From Chaos To The Dawn of System


by Brigadier L G Hinchliffe MBE (Published in the RAPC Corps Journal Spring 1977)

At the turn of the nineteenth century the Army Pay Department was only just of age, while the Army Pay Corps was a mere seven-year-old. Nonetheless, no part of the administrative machine, itself imperfect in many ways, had a background so bound up with both the fighting soldiers of the Army and the financial development of the nation.

The Officers of the Department sprang not only from the specially commissioned paymasters of the cavalry and infantry but also from the Treasury officials who had in the time of Wellington paid the accounts of the Commissariat, and later, when that institution had been taken over by the War Office, had been constituted the paymasters of the short lived Control Department. In like fashion the soldiers of the Army Pay Corps had as forebears the paymaster sergeants of the regiments, and the staff clerks who had served under the accountants of both the Commissariat and the Control Department. These worthy men had, over many years, carried, under their officers, considerable responsibility and received little thanks for their efforts.

Hard things had been said about both the Commissariat and the Control Department, and, indeed the methods and organisation, which were the responsibility of Whitehall, had frequently been indifferent and, at the time of the Crimea, plainly wretched. However, though the records of individual performance are thin in the extreme, they indicate that the Accountants of the Commissariat laboured conscientiously, frequently under the most adverse conditions. At the time of the Peninsular War a German named Schumann worked in Portugal for the Commissariat. He records how he saw the Commissary himself huddled with his 24 clerks in a windowless broken down hovel writing hard by candlelight.

This brief description speaks for itself. The highest standards of loyalty and integrity were demanded of both the Pay Department and Pay Corps. They were also expected to take in their stride the voluminous regulations and precedents which the piecemeal methods of Whitehall produced. Representation in the War Office having been refused by the Hayter Committee, the Pay Department was not called upon to participate either in the drafting of regulations or, prior to the enquiries following the South African War, the development of system. Increasingly these functions were being taken over by bureaucrats.

In the broader financial sphere Commanders were expected, without training and often without experience, to exercise financial control on the ground, while the leading strings were held in London by the Treasury and the War Office. By this means paymasters were liable to find themselves stultified, while commanders, unaided, did the best they could with their financial problems.

Following the establishment of station pay offices, and removal of the paymasters from the regiments, a new pattern of pay duties was emerging in the United Kingdom, and in the vast overseas territories. In certain parts of the empire, notably India, totally different systems were in operation. In South Africa, under the command of the Chief Paymaster, Colonel W. B. Wade, an organisation had been established in Cape Town. It was made up of three main elements. First, a district office looked after the payment of bills for supplies, transport and railway services. It dealt also with travelling claims, and the pay of staff and departments. Second, there was a branch pay office dealing with unit payments, contingency charges and the audit of pay lists. Third, there were the field paymasters who advanced money for the payment of troops and local labour, and settled local bills. They rendered accounts weekly to the District Pay Office. All this showed sound appreciation, on the part of Colonel Wade, of the need for flexibility, or, as he put it himself, elasticity. Unfortunately, there was nothing he could do to countermand the disastrous decision, taken in London, to put the entire responsibility for the compilation of the soldiers pay lists into the hands of their company commanders. With a hundred years of experience behind them, those responsible for the design of system had put the clock back to where it was before regimental paymasters had been given their special commissions in 1797.

It is just possible that, had the second South African War been fought with regular troops only, the pay system might have scraped through as it had done in the Crimea, although at that time paymasters were still in the regiments to help and advise company commanders. This war was to be very different, however. It commenced with the appearances of a colonial skirmish, but this took no account whatsoever of the tough, self reliant Boer who was a first class soldier and a brilliant horseman.

Very soon it became apparent that a large force of British mounted infantry would be required in order to match the Boers tactically. In the words of the official history of the Middlesex Yeomanry the requirement was for "hordes" of mounted men. Not only were the existing regiments of Yeomanry doubled, but no fewer than twenty new regiments were added. This whole new corps was enlisted under the title of the Imperial Yeomanry. In its background and composition, save that it was British; nothing less like the regiments of the regular army could be imagined. The regulations issued by the War Office on December 19, 1899 decreed that officers and men would "bring theIr own horses, clothing, saddlery and accoutrements". Uniform would be Norfolk Jackets of woollen material. The colour would be neutral. Breeches, gaiters, felt hats and lace boots would be worn. Sergeant majors of the regular cavalry must have been horrified when they learned that, in the Imperial Yeomanry, "strict uniformity will not be insisted upon".

Despite its size it was essentially a scratch force. As every man jack owned his horse and saddle (compensation was paid later) it was a force drawn from a part of society far removed from that which produced most of the troopers of the regular army. This was fortunate indeed for, although the regulations stated that the Imperial Yeomanry would be paid at cavalry rates, no Whitehall official appears to have given a thought about who was to do the accounting and paying. No paymasters appeared on the establishments of the newly created regiments, yet soldiers' pay accounts had to be maintained within the regiments. The few officers and NCOs who had previous administrative experience, either in the Regular Army or the Yeomanry, were required for training, or the immediate task of getting men and horses to South Africa as quickly as possible.

