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the regiments at Home at an establishment which will enable them to find drafts for those abroad. The details of the Cavalry organization are, however, not yet fully settled.

GENERAL STAFF.

An Army Order was issued in September last, creating a General Staff for the Army, thus completing the reform begun, under my predecessor, by the creation of a Department of the Chief of the General Staff in the War Office itself.

MEDITERRANEAN COMMANDS.

For many years the Commanders-in-Chief at Malta and Gibraltar have also been charged with the responsibilites of the civil government of those Colonies; and it has been necessary to provide a complete staff, general, administrative and personal, on a liberal scale at each station. At the same time these two commands, as well as the third Mediterranean command of Egypt, have been entirely independent of one another, without any provision for co-ordination except through the War Office itself. In view of the progress made with decentralization from the War Office, it has been decided to appoint a purely military Commander-in-Chief, with no civil duties, for the Mediterranean as a whole, to be stationed at Malta. No increase in cost of any kind will result from the new arrangements.

SERVICE AND PROFICIENCY PAY.

An alteration of some importance has been effected in the rules under which the soldier draws his pay. Under the scheme of general three years' enlistments it was necessary to hold out a substantial inducement to the soldier to extend his service with the Colours to eight years, in order to supply drafts to India and other garrisons abroad; and this inducement took the form of “service pay” at rates varying from 4d. to 7d. per day, payable to men of two years' service and upwards who so extended. This service pay however, which was costing the country over a million a year, failed to induce men to extend in the requisite numbers and for some time grave difficulty was experienced in supplying India with drafts. The general three years' term of enlistment having consequently been abandoned, and the main principle of the system of service pay, viz., payment for length of service, having therewith disappeared, it became necessary to reconsider the general question of the soldier's emoluments.

It appeared, in the course of enquiry, that the giving of extra pay merely for extension of service, without any qualifying standard of military efficiency, threatened to militate seriously against the efficiency of the Army. Men no longer found it worth their while to qualify as signallers or other specialists or even, in some cases, to take up the duties and responsibilities of noncommissioned officers. On the advice of the Army Council, and in accordance with the recommendations of a predominantly military committee, an important change has been made. Subject to the vested rights of individuals in the Service at the time the change took effect, extra pay will no longer be given for mere length of Colour service; but men of over 2 years' service will be eligible for Proficiency Pay, at rates of 3d. or 6d. a-day, each rate being given only for the attainment and maintenance of a defined standard of skill in musketry, signalling or some other branch of military proficiency, together with a 3rd Class Certificate of general education. This proficiency pay will not be given in specialised corps such as the Royal Engineers and Army Service Corps, the men of which already draw, in addition to their regimental pay, varying rates of “corps’ or other special pay according to their skill in their own special duties. Various minor restrictions formerly adhering to the grant both of service pay and of the messing allowance of 3d. a-day, have at the same time been withdrawn.

The general result of these changes, as individuals with vested rights pass out of the Army, will be in course of time to produce a substantial saving on the Pay Vote. As money becomes available from this source, it is intended to give the soldier, from the date of enlistment, the Messing Allowance of 3d. a-day additional to his pay, which he at present receives only after 6 months' service.

MEDICAL SERVICES.

The principles of sanitation are being steadily inculcated in the Army by means of a School of Army Sanitation at Aldershot for combatant officers and men, and for non-commissioned officers and men of the Royal Army Medical Corps, by the compulsory examination of all officers in hygiene, the distribution of literature, and the delivery of lectures by officers of the Royal Army Medical Corps. By these means, and by the institution of sections of specially trained men to look to the sanitary affairs of units in the field, it is confidently hoped to reduce the proportion of sick in future campaigns.

AUXILIARY FORCES.

A careful survey has been made of the condition of the Auxiliary Forces. Investigation has shown that it is beyond question that the existing organization of these forces is such as to make it impossible to use them with full advantage to the nation.

Proposals for the reorganization of the Auxiliary Forces, by which it is hoped to adapt them to our military requirements, will be laid before Parliament in due course. It will, however, be impossible to put these proposals into effect during 1907–08; and accordingly no provision for them appears in these Estimates. A Supplementary Estimate will be presented for the year 1906-07 to provide the sum necessary to enable the War Office to take over from the Public Works Loan Board the mortgages secured on Volunteer drill halls and other property of the corps, which are held by that body. The charge will be met out of savings on the Army Votes of 1906-07; and the effect on the Estimates of 1907-08 will be to reduce them by the amount (about 28,000l.) repaid in the usual course as interest and sinking fund for these loans. In the event of the new scheme receiving the sanction of Parliament, and of the War Office taking over the existing secured debts of Volunteer corps, the operation will in this way be greatly facilitated.

MILITIA.

The numbers of the Militia fell from 98,812 on 1st January, 1906, to 97,632 on 1st January, 1907. This is partly due to the recruiting and re-engagement for the Militia Submarine Miners having been stopped in view of the transfer of their duties to the Navy.

The experiment referred to in my Memorandum for 1906-07, by which the recruits of 20 selected battalions drill for 6 months on enlistment instead of 63 days, has attracted recruits to these battalions in large numbers, and during the coming summer the selected battalions will undergo a lengthened training of 6 weeks instead of 27 days. The results of this interesting experiment, which necessitates an increase in the Militia Vote, will continue to be carefully watched.

VoluNTEERs.

The strength of the Volunteers on 1st January, 1907, was 248,416, as compared with 241,708 on 1st January, 1906, an increase of 6,708. 5,343 less attended camp, but on the other hand there was an increase in the number of efficients of 10,693.

