rule by which a Minister, if he quotes from a document, is compelled to lay it on the Table. There are other documents also to which the right hon. Gentleman has referred, and which in consequence he will have to lay on the Table. Those telegrams are of the utmost consequence, and I venture to say that they will be a revelation both to those who believe there is foundation for everything in the Butler Report and to those who strongly believe the contrary. Those telegrams show us that in August, 1902, the very question of what was to be done with the surplus stores was raised here, and the right hon. Gentleman obtained from General Lyttelton a promise that the surplus stores would continue to be utilised for the troops. That is a most remarkable thing. We know that that promise was not carried out. We know that instead of being utilised for the troops they were sold and re bought to a very considerable extent. I hope the first thing the right hon. Gentleman does will be to lay upon the Table of the House his own telegrams and all other documents cognate to this matter. I think the House will see that they very much enlarge the importance of the investigation.

Then the right hon. Gentleman has introduced entirely new matter—not, indeed new to me, but new to the House—the matter of the canteen. He has told the House that there were avoidable losses of between £250,000 and £300,000, that he, with the single-mindedness which we recognise as always belonging to him, wished to bring the officers to account, but that he was overruled by Lord Roberts. So I understood him.

MR. BRODRICK

Lord Roberts put the matter to the Judge-Advocate-General for legal advice, and he said that the position was not one in which it would be feasible to bring the officers to Court-martial. Lord Roberts did everything he could.

MR. GIBSON BOWLES

Whether it was the Judge-Advocate-General or the Commander-in-Chief, Lord Roberts or anybody else, whoever was responsible, such is the feeling of the right hon. Gentleman himself with regard to this transaction that he has thought it necessary—rightly as I think—to detail the matter to the House for the avowed purpose of bringing it within the purview of the inquiry. I say that that also very much enlarges the field of operations. He has not told us the names of the persons concerned, and I shall not make any guesses at them, though I think I could make a very good one. But the most serious imputation that I have yet heard is that made by the right hon. Gentleman himself in connection with the canteen system. He suggests that those who were responsible for the canteen system and the losses thereon had such authority and power in South Africa that they were positively able to interfere with the work of the auditors whom he himself had sent out.

MR. BRODRICK

dissented.

MR. GIBSON BOWLES

The right hon. Gentleman is in the recollection of the House. I certainly understood him to suggest that that was one of the reasons why the auditors failed in their task.

MR. BRODRICK

I was merely attempting to answer a Question which might be asked, namely, why did not the auditors make a report earlier than they did on certain points, and I said that it must be remembered that they were dealing with this heavy mass of figures and could not report to us earlier.

MR. GIBSON BOWLES

I am glad to have elicited that explanation, because I had entirely misunderstood my right hon. friend. Then the right hon. Gentleman was most eloquent and indignant on the subject of the returns. "Why," he said, "did not the Butler Committee tell us the reason the returns of these stores were not obtained?" I do not know, and my right hon. friend did not give any hint on the point. I am sorry he did not; this, again, enlarges the scope of the enquiry. Finally, he seemed to complain most unreasonably of the premature publication of the Butler Report, and if I did not misunderstand him he rather attributed that premature publication to the Public Accounts Committee. Tae Public Accounts Committee had nothing whatever to do with the publication of the Report. By virtue of the authority given to them by this House to send for persons, papers, and records, the Public Accounts Committee called for the Report for their own purposes, and obtained it on May 26th. For their own purposes they used it and no hint of that Report reached the Press from any member of the Public Accounts Committee until the Report itself was published. As I have said, the area of the inquiry has been greatly enlarged by the speech of the right hon. Gentleman, and that the investigation will be final and complete no Member of this House can doubt. I need not tell the story again; one has only to recall the essential features. Oats were bought at 11s. by Meyer, and here is a point which requires comment. By telegram on December 26th, 1902, an order was sent to every station in South Africa to sell to Mr. Meyer every oat in the country at 11s. But the right hon. Gentleman says he sold his oats at 25s.

SEVERAL HON. MEMBERS

35s.

