TOPICS OF THE DAY.
THE REPORT OF THE WAR STORES COMMISSION.
Royal Commission on War Stores in South Africa,
who issued their Report on Thursday evening, were appointed last June to investigate certain allegations made in the Report of the Butler Committee. They had large statutory powers, and their inquiry has been most full and searching. Not only did they examine an immense number of witnesses, and peruse all the documentary evidence in the possession of the War Office, but they sent a Special Commission to South Africa to prosecute
inquiries on the spot. We may assume that so elaborate an inquiry by so able a body of men as Lord Justice Farwell and his colleagues has come as near the truth as is possible at this distance of time in a case of such infinite complexity. Sir William Butler, in our opinion, may consider himself a very fortunate man. With not a tithe of the evidence before him which the Commission have had at their disposal, he indulged in certain wide charges and condemnations. Except for the suggestion of fraud, for which there is little evidence, the Commission with their ample materials find the facts very much as he found them after a cursory survey. Yet while in a sense the Report justifies Sir William Butler's findings, its studied modera- tion and rigorous accuracy is the most serious reproof which could be given to his ill-timed rhetoric. If after an ex- haustive inquiry its authors find it necessary to state their conclusions with scrupulous care, as befits a matter of great national concern, there is the less to be said for the man who on ill-digested evidence was prepared to fling about hints of fraud and conspiracy with the freedom of a sensational novelist. The Commission's Report is, in our opinion, one of the ablest State papers which have been issued for many a day. It is admirably arranged, as clear as it is possible to make an intricate question, and the style throughout has a restraint and dignity, not unmixed with a certain grave irony, which are the qualities that the subject demands.
It is important that the public should have the pre- liminary facts clear in their mind. At the Declaration of Peace on June 1st, 1902, the Army authorities were left with an immense quantity of stores, and had to face the problems of selling everything beyond what was necessary to support the Army during the transitional period, and of preparing for future supplies to the permanent force. Colonel Morgan, an Army Service Corps officer, was Lord Kitchener's Director of Supplies, and was appointed head of the new Sales Department. There was also a Financial Adviser attached to the Staff, whose business inter alia was to advise on all contracts made locally. This arrangement was reasonable enough, since under it the Director of Supplies was subject to an effective control, while the General Officer Commanding was able to rely on his Financial Adviser to supervise details. But on Lord Kitchener's departure the muddle began. Lord Kitchener imagined that the Financial Adviser was staying on to review local contracts ; General Lyttelton, the new General Officer Commanding, thought he had been left behind merely to close outstanding accounts ; while the War Office seems to have omitted to consider the matter at all. The Financial Adviser, having no proper instruc- tions from home, wound up the finances of the war and left the country ; and at the same time, to add to the confusion, Colonel Morgan was recalled on the ground that he held a post to which his seniority did not entitle him, and replaced by Colonel Hipwell in November, 1902. There were thus removed from South Africa, by a blunder which must be mainly credited to the War Office, the two officials who were necessary to conduct the Supply Department properly,—a financial adviser to control, and an experienced and able director to administer. This was the first mistake, and the direct cause of what followed.
In February, 1903, two War Office officials, Messrs. Flynn and Edwards, were sent out to audit the ordnance stores. They saw nothing wrong with the Sales and Supply Departments, and on his return home one of them took up a very arbitrary attitude in regard to queries on the subject which were being addressed to his Department by the Comptroller and Auditor-General. The blindness of these gentlemen was unfortunate, for things had begun to go very far wrong, and it is difficult to see how they could have missed noticing it. For the famous "dual system" had begun, which was the cause of all the scandals. This system was bound to follow from the institution of local contracts, which Lord Kitchener, on Colonel Morgan's advice, had recommended, though only as an experiment, and which General Lyttelton, mis- construing apparently his predecessor's policy, recom- mended as a permanent arrangement. The strange thing is that neither the General on the spot nor the War Office saw what was bound to happen,—that we should soon be buying back our own surplus stores from the contractors who had purchased them. The chaotic state of the War Office, where Departments dealing with the same subject were without any machinery of communication, prevented the result being perceived at home ; the preoccupa- tion of General Lyttelton with other matters kept the Army authorities in South Africa in the same state of ignorance; while as for the Officers directly concerned, they never seem to have realised that anything was wrong. And yet it does not require great intelligence to see that local contracts must beget the "dual system," and that the "dual system" is the last word in extravagance. A class of contractors had to be created where none existed, and since the tenderers were making a leap in the dark, their prices were sure to be high. Further, we condemned our- selves to the loss of the only market in South Africa for the sale of our own surpluses. Again, the direct issue by contractors to the troops, which was part of the system, gave them every chance of tampering with the Quarter- master-Sergeants. The system cannot be defended on the ground of its necessity, for in Natal during the same period it was largely dispensed with.