The special Field Army Brigades have ceased to exist; but in their place forty-four brigades of Infantry Volunteers have been established, with permanent Brigadiers and Brigade-Majors. The whole of the Volunteer Infantry are thus under their own Brigadiers for all purposes throughout the year.

SHORT RIFLE.

The output of short rifles has been satisfactory, and more than suffices to re-arm the whole of the Regular Forces, including reservists. The Cavalry have all been re-armed, also the Infantry at home, and certain other units. Issues to Infantry abroad are being made as rapidly as possible, and will shortly be completed.

The programme for 1907-08 is sufficient to provide reserve arms for the whole of the Regular troops.

A modified long rifle, suitable for charger loading, has been approved for the Volunteers, and the conversion of existing long rifles will begin in 1907-08.

RE-ARMAMENT OF HORSE AND FIELD ARTILLERY.

The progress contemplated in the original programme has been more than realized. The supplies demanded by India have been completed and issued; the re-armament of the batteries in the Field Army and in South Africa is completed. Of the training batteries, some are completely equipped, and the remainder are being provided with sufficient guns for training and will, it is anticipated, be completed before the coming practice season.

Good progress has been made towards the selection of an improved pattern of Field howitzer; and provision is made in these Estimates for the commencement of manufacture, so that the re-armament of the howitzer batteries may be actively proceeded with in 1908–09.

SUPPLY OF OFFICERS.
SANDHURST.

It is recognized as desirable that cadets should remain at Sandhurst for two years before joining their regiments; but the present accommodation there is so limited that in order to supply the numbers of officers now required by the British and Indian Armies it has been found necessary to reduce the course to one year. As a makeshift, an extra class of Sandhurst cadets is at present, accommodated at the Royal Military Academy, Woolwich, where rooms are temporarily available; but the enlargement of Sandhurst is a pressing necessity, and funds for the purpose have been set aside out of the limited sum remaining available under the Military Works Loan.

RESERVE OF OFFICERs.

Large number of officers of all arms are required on the outbreak of war, in addition to those employed with the Regular Army in peace. As matters stand at present, these cannot be found from the Militia and Volunteers, those forces being themselves seriously short of officers. The question of supplying these requirements is one of considerable difficulty and has been engaging the attention of the Army Council for some time past. A Committee including representatives of the Universities and Public Schools is now sitting at the War Office, and it is confidently hoped that, as a result of its deliberations, practical steps may shortly be taken to begin the formation of this most necessary reserve. A sum of 50,000l. has been provided in Vote 1 for expenditure on this service in 1907-08.

ADMINISTRATIVE TRAINING OF OFFICERs.

A new course of training for Army officers has been inaugurated at the London School of Economics. It is specially designed to train officers in business and commercial methods, in order to fit them for administrative posts. The subjects to be taught include Accounting, Commercial Law, Carriage by land and sea, Economic Theory, Economic Geography, and Statistical Method, all of which will be treated from the point of view of Army requirements.

R. B. HALDANE. 18th February, 1907.

- SUPPLEMENTARY ESTIMATE, 1906-7.

1.—ESTIMATE of the further Amount that will be required during the Year ending 31st March 1907, to meet ExPENDITURE not provided for in the Original ARMY Estimat Es of the Year under Vote 5, CAPITATION GRANTs and MiscellANEOUs CHARGEs of VolunTEER CORPS, including PAY, &c. of the Permanent Staff, also Loans for Drill Halls and Ranges; and under Vote 12, MISCELLANEous EFFECTIVE SERVICES.

One Hundred Pounds.

II.—WOTES and SUB-HEADS of the ARMY ESTIMATEs under which this
Vote will be accounted for by the War Office. -

f f VoTE 5.—VolunTEER Corps: PAY, ALLow ANCEs, &c. EE.—Loans to Volunteer Corps for Drill Halls and Ranges - - - - 439,000 Vote 12.-MISCELLANEOUs EFFECTIVE SERVICEs. C.–Contribution in respect of damages caused by the explosion at Woolwich - - 20,000 Total - 459,000 Less Surpluses on other Votes, viz.:Vote 1.-Pay, &c. of the Army - - - - - - 250,000 Vote 6.-Quartering, Transport and Remounts - - - - 43,000 Vote 7.—Supplies and Clothing - - - - - - 165,900 — 458,900 ToTAL NET SUPPLEMENTARY ESTIMATE - - - 100 f The net total Original Estimate for Army Services, 1906–7, was - 29,796,000 Add sum now required - - - - - 100 Total - - 29,796,100

EXPLANATION.

This estimate is submitted to appropriate the surpluses above shown to meet the sums payable (a) to the Public Works Loan Board by the War Department on taking over from the Board certain mortgages on Volunteer Drill Halls and Ranges; and (b) for damage done by the recent explosion at Woolwich.

The mortgages to be taken over are those relating to loans which have been advanced in full. Loans not fully advanced and future loans will be dealt with as heretofore by the Public Works Loan Board. The liability of the Corps to repay the principal and interest of these loans is in no way affected, but the sums repaid will be appropriated in aid of the Volunteer Vote (Vote 5).

The sum to be paid in respect of damages in Woolwich will be handed over to the Mayor's Committee for distribution.

The surpluses appropriated to meet these charges arise mainly from reductions effected in the strength of the Army in men and horses, &c.

R. B. HALDANE. N. G. Lyttelton, C.G.S. W. G. Nicholson, Q.M.G. PortsMOUTH. C. W. Douglas, A.G. C. F. HADDEN, M.G.O. T. R. BUCHANAN. E. W. D. WARD, Secretary. War Office,

21st February 1907.

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