MR. GIBSON BOWLES

Thirty-five shillings a quarter; I am talking of the 100 1bs. On December 27th the fiat went forth that all the oats in South Africa were to be sold to Meyer at 11s. The oats were not moved; they were bought back by us at 18s. When one remembers that this was accepted by the general, if we are to believe the evidence of the witnesses; that this same Meyer got a refund of £21,232 on the mere authority of a subaltern officer; that chaff costing £3,215 was sold for £481, and that although it was at Durban, where it could easily have been thrown into the sea, an extra charge per 100 1bs. was imposed upon it to get it to Pretoria for Meyer, I wonder where negligence merges into incapacity, and where incapacity reaches a point at which the country may refuse to pay for it. This system of selling your own oats at 11s. and buying them back at 18s. is called the "dual system." It was not invented by Lord Kitchener. It is too great an invention to be allowed to be credited to any other than its rightful author. Colonel Morgan was the inventor; he claims it and resents the suggestion that it was Lord Kitchener's invention. It was adopted by Lord Kitchener, and the remarkable thing is that in recommending it to the War Office Lord Kitchener said— This system will be worked by Colonel Morgan and others, and I recommend that they should have largely increased salaries because of the sales they are going to make and the large sums involved. So that the original inventor of the "dual system" in recommending it was really recommending himself for an increase of salary. I do not know how Lord Kitchener came so readily to accept this scheme. He is considered to have developed the commercial side of war to its highest point, but certainly his venture here makes me ask whether, although no doubt he is a great captain, he is quite so great a commercial man as has been supposed. This proposal, made by Lord Kitchener on June 18th, 1902, was within a few days accepted by the War Office. All they said was "How do you propose to act as to preference for home and colonial produce? "The right hon. Gentleman cheers that, but I should not have thought it was the most important question. I rather suspected that it was put with some touch of humour. But the right hon. Gentleman got no answer, and the system went on. It is very simple. You want to get rid of your stores; sell them on the spot. You want to buy other stores: buy them on the spot. The idea seemed to be that you would somehow manage when you sold your stores to get a higher price for the British and colonial than for the foreign. But how you would induce Meyer to pay a higher price is one of the mysteries which can be solved only in Birmingham.

When did the War Office first be come aware of the abuses which arose and were certain to arise from the dual system? If we are to believe Colonel Morgan, they knew it in December. 1902. I think there is evidence to show that they knew enough to cause them to make inquiries in April, 1903; and certainly in December, 1903, there began that series of queries by that trouble some person, the Comptroller and Auditor-General, which has continued to this day. Query after query has been put and not really answered. There are at this moment seventeen queries of the Comptroller and Auditor-General, all touching matters of the highest importance, which remain really unanswered. Then what has been the total loss to the country in respect of the mismanagement of these stores? The right hon. Gentleman began a demonstration of what the total less was, but he did not proceed to the end. As far as I followed his arguments, he is of opinion that on oats there would be again, because he bought at 20s. and sold at 35s. Evidently that was not to Meyer. Let me try to ascertain what the total loss was. First of all, there is the testimony of Colonel Morgan in which he says— Lord Kitchener asked me to make an estimate of what I thought the surplus things would fetch. These "surplus things" are the only things with which we have to deal. The present Secretary of State for War has. referred to many other "surplus things" and makes them come to £8,000,000, but we have nothing to do with-those. Colonel Morgan continued— Lord Kitchener says in his telegram 'As the money involved will reach £6,000,000 or £7,000,000' That is a smaller sum, and Colonel Morgan explains it by saying that a great deal was sold by him before he left the country—the transports, the blockhouses, and the barbed wire were all sold to Lord Milner before Lord, Kitchener left the country. It is clear, therefore, that the £1,500,000 realised by the sales to Lord Milner must be deducted from the original £8,000,000 and this would leave the £6,000,000 or £7,000,000 mentioned by Lord Kitchener. On Thursday last, I think, the present Secretary of State for War said that from April, 1902, to September, 1904, the sales amounted to £8,000,000. But those sales are not of the "surplus things" about which we are talking; they include the sales of captured stock which began months before the dual system was instituted. The right hon. Gentleman says that he cannot separate these things; I think I can assist him. The Comptroller and Auditor-General, quoting from a report of the General Officer Commanding, says that the sales were conducted mainly by private treaty, as there was practically no response by merchants to the advertisement, and he further states— It will be found from this statement that the gross amount realised by the sale of surplus supplies from October, 1902 to December, 1903— those are the critical fourteen months in which these things occurred— was £560,898. That would really lead to the inference, which I do not say I adopt—that the loss to the country is about £6,000,000. I do not put that forward as absolutely correct, but there is some corroboration of it. The right hon. Baronet the Member for the Forest of Dean said the other day that he had understood the right hon. Gentleman the Member for Croydon, when Chancellor of the Exchequer in 1902–03, to say—as I also understood—that he expected to get from these stores £6,000,000 in relief of his forthcoming Budget. One of the special documents that ought to be produced before this Commission is any correspondence that took place between the War Office and the Treasury on that subject. I ask, did the War Office in any way lead the Chancellor of the Exchequer in the autumn of 1903 to believe that he would get £6,000,000 out of these stores in alleviation of the charges he would have to put upon the country in his next Budget; and did he find at last that, instead of £6,000,000, he got nothing at all? If the right hon. Gentleman answers that Question it will give us some notion as to how far I am correct in my inference that the loss by the ill financial arrangements connected with these stores —to put it no more strongly than that—was something approaching £6,000,000. I admit that there has also to be deducted, the value of the stores used.

THE POSTMASTER-GENERAL (Lord STANLEY, Lancashire, Weithoughton)

And the £1,500,000.