We have no space to analyse at length the scandals which sprung from this system of selling our surplus to a contractor and buying it back as need arose at a greatly enhanced price. Their tale is not the least amazing of the romances of the war. Mushroom contractors appear from nowhere, without capital, without characters, and are given contracts involving large sums of money. The general method was simple. The contractor got long credit from the Army for the supplies he bought, and received imme- diate payment for the supplies he sold, so that a man without capital was able to make a beginning, and in a month or two attain wealth. The supply officers had their favourite contractors, to whom they clung, in spite of their amazing incompetence and greed, with a loyalty which would be touching if it had not been so costly. A few instances may be culled from the Commission's narrative. The firm of Meyer is the most interesting because it involves the reputation of Colonel Morgan, who secured for his brother a post in it while he was still Director of Supplies. The understanding was that he should not enter Meyer's employment till Colonel Morgan had resigned office ; but it is plain that he began to work for Meyer some time before. Colonel Morgan asserts that he was entirely unaware of his brother's conduct, and the Commission remark with justice that this is improbable, and that Colonel Morgan has only himself to blame if his behaviour has given rise to grave suspicion. Meyer continued to flourish under Colonel Morgan's successors, buying, for example, oats from the Army at lls. per 100 lbs. and reselling them back at 17s.
No payment or security was required from him on delivery ; he did not even pay by way of set-off against goods supplied to him. The Army stored and carried his goods for him, and gave him rebates for money which he had not expended. One other instance we may note which is almost inconceivable. A firm called Wilson and Worthington bought from the Supply Department hay at a net price of 9d. per 100 lbs. This hay was resold to the Repatriation Department, which the Commission describes as rather a fastidious purchaser, at the rate of 10s. per 100 lbs. It is difficult to overstate the incompetence of the Army Service Corps officers concerned with the work. They showed a complete ignorance of the most elementary rules of law, so that their contracts offered endless loop- holes to the swindler. Their fidelity to favoured con- tractors may in general be attributed to indolence, for it saved trouble to keep on dealing with the same men. There are a few instances of pardonable misconstruction of documents, but, as a rule, the mistakes were elementary and easily preventable. The Commission conclude their discussion of liability with these words :—" We consider that Colonel Hipwell, Captain Limond, and Major Walton have not properly appreciated that it was their duty to protect the public and to act as trustees of the money which they
were clic/musing No private firm could avoid bankruptcy if it allowed its agents to deal with business matters in the mode in which these three officers have dealt with the purchase and. sale of supplies."
On one pomt we are reassured, and we believe that the British people will hail the finding with a genuine sense of relief. There has been little or no fraud on the part of the Army, no "favoured contractors" in the sense in which Sir W. Butler used the word, no combination of Rand financiers in the background, which the same vigorous imagination espied. Idleness and stupidity can be urged against the supply officers in Pretoria, but not corruption. Three clerks in the Supplies Office took bribes, two com- missioned officers, and a certain number of Army Service Corps non-commissioned officers. Many of the contractors used fraudulent methods, and encouraged the creation of bogus surpluses by short drawings and false returns. In the midst of such an atmosphere of chicanery, the wonder is not that one or two soldiers succumbed to temptation, but that more did not fall. Remember, these were poor men dealing with people who had large sums of money to spend on commissions, apparently with small chance of detection. It says much for the British Army that the charge-sheet is so clean on this score. Incompetence and apathy are bad enough in all conscience, but corruption is infinitely worse ; and on one point at least we may regard the Report with comfort.