There was little that Colonel Wade and his small staff in Cape Town could do to ease the pay problems of the Yeomanry. They were equipped only to audit the pay lists, as received from the regiments, and send them, when, hopefully, they had been put into order, to London. Despite all their efforts, which in a few months caused the staff of the office to escalate to almost 400, this proved an impossible task. Thousands of men returned to the United Kingdom without statements of account. The first flight of the Imperial Yeomanry arrived in South Africa during the spring of 1900. By the end of 1901 they were back in England and, six months later all their accounts were sent home as incapable of local adjustment. Long after the men were discharged they were, in the words of the official report, "unsettled with". When the second batch of Yeomanry was raised early in 1901, it was "hard to find a soldier clerk who knew what a pay list looked like". The result, even before they left Aldershot, was chaos and confusion. The paymasters in South Africa, realising that, in the Yeomanry, officers could do no more than make advances of money to the men on simple acquittance rolls, had reintroduced a form of pay book. The company system as it developed in the latter part of the nineteenth century had made the 'Thomas Atkins" of Napoleonic days redundant. Now a blue print was produced in the form of the "ittlenamah" which was used by the army in India. This did something to help but could not make good the absence of central control in the financial affairs of individual soldiers.

As had been the case following the administrative disasters of the Crimea, the Government initiated enquiries. This time the spotlight was turned with penetrating intensity, on the regimental pay system. A committee was required to report on "The System under which Soldiers should be paid". As chairman it had Lieutenant Colonel F. T. Clayton of the Army Service Corps. This officer had served throughout the South African War, and was to have a distinguished career which eventual1y earned him promotion to Lieutenant General and a knighthood.

The committee had, in the first place, been asked to consider the preparation of a simple form of pay list which would be equally suited for peace and active service. They quickly realised that this was only a tiny part of the problem and, at their request, the terms of reference were revised so that system and personnel as wel1 as documentation could be considered.

In addition to the chairman, the committee was comprised of two infantry officers; Mr G. P. Wight, a principal in the War Office, whose opinions were to be of the greatest value a decade later, and Major Claude Bray, a paymaster of the Army Pay Department who had recently returned from South Africa where, under Colonel Wade, he had been in charge of the office responsible for the audit of the pay lists. It was he who compelled the committee to bring the very basis of the existing system into question. In a memorandum which he placed before them he stated his disbelief that "any reform in the pay list itself can overcome the existing system of payment by company officers". He told his colleagues that the strong opinion in Cape Town was that the pay list should never leave the base.

The Committee did not take long to discover that, even before the 1888 station system came into being, it was the company commander who paid the men and kept their accounts. Had they gone further into this aspect of the matter they would, of course, have found that whereas the process of physically handing out wages had been performed by regimental officers from time immemorial, a century before paymasters had been introduced specifically to render the accounts. The removal of paymasters from the regiments had now thrown the entire responsibility once again onto company commanders, and advances in educational standards among regular soldiers had produced regimental NCOs who, in peacetime, could maintain the accounts.

The committee's condemnation of the system of payment by company commanders was complete. The Imperial Yeomanry had proved that it was useless when applied to a force which had to be mobilised from scratch, but it was no better for a regular army deployed in the field. The committee's own description of its effect cannot be bettered:

" It is not to be wondered at that a system which even during peace was only carried on with difficulty should have in time of war broken down. How could it be expected that an officer commanding a company, which for months together was continually on the 'trek', could sit with a colour sergeant on the veldt, with a biscuit box for a table and an indelible pencil for a pen, and compile a pay list with its supporting vouchers? In many instances during the present war all company records and documents have been captured and destroyed by the enemy, pay lists and vouchers have been lost in the post, company officers and pay sergeants have been killed and wounded. It is not surprising that accounts cannot be rendered and thousands of non-commissioned officers and men remain unsettled with, and are never likely to be settled with without great loss to the public."

The committee put the whole problem in a nutshell when they said the existing system threw upon the fighting man work which he could not perform. Therefore, when they sat down to devise a new system they had four principles in mind. Above all it was necessary to free the company commander of the need to keep what they called a 'highly technical and complicated account'. Equally, with experience of the South African War very much in mind, they were determined that the scheme must be capable of being operated successfully in war and peace. To this end the soldier's account must be continuous, the pay list must be compiled outside the fighting line and, during active operations abroad, there must be established at the port of embarkation a strong pay organisation worked by trained and irremovable staff to deal with regimental accounts.

Had Major Bray not been a member of the committee it is almost certain that all the accounting responsibility would have been handed over to the Army Pay Department, working at locations away from the regiments in both peace and war. The committee never faltered, however, in their collective view that the physical payment of the soldier, in both peace and war, was the responsibility of the company commander, and that this would be done in war on a simple acquittance roll.

It was the prospect that the company commander would have no responsibilities beyond this function in peace time which caused Major Bray to express strongly divergent views. He had three main points in his argument. First, the company commander, albeit in a simplified form and with assistance, must in peacetime keep the complete account of the individual soldier; second, the paymaster must be the 'auditor' of the company pay lists, it being entirely contrary to good practice that any agency should both compile and audit financial documents; third, should the paymaster be compelled to compile the pay lists, then the 'audit' must pass to agencies within the War Office which would demand a big increase in staff, and the Army Pay Department would become "simply book-keepers and cashiers".

Major Bray's views were strongly reinforced by Lieutenant Colonel F. G. Hamley of the Army Pay Department. Clearly this officer could not have heard of the problems of the Imperial Yeomanry or, if he had, placed a very different interpretation on the chaos and confusion which had existed in financial matters throughout the force, for he stated categorically that "in war time officers commanding companies have time to do their account work if they desire to do it." The combined views of Bray and Hamley caused the Committee to produce two suggested schemes for use in peacetime. In the first the Pay List would be produced by the paymaster, and cash issues, through the medium of a document called a pay and mess book, would be made by the company commander. In the second, which accommodated the views of Bray and Hamley, the company commander would produce both the pay list and the pay and mess book. In effect, apart from some simplification, this system was not much different from that which had existed before the war.