MR. GIBSON BOWLES

I have already deducted that. But, after all, the amount is interesting only to those who are interested merely by the magnitude of the business. I should take the same interest in it if the amount were only £5 instead of £5,000,000. It is the honour of the officers and the credit of the Ministry that is involved, and therefore the amount is of relatively small importance. I regretted from the first that the Butler Committee was limited to these six cases and to South Africa. In my opinion there are far worse cases than these six; I am inclined to think there are nearer sixty than six, and I am not at all sure that the worst cases took place in South Africa. However, there was that limitation. But the Butler Committee discovered neither the dual system, nor the six cases, nor the rest of the abuser They were discovered by an officer of this House, the Comptroller and Auditor-General. For the last three years the Comptroller and Auditor-General has been reporting, and the Public Accounts Committee, which without him could not do its work, has been investigating case after case, and sending to the War Office query after query. It is unnecessary to go through them. There was the question of the meat contract, when unvouched purchases were made by officers in the field to so enormous an extent that when, in April, 1902, I asked the witness what the amount of unvouched purchases was, he said he could not say exactly, and when I asked whether he could say within a million or two he said, "No, I cannot." There are matters of that sort that require inquiry into.

I should like to put before the House the functions of the Comptroller and Auditor-General and their bearing on the Commission just appointed, upon the Butler Committee, and every other method that may be suggested for inquiring into these abuses. The Comptroller and Auditor-General. is not an officer of His Majesty the King, or of His Majesty's Government, or of any Department of State. He is an officer of this House, and his salary is charged on the Consolidated Fund in order to make him independent of Monarch and Minister alike. By the Exchequer and Audit Act of 1866, there is placed upon him the statutory duty of doing these four things. The first is to see that the expenditure is supported by the vouchers; second, to see that it is applied to the purposes intend d by Parliament; third, to see whether the money received by the Departments other thin from Parliamentary grants has been applied as directed by Parliament; and fourth, to see whether any sum charged is for any reason not properly charged against the grant. These are the statutory functions of the Comptroller and Auditor-General. In the exercise of his functions the public officials come before him and the Committee, and are cross-examined. They do, no doubt, readily give information to the Committee which this House cannot get without them. The Comptroller and Auditor-General has to decide in the final result whether he will report that such and such an item will be allowed or disallowed. He reported this year for the disallowance of some relatively small items, and I have no doubt they will be disallowed. He may equally report to disallow £6,000,000 or any smaller sum as is involved in these matters if we come to find it out. From that point of view it seems to me that the Butler Committee has been doing over again the work that has been done by the Comptroller and Auditor-General and the Public Accounts Committee. The duty is put on the Comptroller and Auditor-General by statute, and our duty is committed to us by the House of Commons itself. Therefore, that has always been, in my mind, one objection to the Butler Committee. The same objection applies to the appointment of the Royal Commission, though I recognise its propriety.

A remark has been made on the delays of the War Office. It knew of these things in April, 1903, or, as some may think, in November, 1902. Certainly it knew by-September, 1903. There has undoubtedly-been great delay in the examination of the charges. It was only in January this year that the War Office finally made up its mind to take definite and effectual action. It made up its mind at a most unfortunate moment, I think at the very moment when the Comptroller and Auditor-General was making his Report, which, by the way, contains almost all the facts of the Butler Committee Report. The Report of the Comptroller aid Auditor-General is dated January 31st, and at the moment when the Public Accounts Committee was about to enter on its duties in the ordinary course the Butler Committee was appointed. What is the result? That the Public Accounts Committee instead of being assisted, is stopped in its work. The Butler Committee interposed between it and all those questions, and the result is that we have been obliged, to postpone all the paragraphs in the Comptroller's Report referring to these matters, to go on to other matters, and to await the Report of the Butler Committee. I think that is very unfortunate.

Who is to blame? There is one person who has been animadverted upon strongly, and that is the contractor. The contractor exists for the purpose of making good bargains. The officials of the War Office, if they know their duty, exist for the purpose of preventing him making too good bargains. The contractors who have been named in the Report are not all who have been concerned. There are many other contractors who have done right good work for the War Office. It is said that soldiers are incapable of business. That is not true. I refer you to Khartoum, where you can see how soldiers run a province, conduct schemes of irrigation, manage the navigation of rivers, and run a railway in a way that might give lessons to the London and North-Western Railway. I think that no man can say that soldiers, as soldiers are incapable of conducting business. What has been baneful to soldiers, and contractors alike is the influence of the War Office, that ancient monument of red tape which is building a new palace so near us. It has exercised its nefarious influence upon the greatest of men, and on no less a man than Lord Lansdowne, who has been censured for his conduct in reference to the War Office. My right hon. friend the Secretary of State for India, whose tenacity of purpose and ability for work we all know, even when he does not state it himself—even he has come under criticism. And as to the present Secretary of State for War, he has not escaped. Perhaps now he would not escape a final whipping. It is that malign upas-tree influence that has spoiled the soldier. A soldier is good, a statesman is good, and a contractor is good, but whenever anyone comes under the influence of the War Office he seems to lose his nature and become perverted and demoralised, and that is why the soldier, that is why the Army Service Corps, that is why the contractor, and the whole of the staff in South Africa, seem to. me to know a great deal more than the Butler Committee has told you.