There was an avoidable loss to the nation during the twenty-two months after peace of something between three-quarters of a million and one and a half millions. It remains to allocate the responsibility for this grave state of affairs. To begin with, much blame must lie at the door of the War Office,—partly because its muddled organisation hindered it from exercising any true super- vision, and the obtuseness of certain officials kept them from realising the meaning of facts when they were actually reported. The Commission also find the gravest fault with its accounting system, which, in their opinion, renders the financial control of the House of Commons a farce. The direct cause, however, was the peculiar in- competence of certain highly placed Army Service Corps officers. There is much to be urged in excuse for these officers : they were tired men with an exhausting war behind them, and they had to take over and administer a policy not their own, a policy which they never understood, and which in any case was bound to lead to loss. But when all has been said, there remains a grave charge of stupidity and carelessness against the officers of the Army Service Corps and the Pay Department. Ae to the root of all the evil, the system of local contracts which involved the dual system, it is difficult to fix the blame. Lord Kitchener suggested it as an experiment, and the War Office agreed. General Lyttelton accepted it as a bequest which he was not supposed to tamper with—an error of judgment no doubt, but one excusable in the circumstances—and again the War Office acquiesced. The misfortune is that no high authority saw the ruinous way the system was beginning to work in time to stop it. The War Office returns, as we have seen, were framed apparently with a desire to raise no awkward questions, so that little could have been expected from them. The General Officer Com- manding in South Africa was immersed in other work, and was naturally in the hands of his supply officers. We think that the Commission have shown great good sense in their view of General Lyttelton's position. They look not to technical but to actual responsibility, and find that General Lyttelton, with no financial adviser and with a large and intricate task of his own on hand, was necessarily dependent on the technical knowledge of the Supply Department. Many of the worst cases were never brought before him, and on many points which he approved the mischief lay, not in the principle approved, but in the mode of work- ing it. Undoubtedly, it was the duty of the General Officer Commanding to exercise a general supervision over the supply system, for the neglect of which duty the Commission consider that "General Lyttelton cannot entirely escape responsibility." At the same time, it is difficult to press this responsibility very far when we remember that the blunders sprang directly from a system which had been sanctioned by the highest authority, who, ex hypothesi, had the expert knowledge which could not be expected from a busy general officer. In our opinion, the real blame must be shared between the supply officers in Pretoria and those officials of the War Office who might have been expected to realise from their special financial experience what was involved in the system of local contracts. It remains to add that the British Army, apart from the Army Service Corps, is in no way involved in the scandal. Indeed, the only protests against the system came from hard-worked officers at local stations, who viewed with amazement the profits which thAkPretoria Supplies Office was putting into the pockets of c3ntractors. To this fact the Commission have borne ample testimony. The Commission were prevented by their terms of reference from making any recommendations for reform. The subject is so complex that we have no desire to dogmatise at this stage, but two changes seem urgent and indisputable. One is a departmental reform at the War Office, which shall make such confusion impossible for the future. The second is a complete overhauling of the Army Service Corps and the Pay Department. The duties of these two corps are difficult and responsible, requiring technical qualifications of no mean order. But although they possess many able officers, for some reason they have also become the refuge for the flotsam and jetsam of the Army, and the man who is considered too stupid to command a blockhouse is con- sidered able to face intricate questions of pay and supply. This practice, if continued, will land us in similar scandals in the next great war. In the Militia, in the Volunteers, and in the Yeomanry there are many men who have had a business training, and if Mr. Haldane applies to this question his principle of separating military services of a civilian nature from ordinary military duties, he may solve the difficulty. We must realise, in the words of the Report, that "the Army Service Corps is, in fact, a commercial undertaking, and its officers should be taught to recognise that it must be conducted on business principles, and. should be trained to act on them also."
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