Few committees can have carried out their duties with such flair and imagination as did that presided over by Colonel Clayton. They completed the whole exercise within a few months, getting to the very heart of the problem, and produced workmanlike proposals which accommodated not only the majority but also the minority view. They went to great pains to test them, not only on a range of paymasters, but also on two Commanders of wide experience and distinction: General Sir Redvers Buller and Lieutenant General Sir William Butler. They drew blank however, when they asked the Commander of South Eastern District, Major General Hallam Parr for his reactions. Perhaps it was unfortunate that Colonel Caulfield-Stoker, who was paymaster at his headquarters, and Lieutenant Colonel HamIey, who was acting paymaster at Shorncliffe, expressed, when requested to do so, 'diametrically opposed' opinions. He himself retreated from the firing line, to use a popular metaphor of the time, by saying that practical experience was the only way to find an answer. Perhaps he was right.

In view of his vast experience, particularly in South Africa, where he has been Commander-in-Chief until relieved by Lord Roberts, the ideas of General Buller were of great interest to the committee. He declared it would be nothing short of disaster to the British Army to attempt to make the soldier look to anyone except his commander for justice or assistance in the matter of his pay. Seeming to suspect, as may well have been the case, that there was some naval influence at work he roundly declared: There is no analogy whatever in this respect between the Army and the Navy; the soldier is paid on his ship and his Commander is the captain of his ship. There is nothing about which soldiers, to be contented, require kindly sympathy more than in matters connected with their pay, and if I have any knowledge of the British Army it leads me to believe that the only person who is likely to afford the private soldier this sympathy and assistance is an officer of the regiment to which he belongs'. He went on to disagree with the committee's proposals, summing up his own view as follows:-

'The paymaster should be the captain's banker and keep the captain's account; the captain keeping the soldier's account. In war, the captain should deal with cash payments only, the men's accounts being kept at the depot by a small staff told off by brigades for that purpose. Once a war is fully under way, there will be heaps of men at the base, convalescent and others, who will keep the offices for company accounts going satisfactorily'.

No clearer statement of the traditional attachment of the British Army to the company pay system could have been made. In view of the problems encountered in South Africa, however, the confident assertion in his final sentence was a little odd, to say the least. While General Buller's traditional approach caused him to disagree with Colonel Clayton and his colleagues, General Butler had no doubt that the methods of the past would have to be considerably modified in order to plan for the problems of the future. His ideas were even more radical than Clayton's. When first requested for his opinions he was holding the appointment of General Officer Commanding Western District. His Chief Paymaster was Colonel O. M. Johnston. This far sighted officer, when asked for his advice, got to the nub of the requirement. He advanced the view that the soldier's accounts should be maintained at a permanent or fixed centre. Colonel Johnston must therefore be regarded as the father of the system which, in its main element, has been operated down to present times. Prompted by Colonel Johnston, General Butler went on to set out four principles. First, the soldier's emoluments must be simplified; second, payment of all soldiers belonging to the same unit must be made from a fixed station when they were at home, and payment of their families must continue from this station when the soldiers served abroad; third, the soldier must be paid by his captain, but his account must be prepared by the paymaster; fourth, the system used in peace must be the same as that resorted to in war. These four principles are as apposite today as they were when written down three quarters of a century ago. Most impressive was the foresight shown in respect of families. At the time when this principle was laid down there had been no mass conscription, nor had the nation accepted the social reforms advocated, and later achieved by Lloyd George. Hence when General Butler rated the need to care for families in wartime equal to the personal financial needs of the soldier he was showing remarkable prescience. He was also pinpointing the essential factor in sustaining the morale of the married soldier in war.

Not surprisingly the Secretary of State, having studied General Butler's proposals, requested him to develop them in greater detail. The General had already been asked to give his attention to a number of matters arising from the experience of the Army in South Africa., He was chairman of a committee charged with the simplification of regulations, and used it as the instrument for the further examination of the additional problem. The committee recommended that the whole of the accounting and clerical work should be made the responsibility of the Army Pay Department and the Army Pay Corps, only the physical task of payment being retained by company commanders. All would be done on a weekly basis. Clearly this would require paymasters and their staff to be in the immediate vicinity of the units served; and preferably located with them.

How could this method of payment be reconciled with General Butler’s principle of a permanent centre? Had this question been pursued, the committee would have been compelled to conclude that trained pay staffs were required both at permanent centres and in units. This might have brought forward today’s system by fifty years. As it transpired all they could do was to evade the Issue. Their precise words were: The committee do not consider that it would be expedient at this stage of the discussion to endeavour to lay down the exact position of the paymaster'. . . In the event there was a half hearted experiment at Devonport using the 1st Battalion of the Border Regiment as guinea pig. Despite the fact that the paymaster, who was specially attached, had Army Pay Corps staff to help him, it came to nothing.. . . . General Butler's ideas, in their entirety, had to wait for the computer age to come to fruition. With hindsight this was no bad thing. It is virtually certain that, worked manually as would have been the case. In the 1914-18 war, the Army Pay Corps manning requirement would not have been met.

For the time being it fell to the lot of the Accountant General, Sir Frank Marzlals, to make the final recommendation. He was very familiar with all aspects of Pay Services for he had been a member of the Hayter Committee. At that time he had declared against giving the Army Pay Department Increased control of their own affairs. He now had no hesitation in selecting the first of the two schemes put forward by the Clayton committee. He was swayed principally by the fact that it would give considerable relief to company commanders both in peace and war. He warned that a much greater load would be thrown on paymasters and their staffs. But this, he said, would have to be accepted. He recommended a field trial. His first thought was that it should take place at Aldershot where the Station Paymaster scheme had been tested. However, Dover was chosen as the location. By 1904 it was possible for those competent to Judge to declare that the system was a considerable success. It was dubbed the Dover System, and became the replacement for the method of company pay which, with relatively minor modifications, had existed since Tudor times.