My desire is to show the House that it is not the Butler Committee that has brought these things to light and made it necessary for them to be examined. It is the system established by the House, it is the officer appointed by the House that has ferreted out things and taken the initiative. My opinion is that the steps taken by the Government have not facilitated inquiry so far. I find myself surprised to learn that the area of inquiry will be so much extended as has been suggested by the Secretary of State for India. With regard to the appointment of the Commission, I think it is a matter that must give satisfaction to both sides of the House. There are some who say "Do not wash your dirty linen in public." Those are people who want the dirty linen to remain unwashed. Our system is, when we find the linen is dirty, to give it a good wash. I think it will be found increasingly certain that the financial securities set up by the House have not been insufficient, and that those to whom financial duties have been committed by the House have done their duty a8 they will in the future do their duty.

THE SECRETARY OP STATE FOR WAR (Mr. ARNOLD FORSTER,) Belfast, W.

I am relieved of much of my task by the speech of my right hon. friend who has stated his case with such admirable clearness and lucidity; but it is natural that I should desire to supplement what ha has said. The House also-will desire that I should do so and give an account of my part in these transactions. I may repeat one thing my right hon. friend said on which I share his view. Nothing could be more congenial to me than to have an opportunity of saying what I have to say on this matter. I readily admit that during the course of the afternoon practically nothing has been said about any special responsibility of my own; but something has been said, and an answer is due from myself. I have been told in this House and outside it that I have concealed, or have had a desire to conceal, the transactions which are now the subject of consideration. I am astonished that any such suggestion should be made. I have no reason and I have no motive whatever for desiring to conceal from the House any facts within my knowledge. I am not primarily responsible for these transactions. They took place at a time when I was not cognisant of what was going on in the War Office; and it is a matter of fact that, whether right or wrong, for good or for evil, I have been the person responsible for the discoveries, or the alleged discoveries, which the House is now discussing and to which hon. Members attach so much importance.

I was first informed by the Financial Department of the War Office that there was ground for investigation of special cases on January 7th of this year. On the same day I decided that a Committee should be appointed. On January 14th I approved the names of the Committee. On May 22nd I received the Report of the Committee. On the same date, at the request of the Chairman of the Public Accounts Committee, I forwarded that Report to him, and as soon as the evidence was received it was also forwarded to the Public Accounts Committee and the Members of this House. I came to these questions as matter of past history. In October, 1903, these contracts were things of the past and were only represented by the paper records of what had taken place. The two cases I had practically to deal with are the cases known as the Meyer case and the Stepney case. I am not for a moment going into the details of either of these cases. I am not competent to do so; and if I were I should not attempt to do so, because there is a tribunal appointed for the special purposes of investigating the details and putting the blame on those on whom blame should rest. I take these two cases because they are the key to the situation as far as I am concerned. The House will want to know, in the first place, whether reasonable intelligence had been exercised in ascertaining what had taken place, for that that which had taken place did require investigation nobody will deny. They will further require to be satisfied that equal diligence was shown in examining what had taken place, and that reasonable promptitude had been shown in following it up. I can show, from the history of these two cases, that I can reply to all these Questions in the affirmative.

In the first case—the Meyer refund—I will not dwell on details which are probably fresh in the minds of most hon. Members—but I will give the main outline of the case. The contracts were made in November, 1902, for the supply of forage to begin on 1st January, 1903. The prices were to be 17s. 11½d. per 100 1bs. of oats and 17s. 8½d. per 100 1bs. of hay and oat-hay. I mention these figures because these are the figures which ultimately caused inquiry to be made. Subsequently tenders of purchase for the supply of forage were invited on 4th December, and Meyer made a tender for the purchase of certain supplies, and the prices that he offered were said to be the highest, viz., 11s. per 100 1bs. for oats, and 10s. per 100 1bs. for hay and oat-hay. These two contracts, when placed in juxtaposition, as everybody sees very plainly, were calculated to excite remark and to require explanation. As a matter of fact they did excite remark and they did receive examination. The contracts were followed on 13th April by a refund of £21,000 in respect of a portion of the articles sold to Meyer. Let us see what the action of the War Office was. These transactions took place in 1903 in South Africa, and in November they became subject to examination in the War Office. It must be remembered that the whole of these documents from South Africa were belated. I should explain why the ordinary procedure in regard to the examination of contracts of sale did not proceed pari passu with the transaction of the business itself during the time of war as in the time of peace. I believe that a system may be devised—I am bold enough to say that it has been devised—whereby the system continued in time of peace will now be continued in time of war; but it did not exist at that time. All these documents came in in enormous numbers for the review of the War Office. The whole of the arrangements of the War Office were then-subject to considerable change, amounting almost to a revolution; but at the end of 1903 these documents were examined in the War Office; and this transaction was queried by the War Office, and the Paymaster in South Africa was desired to explain. On 26th March these documents went out to South Africa and were examined there. The Paymaster replied in a letter received on 18th April, in which it was said that the officer in charge of the forage supplies at Pretoria stated that, in accordance with instructions, the whole of the forage was sold to Meyer, provided that the same was in sound condition. In March. 1903, the debit voucher amounted to £127,000, but on taking delivery of the forage a large quantity was found, so it was said, to be deteriorated, and a refund of £21,232 was then made. The Auditor-General made a similar query, apparently with the same result. On the 5th of the following month a copy of the Paymaster's letter was sent to the Auditor-General, who made no comment on it at that time, and the explanation of the officer in South Africa was accepted. There was no knowledge at that time of the system on which these transactions had taken place. We merely had the vouchers of the officers; but the Auditor-General did take further notice in October of the same year. He asked what was the condition under which forage was offered for sale. Long before that period the War Office had been led by a totally different road to a similar inquiry. The Audit Department did not make a second query until 20th October, but long before that period the War Office were making investigations. The War Office sent to South Africa for the contracts and in January, two months after, the reply came. We then sent a telegram asking for all the documents. We now come to the point: did the War Office know all the facts? They knew that the contracts were under the dual system, of which up to the end of 1903 they were not aware. These contracts had, however, been made for sound goods and they knew that a refund had been made. I do not intend to pronounce whether any or all of these transactions were right or wrong. But taken by themselves any one of them might still be legitimate, though they were so questionable when put together—side by side—that it was evident that an inquiry should be instituted.

