Papers of the Interdepartmental Conference on Middle Eastern Affairs [‎51r] (101/290)

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Colonel Wilson said that the administration was still technically
a military one, under the War Office, and there was no reason why
the railway deficit should not be met out of Army funds.
Mr. Kidston said that the only point which concerned us from
the Foreign Office point of view was the necessity of preserving
the military facade of the administration. The Peace Conference
were sending out a Commission to Mesopotamia, and it appeared to
him dangerous to take up a definite policy entailing lengthy
commitments until the Commission had come to a finding on the
future of the country. *
Colonel Wilson said that at present the military facade was
being maintained, though from one point of view it could be said
that it was politically undesirable for the railways to continue to be
run on a purely military basis ; there was a good deal of local dis
content because of the impossibility of obtaining the amount of
transport necessary for civilian and commercial requirements.
Mr. Waterfield said the general position should be that until
matters were straightened out, the expenditure should be confined
to current expenses and capital expenditure ought to be avoided. It
must be understood that if the Treasury were to be considered liable
for the deficit, then the Treasury must be in control. They could
not accept responsibility for new schemes which had never been
referred to them. Though he had not been able to get any very full
instructions on these proposals, he could say that the Chancellor of
the Exchequer had definitely declined to assume responsibilitv for
any schemes which had not been submitted to him in the ordinary
course.
Sir T. Holderness said he had been under the impression that
Mesopotamia was paying its way ; the deficit of one and a half
millions which was expected for 1919-20 was a surprise to him.
Could this be charged temporarily to Army funds ?
Colonel Wilson said he fully accepted the principle laid down
by Mr. Waterfield that if the Treasury were to be responsible for
payment, control should also be vested in them. The deficit to
which the Chairman had alluded would probably be paid out
of Army funds. Up to now receipts had more than balanced
expenditure, and this was the first deficit we had had in Mesopotamia ;
one reason for it was that the moment demobilisation on a large
scale had begun, Arab levies had had to be raised and the cost of
these met from local revenues. As troops were withdrawn from
outlying stations, civil control had to be strengthened, and as the
military control was relaxed in various directions, civil control had
to be increased, for circumstances were not yet normal, and our
hold on the country was not so strong as to justify any considerable
relaxation of control at present. The net economy was enormous,
but the result was a local deficit. The Budget, which had been
delayed by the illness of his financial adviser, ought to be by now
in print, and on its way home.
On the port there was a deficit of 2 jO,OOOL ; more than that
could be levied as port dues.
Similarly, the customs could be increased to 15 per cent., and
he had in active preparation a scheme for income tax which could
be applied as soon as sanctioned, but in the absence of any ruling
as to the status of the country, he had not done so.
Last October he had asked the Government of India for an
Auditor-General to be sent out, with full authority from the
Treasury, to act at the same time as Auditor-General and
Accountant-General, his accounts to be submitted direct to the
Treasury. That proposal had been neither approved nor dis
approved ; he could only urge that action should be taken thereon
now ; he had everything ready to take over the financial administra