The British troops in South Africa at the beginning of the war numbered no more than 26,000 men. By the time it was over the total under arms was in the region of half a million, and the vast majority of these, despite contingents from other parts of the empire, came from the United Kingdom. The figure gives some Idea of the administrative problem.

There was, as had been the case half a century before in the Crimea, a grim catalogue of failure. Indeed, until the redoubtable Lord Roberts, with his brilliant Chief of Staff, Lord Kitchener, took over, the Boers had matters very much their own way. In the general management of finance there was the same sort of fundamental weakness as was revealed in the more detailed matter of troops' pay. Just as the company commanders were. charged, in the latter connection, with duties which were, when in the field , entirely beyond their capacity, so It was with the commanders in the wider financial sphere. Whitehall was quite happy to leave it to the man on the spot without providing him with the means to do the job. When Lord Kitchener arrived on the scene he was more than ready to accept financial responsibility, but, with administrative ability far beyond that of any other senior officer, he knew, nonetheless, that he needed expert advice and assistance. He turned to the senior paymaster on the spot and asked him either to do the job or to nominate one of his officers. The reply was that the task was beyond the capacity of any paymaster serving m South Africa. This refusal sprang not from any unwillingness to face responsibility, but the knowledge that the restrictions which had been placed on paymasters for the past half century, had left them with neither the ~experience nor the knowledge to tackle the job. Kitchener, in consequence, asked the War Office to provide a financial adviser. This they did in the person of Mr (later Sir) Guy Fleetwood Wilson. This official stayed until August 1901. He was succeeded by a Major O. Armstrong, Lord Kitchener's personal nominee. Armstrong was in South Africa for less than a year. Fleetwood Wilson and Armstrong improved matters in respect of general control of expenditure, contracts, local purchase, requisitioning and damage to property as a result of operations. After the departure of Armstrong matters degenerated, and became as bad as they had been before the arrival of Lord Kitchener. Contract procedures went to pieces. Matters were brought to a head when Mr Justice Farwell, under the authorisation of a special Act of Parliament, presided over a Royal Commission. It was found that, while the officers concerned were not corrupt, there was 'a degree of neglect of the public interest well-nigh incredible even in over-worked men'. From all this it was clear that good local financial management was possible only when backed on the spot by an officer/statesman of the calibre of Kitchener. Once he had gone lesser officials were useless. It was indeed a good thing, at the light of events, that the Pay Department had no part in the business.

Against this dismal background the Pay Department in South Africa battled on with a vast amount of work. In addition to the unenviable task of trying to make sense of the unit produced pay lists they were responsible for all accounting matters. By the time the war ended, Sir Frank Marzials revealed, most of the Army Pay Department and Army Pay Corps had been sent to South Africa. Even so their numbers were entirely inadequate, and businessmen, who had lost their jobs in either Cape Province or Natal due to the war, were brought in to help. In order to ensure the support of shopkeepers and business men it was vital that there should be no delay in the settlement of local bills. Unfortunately, it was not possible to do this by paying cash as Sir Redvers Buller had ordered that, in the field, neither coin nor notes should be carried. Forms produced in cooperation with the Standard Bank of South Africa, were designed to ensure prompt payment. It was intended that they would be used only when other means of settlement were impossible. Unfortunately insufficient care was taken. The many mistakes and deficiencies in their completion caused a great deal of extra work for the pay office. As these documents were engraved, they were payable orders on the Standard Bank. They could not be defined as military currency, although they were created to meet a military requirement. On the other hand Mafeking Siege Money, authorised by Colonel R. S. S. Baden-Powell, was military currency pure and simple. Each note was engraved:

This note is good for (amount) Shillings   


during the siege

and will be exchanged

for coin on resumption

of civil law at the

Standard Bank Mafeking

Under the authority of Baden-Powell, it was signed by the paymaster. This is the only recorded case of a British paymaster certifying currency on behalf of a commander in the field.

The whole nation was so alarmed by the failures in South Africa that a major enquiry was conducted under Lord Elgin. As a result of his report a committee, presided over by Lord Esher, was set up. It was to achieve a unique place in the history of the War Office. Not a single aspect of military administration was unaffected by its recommendations, and the effect on the Finance Department and the Army Pay Department was profound. However, before reviewing those aspects which are of special interest to this study, mention must be made of two previous investigations. The first, under Lord Hartington, had suggested in 1890 that the appointment of Commander-in-Chief should be abolished, and replaced by a co-ordinating council which would be presided over by the prime minister, and served by a chief of staff. In 1895 some half hearted reforms were carried through but the appointment of Commander-in-Chief was retained. The second was the Clinton-Dawkins Committee which, after no fewer than 39 sessions, strongly suggested that there should be a high degree of decentralisation, coupled with a much closer association between the military and civilian elements of the War Office. It was notable that business men were among the members of this committee.