Meanwhile, another transaction, which, to my mind, was much more important, had been brought to the notice of the War Office. That was the transaction of the Stepney refund—a much smaller amount, but in some respects a case more calculated to rouse suspicion. At the beginning of the year 1903 Mr. Stepney contracted to supply oats and other forage at 17s. 10d., and this was accepted. In June, 1903, when the time came for delivery, Stepney had not got the oats. We undertook to supply him from our own stores and at first charged him the full amount for the oats. Probably that, on our own showing, was wrong. We subsequently paid him a refund of the difference between the lower price which he charged and the amount actually paid us.

MR. LOUGH (Islington, N.)

What rate did he claim?

MR. ARNOLD-FORSTER

He claimed at surplus stock rates, 30s. This refund was actually made. The account of these transactions which took place in South Africa was in the first place passed at the War Office under what is known as a system of back examination. In consequence of the examination of the back account a letter was sent to the General Officer Commanding with a very plain indictment of the transaction in which it was stated that it was not clear to the Army Council why the forage to the troops was not issued without the intervention of Mr. Stepney, and that in the absence of explanation the transaction was likely to convey the impression that the Army made the contractor a present of £1,270. That was the point raised by the War Office and the statement sent out demanding explanation from the authorities of South Africa. The letter was dated June 23rd, 1904. As a matter of fact, the reply did not reach this country until October 31st. It was a long interval, I admit, but it does not represent neglect. The authorities in South Africa found it necessary to refer the matter to the officer principally concerned for his observations. The whole transaction had taken place in South Africa, and it was necessary that the authorities on the spot should make the communication. They replied the moment they received the explanation. When received on October 31st the reply appeared to strongly condemn the transaction, and the Quartermaster-General took action immediately. Inquiries were made from Colonel Hipwell and others, and Major Walton was consulted. So far as he could the Director of Supplies satisfied himself, and, the Financial Department having reported that an investigation was needed, a Departmental Committee of inquiry was ordered, and light was thrown on previous transactions on which explanations had been received. The Finance Department had the matter brought before them, and as soon as they found anything in the documents referring to past contracts they proceeded with the inquiry I have-described and gave information to me.

SIR ROBERT REID

Is it the case that the right hon. Gentleman was informed in September or October, 1903, that the Army Service Corps were selling at one price and buying back at another price from the same person?

MR. ARNOLD-FORSTER

Personally, no, I was not. It is stated in the evidence, I think, that the double sales were brought to the notice of the War Office in October.

SIR ROBERT REID

There was a telegram of October 1st, 1903, in which the War Office stated to General Lyttelton this was the case, giving four classes of goods. Was this withheld from the Secretary of State by the officials of the War Office? When did the right hon. Gentleman first learn that this was going on, that sales were being made to and repurchases from the same person at an enhanced price?

MR. ARNOLD-FORSTER

The transactions were reported as being advantageous to the public service, and it is conceivable that they might be so; it is only the method upon which the practice was conducted that was made the subject of complaint. It is mentioned by all the witnesses as being regarded as the best method of dealing with the congestion of stores, having regard to the liability of stores to deterioration.

MR. A. K. LOYD (Berkshire, Abingdon)

When goods were supplied to a contractor to enable him to fulfil his contract to supply the troops, was that to enable him to supply troops in that district or to convey the stores to another part of the country?

MR. ARNOLD-FORSTER

In one instance I believe it was for supply in the same locality. There is no doubt the practice was explained as desirable, and the statement was accepted.

