The History SectionLa Section d'l'Histouaithe
The Imperial Contribution & The Association Of Jerseymen:
A short synopsis of the talk delivered by Gavin Booth as part of the History Section's Winter Lecture Series - November 11th 1998
The First World War had been enormously expensive, both in lives and money. The British Goverment had a war debt in 10 figures. In 1923, Prime Minister Baldwin, noting that the Channel Islands had given nearly quarter of a million pounds to the war effort, and also the presence of tax exiles, ordered his Home Secretary, Bridgeman to do something about it.
On January 31st 1923, Bridgeman wrote to the States of both Bailiwicks:
I have the honour; by the desire of His Majesty's Government, to invite you as representing the Island of Jersey, to consider whether the Island should, in view of the present circumstances of the country, make an annual contribution to the Imperial Exchequer. Hitherto (apart from the war contribution made by the island during the war) the United Kingdom has born the burden of the Imperial Services from which the inhabitants of Jersey derive the same benefits as the inhabitants of the United Kingdom: but as a result of the war, the burden had become so onerous that His Majesty's Government felt compelled to ask the inhabitants of Jersey to share it, and to make an annual contribution towards Imperial Expenditure in proportion to the benefits derived from it. I am convinced that the facts are well appreciated in Jersey. The Government can rely on loyal support of the inhabitants of the Island.
Also enclosed was a treasury statement claiming that Jersey could, by a simple tax, produce for the British Government a return of £325,000 per anum.
The reaction of the States was incredulous laughter. At the time, Jersey was running on indirect taxation totalling £230,000 a year. The majority of States members had no objections to giving Whitehall a one off payment, but a regular contribution was out of the question.
Within a few days letters were appearing in the press demanding no taxation without representation.
A Home Office leak to the Daily Herald provided the real story;
The people who went into exile in the Channel Islands to escape British taxation look like being caught after all-and there is quite a little army of them.
By February 6th, letters were appearing in the national press from notables such as Sir Bertram Falle and Athelstan Riley who asked if this behaviour was the correct way to treat loyal subjects of the Crown.
A protest meeting summoned by The Jersey Labour Party attracted over 400 disgruntled citizens. The meeting agreed to form a committee to oppose the taxation plan. A similar meeting in Guernsey attracted nearly 2,500.
On Feb. 15th the States of Jersey decided to form a joint committee with the States of Guernsey to come to some arrangement. When the Committee returned to the House, it was to suggest that a one off payment of approximately £250,000 be made. This went down badly with some members and in November 1923 the request was rejected out of hand.
There then followed a short lull. Baldwin's Government had lost the general election, and Ramsey McDonald's Labour Party were not interest in running around after such a small amount. However,1925 saw Baldwin return to power and sure enough, another request soon followed.
It was noticed with some disgust by the Islands, that Baldwin thought nothing of writing off the £800,000,000 debt owed by Australia and the £1052,000,000 owed by America in war payments.
Baldwin appointed a committee of the Privy Council to visit and assess how much the Islands could pay. The committee consisted of;- The Duke of Devonshire; Major-General J.E.B. Seely; Sir Henry Craik; William Graham and The Duke Of Atholl.
In October of 1925 the Privy Council visited the Islands to examine the financial situation. Their conclusion was startling. The report suggested that Jersey paid £120,000 a year in tax for one hundred years - Guernsey £75,000. It was also implied that a solution could be forced on the island if they did not approve. The suggestion of a one off lump sum was rejected.
As might be expected, that went down like a lead balloon with Islanders. It was bitterly pointed out that Whitehall had just spent £250,000 on a gym for Civil Servants in Ruislip.
The subsequent States meetings were bad tempered affairs. The result of their deliberations was to offer a lump sum payment of £325,000 as a final offer.
Eventually, Whitehall gave in and accepted the payment. At which point, Chancellor Winston Churchill announced that a special conference was needed to deal with the tax avoidance issue. The conference was held in London in July 1927. After several days of discussion a framework was agreed.
Taxation would be introduced against those who had moved to the Channel Islands after November 11th 1918. Tax to levied on those earning more than £2,000 p. a. and those whose death duties exceeded £30,000. The Island representatives to pass on details of those who fell under that umbrella. The legal departments of the United Kingdom would have a right to inspect to books and constitution of any company registered in the Channel Islands. These laws were designed to be applicable anywhere under British jurisdiction.
The States members who went saw nothing wrong with this idea. However a group of bold figures, led by G.F.B. De Gruchy, thought otherwise and founded the Association of Jerseymen. Their points were:
1. The essential feature of this report is the distinction between the native born Jerseyman and the settler; which must be wrong.
2.An agreement to make this distinction, would break our constitutional rights laid down in Royal Charter.
3. The tax dodgers would go elsewhere, thus the Island would lose it's rights and England would gain nothing.
A series of public meetings were held during November and December 1927.They were well attended (between approximently 200-250) and determined. A petition was raised and presented to the States. The States members ignored it but it didn't matter anyway.
Two things conspired to wreck the plans. The Association had many contacts with members of Government for the Dominion Territories and managed to persuade these people that the Churchill plan might one day be applied to them. It is perhaps no coincidence that these countries then proceeded to demand their own Privy Councillors. And of course, with the rapid rise and equally rapid fall of the world economy, the Government's eye became fixed on the simple act of survival.
Mr. De Gruchy kept the Association running until his death in 1940, keeping a wary eye on the activities of the UK Government.