Before the Esher Committee sat the prime minister, Mr Balfour, had announced he was impressed by the system under which the Navy was administered. It was not surprising; therefore, that Lord Esher's terms of reference required him to take the Admiralty system as the basis of reform. To make the position even more firm in this respect the senior member of the committee, after the chairman, was Admiral Sir John (later Lord) Fisher. The secretary, Lieutenant Colonel Ellison has been described as 'of great ability, equipped with a fluent pen and a fervid insistence on thinking clearly'. It has been argued that the main ideas of the Esher Committee were not altogether unacceptable to members of the War Office. Whether this be true or not, the appointment of the Commander-in-Chief was abolished. The Secretary of State for War was placed on the same footing as the First Lord of the Admiralty, and all submissions to the Crown in respect of military matters became is responsibility and him alone. The Army Council was set up. Its members, seven in number, were to act, at one and the same time, as colleagues, under the Secretary of State, and also as head of their departments. The four military members were the Chief of the Imperial General Staff, the Adjutant General, the Quartermaster General and the Master General of the Ordnance.

The committee insisted that executive military work was to be carried out locally under General Officers of senior rank. To this end the country was divided into Commands. Only London remained as an independent district. No part of administration, both in the War Office and on the ground, came under sharper review than finance. The committee prefaced their views on finance by stating that it lay at the heart of war office adminlstration, and that the adjustment between spending and accounting branches was the crux of the matter. The present arrangements were, they said, to the last degree unsatisfactory. The department of the accountant general had become a huge and costly machine, while military officers were assumed to be spendthrifts. Having said that no branch of the war office needed more radical reform than that of the Accountant General, they went on to argue their case from 'first principles'. They found that the advent of the Army Council would automatically get rid of 'some of the evils'. The Financial Secretary would no longer be an independent critic with special access to the secretary of state, but a member of a team, a co-equal. His specially assigned duties would not confer special responsibilities. In future parliament and the country would look to the army council as a whole for the efficiency of the Forces. Descending from this high level, the committee reiterated the need for military officers on the ground to accept financial powers and responsibilities. To this end they would need financial advisers who must be supplied by a homogeneous body, specially trained and apart from the Army. They went on to say:

'Such a body does not at present exist. Instead, there are two bodies, one civil and one military, with duties which frequently overlap. This is an arrangement which is at once costly and ineffective. 'On the one hand, there is the finance branch under the Accountant-General, zealous, and hardworking; but, as we have pointed out, exercising functions quite apart from its proper sphere. On the other hand, there is the Army Pay Department, whose duties, in war especially, intermix with those of the finance branch. The one has been, until recently, entirely out of touch with the work of the Army, which it has to a great extent controlled. The other, with limited functions, is an integral part of the military system, and is administered by the Quartermaster General.‘

'Such a dual arrangement for dealing with matters of pay and finance has the following grave disadvantages:

(a) The Military Department not being under the Accountant General, an intermediate audit is required to satisfy the requirements of the latter as Chief Accounting Officer. This audit only extends to about five per cent of the accounts of the Army. It appears to be of little practical value; but it introduces unnecessary expense and complication.

(b) The paymasters are restricted in many ways to duties which are not commensurate with their rank and salaries. Their most capable officers have no sphere for their energies, as they are dominated by the civil finance branch. On the other hand, promotion being regulated by seniority, there is little incentive to exertion, and officers may reach high rank without attaining corresponding financial capacity. Nevertheless, the paymasters recruited from the army, in daily touch with its working, and serving all parts of the Empire, acquire knowledge of which the civil branch of the War Office stands in daily need.

(c) In consequence of the proposals of the Dawkins Committee local civil finance sections, detached from the Accountant General's Branch have been established at certain stations outside the War Office. It is now proposed to establish such a branch in South Africa where it is evidently needed. This, however, has the effect of further duplicating financial duties and of creating divided financial responsibility in the commands, and as the members of the civil finance branch seem to have acquired a prespective right to serve only in London, considerable increase in salaries is involved by transferring them to out-stations. This expense will be further increased by the formation' of civil branches abroad. '

The solution to the problem, the Committee went on to state, was the establishment of a 'properly constituted finance department'. They then disclosed that proposals for such a department had already been laid before them, although they did not say by whom. There was no indication that either commanders or staff had been consulted in formulating the method of achieving this laudable objective. Euphemisms such as ... 'absorbing the Military Pay Branch' . . . and .. 'it is necessary to amalgamate the Army Pay Department with the present Accountant General's Branch' . . . , did not disguise the fact that the creation of the new department was to signal the end of the Army Pay Department. The Finance Department would, from the outset, be a civilian organisation. Only one concession to the military past was made. Officers transferring to the new organisation from the Army Pay Department would be permitted to retain their military titles. It is hard to see how this could have been otherwise. The Army Pay Corps was not even mentioned. As, in another connection, the Accountant General himself had disclosed that wartime problems had required most of the Corps to be sent to South Africa, this omission indicated that the Committee had little conception of the size and nature of the clerical problem involved. According to them in both peace and war a 'subordinate section of writers would suffice'. The senior officials would be called accountants. The age of new entrants would be 18 to 20 and they would be required to sit an examination of an academic rather than professional nature. On joining they would serve a probationary period partly at an 'out station' in the United Kingdom. All was far removed from the facts of life as they had been experienced by the Army Pay Department and the Army Pay Corps in South Africa. Indeed there is no evidence to show that the scheme, as 'laid before' the Esher Committee, had been examined by the Pay Department. Nothing could have differed more from the painstaking methods employed in this respect by the Clayton Committee. It is not surprising, therefore, that matters such as mobilisation expansion, and the vast extra clerical effort which would be required to meet the payment of families in the event of major war, were not considered.