SIR ROBERT REID

By whom?

MR. ARNOLD-FORSTER

By the Financial Department of the War Office; but as soon as the documents were found to exist and were examined suspicions were aroused as to the wisdom of this practice and the accuracy of the reports, and it was the investigation which followed the examination of the documents which led the War Office to condemn the practice.

MR. CHURCHILL (Oldham)

The right hon. Gentleman stated that the War Office were informed in November, 1903, of this dual system Why was the knowledge kept from the Secretary of State, and by whom was it kept from him?

MR. ARNOLD-FORSTER

I was quoting the evidence given by Colonel Clutton and Colonel Hadfield.

MR. LOUGH (Islington, W.)

When was the right hon. Gentleman made aware of this duel system?

MR. ARNOLD-FORSTER

I did not know anything about the transactions until attention was called to them. The War Office found that the transactions were not satisfactory when the refunds excited suspicion.

MR. CHURCHILL

When?

MR. ARNOLD-FORSTER

I became aware of the transactions on December 7th. I knew that the accounts required investigation, the Public Accounts Committee having drawn attention to the matter. It was because the Public Accounts Committee and the War Office Committee themselves had drawn attention to them that the investigations Lave been taking place during the whole time I have been at the War Office. It was when the result was pointed out to me that I took this action.

MR. JOSEPH WALTON (Yorkshire, W. R. Barnsley)

You telegraphed to South Africa.

MR. ARNOLD-FORSTER

I have been speaking hitherto of one side only of what took place during the eighteen months, but there is another side not unimportant—the work done in connection with a war of this kind. I believe that the more we inquire into matters the more we shall find that waste has been due in a large measure to the enormous pressure upon individuals of work to which they were unaccustomed, and to the system under which they worked which would not allow them to perform these duties satisfactorily. The hon. Member has spoken of the War Office as a upas tree, but, however that may be, the War Office has been engaged during the past year in making arrangements they will not be called upon to make in the future. We have transferred the contract work to the locality. It is evident that in South Africa officers of small authority did make contracts which their experience did not qualify them to make, and these did not come up for review by the War Office until months or years after the transactions We have changed that. We have made arrangements by which the whole staff makes the contract as part of their organisation, and when the Army goes to the front they will continue to perform the work they perform in time of peace.

I have been asked whether the time taken in investigation was not a long one. Well, Sir William Butler's Committee took three months to investigate a portion of the transactions, but the Commission will have before it all the information we have been able to amass during those three months, and it is estimated that the Commission may occupy eighteen months in completing its inquiry. I have endeavoured to show that once put upon inquiry we have not neglected it, and the time occupied was necessary owing to our having to communicate at every stage with South Africa, and to obtain reports that could only be obtained from South Africa. As hon. Members know, the Committee reported on June 14th, and I cannot accept any blame for remissness in presenting the Report. It may have been an error to place at the head of the Committee an officer who has not prepared a Report of such a judicial character as some of us might have hoped for, but our desire being to make the inquiry thorough and complete, I appointed officers to the best of my judgment, and I gave every facility to the Committee for obtaining information they might desire, and I cannot help thinking that with their opportunities the Committee might have assisted us more materially than they have. But I know the House is not interested in the form of the document so much as in the substance of the Report. I may be asked why the Report was published at all. I appointed the Committee primarily for my own information, I placed a soldier at its head, and I added a civilian, and anticipated that I should have useful information in reference to these complicated transactions.

MR. JOHN MORLEY (Montrose Burghs)

In the course of the evidence it was stated that Mr. Edwards, who was on the Committee, had himself been sent from the War Office to South Africa. Was that a mistaken impression?

MR. ARNOLD-FORSTER

Mr. Edwards did go to South Africa, but not in connection with any of these matters. Most of the financial officers of the War Office have been to South Africa at one time or another. Unless the right hon. Gentleman means to assume that Mr. Edwards was incompetent to sit on this Committee, I do not appreciate the relevancy of his remark.

MR. JOHN MORLEY

I do not wish to imply that. I. referred to it rather as strengthening the Report.

MR. ARNOLD-FORSTER

I placed on the Committee those gentlemen in the office whom I thought were best able to ascertain what I desired to know.

As to the publication of the Report, it arose by reason of the circumstance that the Public Accounts Committee called before them the officer at the War Office who had been in charge of our finance department. It became known, and naturally became known, to the Public Accounts Committee that this inquiry was taking place, and the Public Accounts Committee, in pursuance of their undoubted right, called for the production of this Report. When they called for the production of the Report I had not the option and had no desire to withhold it. As the right hon. Gentleman the Member for Wolverhampton pointed out,-when once the Report was presented to the Public Accounts Committee it was necessary to present it to the House of Commons, and its presentation was imperatively called for. I should greatly have preferred that this Report should not have been presented until the whole of the labours of the Committee had been accomplished. That would have been in every respect the better plan, and I regret that circumstances over which I had no control prevented my following it.