The recommendations of the Esher Committee were accepted en bloc. It only remained for the skeleton of the new Accounts Department to be clothed with flesh. This forbidding task was made the responsibility of Major Bray and a Mr A C Pedley. They went to work with a will for in the space of two months, following the acceptance of the Esher recommendations in 1904, they produced no fewer than four reports. These were 'submitted to Sir Guy Fleetwood Wilson, who now held the appointment of Director of Finance at the War Office. No doubt the experience he had gained in South Africa, as the first Financial Adviser to Lord Kitchener, put him in a good position to judge those aspects of the proposals concerned with advice. How much he knew about the development of pay services over the centuries and their vital importance to the morale of the soldiers, was another matter. It was he who secured the agreement of the Treasury to the completed scheme.

The new department came into being by authority of a special army order in May 1905. Sir Guy did not long remain in the War Office to judge either its success or failure. He went to India where he became Financial Member of the Governor General's Council. One of the corner stones in the argument advanced on behalf of the new department was that staff would be interchangeable. Presumably this was regarded as something to be achieved in the long term when the process of absorption was completed. In the event the civilian elements remained, as they had been in the past, in the audit offices, while pay duties, in their various forms were carried out by the ex-military personnel. The division of duties was set out in some detail. First on the list of duties of the audit department was financial advice. It was the duty of the chief accountant in a command to tender it to the Major General in charge of Administration.

The Army Pay Department, at the time of its absorption into the Accounts Department was comprised of 17 Chief Paymasters, 75 Staff Paymasters, and 144 Paymasters. The Army Pay Corps had a complement of 930 , of these 12 were First Class Staff Sergeant Majors, 35 Staff Sergeant Majors, 330 Staff Sergeants and Staff Quartermaster Sergeants, the remainder being Sergeants and Rank and File. Within each major command the Chief Accountant, who served directly under the Major General in charge of Administration, controlled an audit office, a district services office, a regimental services office and a cashier's department. The first three were headed by Accountants while the cashier was an Assistant Accountant. It was hoped that independence of audit, which was required by the Exchequer and Audit Departments Act, would be achieved by the 'strict segregation' of the cashier and his staff. In Aldershot, Salisbury, London, Dublin, Edinburgh, Chester and York audit offices were established. These were entirely new following the decentralisation of the function from Whitehall. There were 45 other offices, most of which had existed previously, of which 24 were engaged on regimental pay. The bulk of the operation was, therefore, in the hands of the former staff of the Army Pay Department and the Army Pay Corps.

In one most important matter Sir Guy Fleetwood Wilson, as Accounting Officer, had, some months before the Army Accounts Department came into being, expressed dissatisfaction with the proposed arrangements made within Commands. On 6th January 1905, under the authority of a Special Army Order, Major Generals in charge of Administration were given considerable financial responsibilities. In this respect they were answerable directly to the War Office where, as a result of the Esher recommendations, the Army Council exercised collective control. In Sir Guy's opinion the effect of this was to 'impair' his personal responsibility to Parliament. He put the matter to the public Accounts Committee who, having considered the matter closely concluded as follows:

'In order to remove all doubt or misunderstanding, we recommend that it be distinctly laid down: first, that in the case of the Army, as of all other Departments. the duty of accounting for monies received, expended or on hand, and the responsibility for them, lies upon the accounting officer of the department; second, that the authority over the responsibility for all sub-accounting officers belongs to him; third, that no part of that authority or responsibility can be diverted from him to any other person whatever; fourth, that in all matters of account, and of payment or receipt, whether matters in dispute or not, the sub accounting officer is authorised to and required to communicate directly with the Chief Accounting Officer.'

Sir Guy had made his point in no uncertain manner. It only remained to put it into effect. This was done in Army Order 150 of August 1905. While the financial responsibilities of the Major General in charge of Administration in relation to the Army Council were not diminished accounts were no longer to be submitted to the War Office through him. Consequently no annual certificate was required of him, which was the original intention. The duties of the Chief Accountant were now stated as follows:

'In all matters of account and of payment or receipt, he will be directly responsible to the director of finance whose subordinate he is, and with whom he will correspond direct upon all such matters as well as in regard to the personnel of the branch. ‘Should the Major General in charge of Administration desire the Chief Accountant to make a payment or pass a charge or receipt a credit which in the opinion of the latter, is not authorised by regulation the question will be referred by the Major General in charge of Administration to the Army Council, and in such cases the chief accountant will report the question direct to the Director of Finance. The Chief Accountant will advise the Major General in charge of Administration of the command, when ever called upon to do so, and for this purpose will be attached to his Staff.'

It was also made clear that the Chief Accountant would 'give every facility' to the test audit of the Controller and Auditor General. Thus despite any possible idea which might have been current in some quarters that Esher had given the Army greater control of its financial affairs, the plain fact of the matter was that Parliamentary control now existed not only in the War Office in precisely the same way as it had done since the passing of the Exchequer and Audit Departments Acts, but also within Commands. Following the South African War there was a little over a decade of military tranquillity. It was, of course, no more than the lull before the most devastating military storm in history. Nonetheless, it was a godsend to the military and civilian administrators who had the job of making the changes brought about by the Esher Committee work. At Army Council level there was remarkable success. The degree of cohesion and coordination was greater than anything achieved under the Commander-in-Chief system. In the Army Accounts Department, also, there was a genuine endeavour to make the new arrangements work. Its failure was, therefore, a measure of its fundamental weaknesses.