MR. GIBSON BOWLES

The right hon. Gentleman says that presentation to the Public Accounts Committee necessarily involves presentation to this House. That is not so. The Public Accounts Committee has many documents which are treated as confidential until the end of its labours, when, and when alone, in its Report they are presented with the evidence given before the Committee.

MR. ARNOLD-FORSTER

I will not attempt to decide between the view of the might hon. Gentleman the Member for Wolverhampton and the view of the hon. Member for Ring's Lynn. The Report having been presented to the Public Accounts Committee, it would be known to the House almost as soon as it was known to the Committee. It had actually been quoted from, and I go further and say that I think any Member of this House has the right to inspect the documents of the Public Accounts Committee. I have been censured for appending to that Report the statement that, as far as charges against individuals are concerned, the matters dealt with in the Report must be regarded as sub judice. I do not go back on that statement. I thought it was imperative, in view of the character of the Report, and in view of the position in which it left those persons who were arraigned directly or indirectly by that Report, that I should make some statement of that character. I think I could have done no less than warn those not cognisant, as I was cognisant, of what had taken place, of the error which they would make if they proceeded from the imperfect evidence contained in that Report to draw conclusions unfavourable to the characters of soldiers and others who were concerned in that Report. I will go further. I will say that it was necessary in the interests of a larger body than those specifically named in that Report. I desire once more to call attention to the following paragraph in the Roport, with which I am in cordial agreement— The impression may have arisen that the whole Army Service. Corps in South Africa was concerned in these transactions. There is no evidence in support of this idea. On the contrary, there is proof that the decisions by which these transactions were authorised were given in opposition to the opinion of the officers of the Army Service Corps, who at outside stations had to deal locally with these questions. That was one of the many and sufficient reasons which led me to append a note to the Report, stating that in my opinion the case was still sub judice.

What the issue will be no one can say. But I can assure the House that I share the view which has been expressed by the Secretary of State for India, who has already dealt so minutely and with great ability with this case. We desire nothing better than to place all the facts before any tribunal that may be selected by this House. When that tribunal has adjudicated, whether we shall hold precisely the same opinions that some hon. Members seem to have formed in anticipation of that inquiry I am not quite sure. I am deeply indebted to my right hon. friend, who has borne so much of the burden that I ought to have borne, and has borne it so much better than I could have done. Neither he nor I have ever desired to keep back from the public any information that they are justly entitled to. He has expressed his belief, and I reiterate it, that the further this inquiry goes the more thoroughly will be established the integrity of the Army and the honesty and capacity of the vast proportion of those who serve in its ranks. It is because I believe that, and for no other reason, that I wish this inquiry to take place in precisely the form in which it has now been decided that it shall take place. I have absolute confidence that we shall receive a judgment at any rate that will be satisfactory to us all, because it will be a true statement on the matter.

MR. ROBSON (South Shields)

, whose opening sentences were inaudible owing to the movement of Members on the floor of the House, said: The light hon. Gentleman has told us that Sir William Butler's Report is not what he expected, and that it is not what he wanted; he says the Committee was appointed to assist him; and he adds that he is not responsible for the publication of its Report; so that he has done his best to deprive himself of the personal credit of the appointment of the Committee and of the publication of its Report. But there is one circumstance upon which he has left us in some obscurity. I think the House is mainly concerned in learning from him when as head of the Department he first knew of the matters now in question. We know that the Department were informed of them by the letter dated March, 1903, appended to the Report.

MR. ARNOLD-FORSTER

The letter was not received at the War Office until the Report was published.

MR. ROBSON

It seems a very curious thing—I make no comment on it—that this colonel should write an official letter in relation to a matter so important, and one coming within the scope of War Office duty and functions, and that the War Office should have heard of it only by the publication of this Report two years afterwards. However, the right hon. Gentleman came into office in October, 1903. In November, 1903, according to the telegrams to which we have listened this afternoon, fresh information was expressly given to the War Office, but, so far as we can understand the fight hon. Gentleman's speech, he does not get information of the matter until December 7th, 1904. That is a very long interval, and we were anxious to hear how the right hon. Gentleman explained it. I am not attacking the right hon. Gentleman, but surely the head of a great Department ought not to remain in ignorance of a matter so important as this without some minor officials being held responsible. It certainly shows a somewhat remarkable laxity of administration.

Passing to the remarkable and vigorous defence of the ex-Secretary of State for War, I would ask the House to consider what it all amounts to. What has the right hon. Gentleman admitted, what has he omitted, and what has he answered? He has admitted—indeed, he could not deny—the dual system of salts and repurchases—a very euphemistic way of describing what seems to have been the most insane proceeding known in the history of any Administration. He has also admitted that the system is a bad one; and he has admitted, too, what is of great importance in relation to the question of Ministerial responsibility, that he knew nothing whatever about it. An important charge against the Government was that the South African authorities had been permitted to cease sending their monthly returns of the sales of stores, and upon that the right hon. Gentleman has given no explanation or defence whatever. Then what has he omitted? He has omitted all reference to the specific cases dealt with in the Report of the Committee. And what has he denied? He has made a remarkable denial, which I hope the House will not pass over without grave examination. He has denied the statement that these stores were offered to the Repatriation Department and refused by them. That is a most important denial to which I will return presently. One of the most important parts of the indictment of my hon. and learned friend was that in which he pointed out that the Government had been warned, I will not say of the probability of these scandals, but of the existence of a state of things in South Africa and of a condition of affairs in the Supply Department from which reasonable men might well infer that some mischief such as that which has arisen might be expected to rise. The matter was raised by the Leader of the Opposition himself in March, 1902, and the Government ought to have made the most careful inquiry. If it had been a business house instead of a Government Department what would have happened? On the disclosures of the right hon. Gentleman the Leader of the Opposition, any business house, without waiting for Select Committees or Royal Commissions, would, by the ordinary methods of business investigation, have informed itself by its agents in South Africa how far the facts disclosed reflected on the competence and capacity of Colonel Morgan and the Supply Department. Instead of adopting any such measures the Prime Minister gave one of those dialectical replies in which he delights. He said— How can you expect us to lay the heavy burden of an inquiry of this kind upon the Department in the middle of a war? I agree that we could not have had a long litigious inquiry in the middle of the war, but that by no means exhausted the alternatives. There was still open what I have described as a business investigation. Or there was another course which ought not to have escaped the attention of the Government. Even if they preferred to pass a sponge over the past, they ought at least to have taken warning for the future. They should have done their best to ensure that in future contracts of any magnitude Colonel Morgan and the Supply Department were not left to their unchecked and unsupervised devices. That is the most vital part of the negligence of the Ministry That they did not take such steps adds to their responsibility to-day. There is, or used to be, a legal principle that every dog was allowed his bite, but after he had had his one bite his owner was held responsible in damages for subsequent bites. The Parliamentary debate in 1902 showed that Colone Morgan had had his "bite," and if the Government insisted in maintaining him in office they did it at their own risk. The charge against the Government cannot be too explicitly stated. They were indifferent to the interests of the British taxpayer. That charge, I think, I can make good, and indeed amplify. They were not merely indifferent to the interests of the British taxpayer, but when the interests of the British taxpayer came into conflict with the interests and desires of local speculators in South Africa the interests of the British taxpayer had to give way.

Now that brings me to the question of repatriation—one which I think the Secretary of State for India soarcely appreciates. My hon. and learned friend stated that the Repatriation Committee refused to take one the stores. The Secretary of State for India asked where is the evidence of that? In the very lengthy Blue-book that has been issued it is one of the most important points in Colonel Morgan's evidence. Colonel Morgan stated in explicit terms that he was present at an interview in Lord Milner's house when it was decided that the Repatriation Committee should refuse to take over the stores. Does this House really appreciate what that means? If it is true, and I see no reason to doubt its truth, it is a worse thing than the Meyer scandals and the dual system of sale and re-purchase. In the supreme duty of repatriating the victims of the war, the British taxpayer had the advantage of these immense quantities of stores, which were just of the kind that were wanted, and just in the places most convenient for distribution. But the taxpayer was not allowed to use this advantage. What was the excuse? It was that "it would not be fair to the local merchants." I hope the inquiry will discover who these merchants were, and what were the prices they obtained for their stocks. Though their names are not given, it is possible to entertain a shrewd suspicion of the sort of names they will be. Meanwhile these very merchants were "in a state of war" with us, according to Colonel Morgan's evidence, for they were "making a corner" against the Government. These were the gentlemen for whom the taxpayer was mulcted. I say that the worst part of this scandal is the repatriation part. I should like to know who it is who deserves reprimand in that matter. The Colonial Secretary at that time was the right hon. Gentleman the Member for West Birmingham. If ever the quality of a business man was wanted it was here. I hops that those who take further part in the debate will fasten attention on the monstrous and scandalous fact as revealed by the Report of the Committee, that we had stores in South Africa, and that we were not allowed to use them in order that we might put unearned profits into the pockets of local speculators.

SIR CARNE RASCH (Essex, Chelmsford)

I was the individual who was responsible to some extent for inducing the Government to appoint the Contract Committee in 1900, which had to investigate the question of rotten hay and the bad stores supplied at that time. We found that everything was for the best in the best of all possible Departments, that the hay went bad, that nobody was to blame at all, and that nobody was to be hanged for it. Well, I suppose that this Commission will probably come to a different conclusion. I have never been an enthusiastic admirer of the War Office since I have been in this House. I have never been able quite to understand what they were about, and I have never been surprised at anything they have done. But I am to some extent surprised at the Report of the Committee of Sir William Butler. There are two or three things which I find it quite impossible to understand. One is that the general officer in command should have full powers placed in his hands and should know nothing of what was going on in this particular matter.

And, it being half-past Seven of the clock, the debate stocd adjourned till this Evening's Sitting.