Even before the revised department began to function in 1905, it had been realised that the fusion of the military and civilian elements presented major administrative difficulties. It was found, for example impossible to convert the pay and allowances of the Army Pay Department to the civilian scale. Not only basic rates but increments, both in incidence and amount, were different. No relationship could be established between military and civilian promotion prospects. Rules for retirement were totally at variance, civilians having no option to retire on pension voluntarily short of the prescribed age. It having been asserted, without the criteria being stated, in a memorandum produced in the office of the Director of Finance, that the emoluments of the Army Pay Department considerably exceeded those of 'civilian scale for similar duties', extra pay was awarded to Chief Paymasters when they carried out the duties of Chief Accountants, to staff paymasters when employed as Accountants and to Paymasters when employed as Assistant Accountants.

The result of these problems of pay, promotion and prospects was that, despite the fact that the Army Pay Department was to be 'absorbed' it was declared impossible to produce a common roster. The military and civilian lists were retained separately. In view of this fundamental incompatibility the lack of practical administrative knowledge on the part of those responsible for the scheme was revealed when it was stated that, based on separate seniority lists, due regard would be given to the claims of both civil and military when an appointment had to be filled, and that precedence would be given between civilians and military by their 'relative positions in the respective lists'.

In the same memorandum it was declared that no further appointments to the Army Pay Department would be made, and there would be no further transfers to the Army Pay Corps. Members of the Corps would remain on their present terms but the grant of extra duty pay, at the rate not exceeding 1s 6d per diem, would be made to the holders of a few positions of exceptional responsibility.

So ramshackle was the Army Accounts Department that anyone of a number of fundamental weaknesses could have precipitated its disintegration. However, according to Sir Charles Harris, the distinguished Permanent Under Secretary of State writing of the Army Accounts Department in 1910, after the Army Pay Department had been reinstituted, 'as the soldiers began to die out and to be replaced by civilians, certain weaknesses began to stand out clearly'.

Not surprisingly, therefore, although Sir Charles's primary interest was financial, the first two weaknesses mentioned concerned manning. It had been realised that, in war, many of the Army's accounting duties could only be carried out successfully by officers and men in uniform who were subject to military discipline, and who had been trained for their wartime duties in peace. In other words a trained mobilisation reserve was required. Of immediate concern was the discovery that, in peacetime, service in the colonies was unattractive to civilians. 'It is,' said Sir Charles, 'difficult to work a military department with civilian personnel to whom peripatetic garrison life offers few attractions'.

Sir Charles Harris, whose influence on Pay Services was to be profound, was by background and training an auditor. He had also been closely connected with the various committees which had been formed to put right the weaknesses disclosed by the South African War. He was also aware, as accounting officer, of the need for independence in the audit process. He found that, even after the changes which Sir Guy Fleetwood Wilson's submission to the Public Accounts Committee had brought about, there remained a lack of independence. Further the 'homogeneous nature' of the Accounts Department had created a position which caused its officers to criticise the decisions of their immediate seniors. Clearly this was undesirable, and completely at variance with the basic concept.

Finally there was the matter of financial advice. This had been central to the thinking of the Esher Committee. With five years experience of the new arrangements to go on, Sir Charles Harris had this to say: 'It is undesirable for the auditor, the representative of the Accounting Officer, to be too closely associated as adviser with the military administrative officers, whose expenditure it is his primary function to criticise, and it weakens the sense of responsibility of the military officers to refer everything to a civilian who will not be at their elbows in war.' Thus, on both military and financial grounds, and on the unequivocal recommendation of the Permanent Under Secretary of State, it was decided that, instead of dying out, the Army Pay Department and the Army Pay Corps were to be "maintained as a permanent part of the Financial organisation". They were to be subordinates of the Accounting Officer instead of reverting to the Quartermaster General. Within Commands, as a military body, both the Pay Department and the Corps were to come under the Major General in charge of Administration. There was, however, to be a sharp division between the areas of subordination. Whereas the Major General in charge of Administration controlled discipline, barrack life, office hours, and the administration of "troops' pay", in all aspects of accountancy paymasters were to take their instructions from the Accounting Officer and from him alone. In the matter of the authorisation of expenditure Sir Charles Harris summed up in the following trenchant sentence. "The Major General in charge of Administration", he said, "can no more order the paymaster to pass a charge in the accounts than he can walk into an Army Hospital and order the Medical Officer to take off a man's leg".

The official announcement of the rebirth of the Army Pay Department and the Army Pay Corps was made on 26th October 1909. It was published in a Special Army Order (294) three days later, although the revised arrangements did not commence to operate until 1st January 1910. Except that the district services offices were now renamed command pay offices, there was remarkably little change in the location and number of the various establishments. Regimental Pay Offices, now known by that name, were undisturbed.

In each command an officer was appointed with the title Command Paymaster. He took over those duties of the Chief Accountant of the now defunct Accounts Department which were appropriate to the Army Pay Department. Most importantly he was to act as financial adviser to the general officer in charge of administration in matters relating to the pay and cash accounting services within the command and in such other matters as might be referred to him by the General. In respect of advice, however, the Army Order laid it down that: "In matters of financial importance, when the general officer in charge of administration considers it desirable to obtain independent financial advice in addition to that of the heads of administrative services (including the command paymaster) he may consult the local auditor; but the advice of this official will neither bind the general officer in charge of administration nor relieve him of the responsibility for the action taken".

The command Paymaster was to command the Army Pay Department and the Army Pay Corps within his area, and to exercise supervision and control over all accounts offices in the command. He was to have direct charge of the Command Pay Office and the cashier.

The total of officers required for the reconstituted Department was 183. The numbers were smaller than in 1905. It was estimated that a saving of £38,000 would be made, £11,000 of which would be achieved in the first year of operation. It was decided that a quota of officers of the quartermaster category were to be employed. They were titled Assistant Paymasters. Their ranks were honorary. The conditions of service for both the Department and the Corps were published in Army Order 66 of 1910.

The establishment of the Corps, announced in Army Order 158 of 1910, was 574, a considerable reduction.

Parliament, through the medium of the Public Accounts Committee, had relaxed none of its vigilance. Particular interest was shown by Mr T. Gibson Bowles MP who had been a member of the Public Accounts Committee when Sir Guy Fleetwood Wilson In 1905 had put the matter of the Chief Accountant and the Major General in charge of Administration to them for decision. Mr Bowles wished to ensure that the position of the reconstituted Army Pay Department in no way compromised the financial control of Parliament. He asked a question in the House of Commons on 3rd March 1910. Arising from Mr Bowles's question Sir Charles Harris, as Accounting Officer, appeared before the Public Accounts Committee. The matter would be fully clarified in Financial Instructions shortly to be published, he explained, meantime, instructions had been issued to paymasters. The relevant rules were as follows:

"The Army Pay Department is a military department under military orders in the same way as other departments; but is subject to the special direct responsibility which attaches to accountants in the public service, as detailed in the following paragraphs."

"In all matters of payment and receipt the command paymaster is directly responsible to the accounting officer at the war office. If, therefore, he is requested by superior military authority to make a payment, or pass a charge, or accept a credit, which, in his opinion, is contrary to the regulations, he will defer action on the request until the instructions of the War Office, obtained through the general officer in charge of administration, have been received, unless, at a station abroad, the general officer commanding takes upon himself the responsibility of ordering payment without waiting for War Office sanction. In all such cases - both at home and abroad - the command paymaster will make a report direct to the accounting officer at the War Office."

"If a regimental paymaster is desired by military authority to make a payment, or accept a charge or credit, which in his opinion is not authorised by regulations, he will state his objections in writing and unless these objections are removed he will not pass the transaction without instructions from the Command Paymaster, to whom, under the regulations. The military authorities will refer the matter if they desire to pursue it".

Sir Charles Harris claimed that the revised system, which placed executive finance under the Command Paymaster while making the local auditor responsible for advice on "more important questions involving a knowledge of financial principles", strengthened rather than impaired parliamentary control. The Public Accounts Committee expressed themselves as satisfied, but considered that such matters should be promulgated in Army Orders and not merely in regulations.

The Secretary of State for War who signed the Royal Warrant which reinstituted the Army Pay Department was Mr R. B. (later Viscount) Haldane. He had assumed office in 1905 and proved himself to be of the same calibre as Cardwell. His reforms were such that, whereas no real mobilisation scheme existed when he came into office it was possible, when the test came in 1914, to produce of 20 divisions, six of which were regular and the rest territorial. This would not have been possible but for the Territorial and Reserve Forces Act of 1907 which Haldane has sponsored.

Haldane had a profound knowledge of German institutions and ambitions. He was, therefore, fully aware of the threat posed by the latter. As a result, under his tutelage, the War Office studied in greater depth than ever before the administrative aspects of mobilisation. In the vital matter of soldiers' pay the Dover System, despite the hindrances which had been caused by the arrival and departure of the Army Accounts Department, was fully operative in its peacetime form. Pay list maintenance was now firmly in the hands of the Pay Department and the Pay Corps, with the workload in regiments considerably reduced as a result. Nonetheless, the scheme as designed for war contained grave defects. By far the greatest was the need to undertake massive transfers of accounts on mobilisation.

In 1911 there was a German threat to Morocco. During the months of July and August war was an immediate possibility. The danger passed, however, and what has since been known as the Agadir crisis did not require mobilisation plans to be put into effect. However the Director of Army Accounts, Mr F. A. Flynn was compelled to conclude that, had the call up of reservists and territorials occurred, he would have been compelled to freeze all soldiers' accounts in whatever location they might have been at the time. In effect this would have brought about a makeshift permanent centre system.

Mr Flynn referred the problem to Sir Charles Harris. Steps should be taken, he argued, to locate every soldier's account at a permanent or fixed centre throughout his service. The advantages were numerous, but these were of paramount importance. First, be the soldier regular, reservist, pensioner or territorial, his account would always remain in the same place. Second, if the soldier was married his wife would be paid from the same place. Third, the risk of breakdown caused by wholesale transfers on the outbreak of war would be obviated.

In view of the lessons of the past it was surprising that Mr Flynn, in making his otherwise admirable proposals suggested that, in due season soldiers accounts might be maintained in regiments.

Sir Charles Harris was adamant that in no circumstances would soldiers' accounts be maintained in their regiments. He also came out strongly in support of the fixed centre system. With considerable insight he regretted the removal of the paymaster from the immediate proximity of the troops, but accepted the point, made by Mr Flynn, that postal communication in the United Kingdom was so good that nowhere would the soldier be, in terms of communication, more than "one night" distant from the regimental pay office. Sir Charles also pointed out that wars would vary in character, and that what was good for "Flanders" was not necessarily good for the North West Frontier of India. Made more than two years before the outbreak of the First World War, this was a prophetic statement in more than one respect.

The fixed centre system was approved by the Army Council, and authorised in Army Order 3 of 1913. The main plank of the structure had, with only a year to spare, been put into place. Main credit for this achievement must go to Sir Charles Harris. He was the first to acknowledge, however, the value of having at his elbow the Chief Paymaster at the War Office, Colonel (later Sir John) Carter, as well as Mr Wight, the civil servant who had played such a valuable part in the deliberations of the Clayton Committee. At last the Army Pay Department had its own spokesman within the War Office and, equally important, civil servants who understood and acted on his advice.