Charles E W Bean, Diaries, AWM38 3DRL 606/255/1 - 1916 - 1937 - Part 14

2.
(4) CROSS-ACCOUNTING SYSTEM: ARRANGEMENTS WITH GREAT
BRITAIN.
The system of settling the cost of maintenance
of the troops as between Great Britain and Australia was at
"this time one of cross-accounting. All goods supplied by
the British Ordnance to Australians had to be accounted for,
and vice versa. The vouchers for these were not finally
in hand and settled until some years after the end of the
war. This system continued until about September 1916,
when the per-capita payment was brought in. It was these
British who suggested the per-capita payment, shortly after
Anderson had taken over from Sellheim. Anderson appears
to have further offered that Australia should pay as though
she possessed a full quota of heavy artillery, instead of
only 8 heavy guns. This was not eventually adopted, but
Australia paid for all those guns which she possessed.
The whole number of shells fired by the artillery during
various periods was estimated and then divided by the total
number of guns, giving the average shell-expenditure of each
gun. We paid on that basis for the expenditure of ammunition
by all our guns.

COPY.
D.A. 470/8/497.
Qs. 1464/1/26.
AUSTRALIAN IMPERIAL FORCE
Administrative Head-Quarters,
A.I.F.
Australia House,
Strand, London, W.C.2.
23rd March, 1921.
The Secretary,
Department of Defence,
MELBOURNE, VICTORIA.
SUBJECT: Financial adjustment for Ordnance Stores,
etc. supplied by the Imperial Authorities to
the A.I.F. in Egypt.
As will be observed in my monthly progress reports,
these Headquarters had for some time been investigating the
whole of the claims received from the War Office in respect
of Ordnance Stores, etc. issued by the Imperial authorities
to the A.I.F. in Egypt during the year 1915. these charges
totalling £163.617. 19. 10d., as under

2. So that you may be "au fait" with the basic elements
of these adjustments, the following brief notes may, with
advantage, be first of all recognised :-
(a) The Ordnance stores in question were issued during
1915 (i.e. prior to the inception of the maintenance
capitation rate mode of adjustment for Egypt - 
excluding Alexandria) when adjustment was on the
basis of actual transactions. Hence Australia
pays for all stores so issued in Egypt (with the
exception of transactions in Alexandria which are
covered by the Gallipoli Capitation Maintenance
Rate) up to the 31/12/1915.
(b) The actual Issue Vouchers (viz. A.F. G.982)
supporting the whole of the transactions were
satisfactorily verified by a member of the Head-
Quarters staff, Cairo, in May, June and July, 1916,
with the original vouchers bearing the signatures
of the responsible Receiving A.I.F. officers (in
the possession of the Local Imperial authorities).
(c) On receipt in London of these vouchers, the War Office
preferred the above claims against this administration.A
3. Our preliminary action on these accounts disclosed
numerous material discrepancies and other queriable charges,
/chiefly

- 2 -
chiefly - 
(i) Errors in computations and additions.
(ii) The levying of prices not in accordance with
agreement.
(iii) Inclusion of "Barrack and Hospital Stores" and
Camp Equipment (both by way of "accommodation").
(iv) Issues at Alexandria subsequent to the 1/3/1915,
Alexandria coming within the Gallipoli zone,
in/view of which any Ordnance stores issued in
that area are covered by the Gallipoli Capitation
rate which operated between 1/3/1915 to 31/12/1915.
(v) Stores issued to the Australian dna New Zealand
Training Depot, Zeitoun, and the School of
Instruction, Zeitoun, were charged for.
4. The process of settlement of these points
has been very protracted, involving as it did much correspondence
and discussion with the War Office authorities before
satisfactory definiteness was reached. I am, however, glad
to inform you that, late in August, 1920, the negotiations
assumed concrete form, the final result being agreement on the
following lines. the above points being dealt with in
sequence: -
(i) Clerical errors:
That arithmetical errors must, of course, be
rectified.
(ii) Prices.
That prices coming into operation on the 1/1/1916
should be reciprocally applicable to all Ordnance
transactions between the Imperial authorities and
the A.I.F. in Egypt during 1915, in view of those
rates representing the approximate cost, to the
Imperial Government, of those stores, the rates
appearing in the Vocabulary prior to that date
indicating pre-war prices. This arrangement is
obviously in Australian interests in view of our
"handings over" to the Imperial Army in Egypt
exceeding by approximately £280 ,000 sterling the
issues from Imperial stocks to the A.I.F. In
this connection, attention is requested to my
memorandum of the 3rd February last, No. Qs.1456/25/3,
embodying resumé of the financial adjustment
effected with the War Office, whereby we received
credit to the extent of £374683, 1.11d. for
Ordnance stores "handed over" by the A.I.F. during
1915.
(iii) Barrack and Hospital Stores and Camp Equipment:
That, in view of the fact that the Imperial
Government agreed to issue, free to the Dominions,
"Barracks and Hospital Stores" and "Camp Equipment",
for Camps, Depots and Hospitals, all such items
should be deleted from the claims against the 
A.I.F.
It is admitted that we have placed a
rather elastic construction on the Imperial
Government's concession in this connection. The
principle underlying the supply of "Barrack and
Hospital Stores" from Imperial stocks to
/Dominion

- 3 -
Dominion Contingents is that "accommodation" shall
be provided free. It does not, of course, follow
that all the stores enumerated in Sections 11-13 of
the Priced Vocabulary of Stores fall within this
definition, but only such of them (excluding clothing
and consumable stores), and in such quantities as
are shown in the various Barrack and Hospital schedules.
Similar remarks apply to the charges for Camp
Equipment. This term does not necessarily include all
the stores mentioned in Section 2 of the Priced Vocabulary,
but only such of them and in such quantities as are
issuable to Imperial troops under Equipment Regulations, 
Part 1.
In this connection, it was absolutely impossible
to discriminate between what of the stores charged for
represented -
(a) free issues of Camp Equipment under Equipment
Regulations, Part 1, and
(b) other Camp Equipment, e.g., that issued by
way of Unit Equipment, as well as "replacement"
issues not due to fair wear and tear, etc. etc.
for whichthe Imperial Government should receive
reimbursement.
Under these circumstances, the War Office finally agreed
to our proposal to waive the charges for all "Barrack
and Hospital Stores" and all items of Camp Equipment,
the A.I.F. deriving financial benefit in consequence.
(iv) Issues in Alexandria:
Alexandria being in the Gallipoli zone over which the
Anzac Capitation rate of 5/10d. operated, that rate
being intended to maintain our troops serving in that
area in "inter alia", Ordnance Stores (i.e. "replacement
issues"), no separate charge for these particular issues
should be made against the A.I.F. The War Office
agreed to this proposal which course was the only correct
one.  All such issues have, therefore, been deleted
from the original claims.
(v) A.N.Z.A.C. Training Depot and School of Instruction,
Zeitoun:
The Australian and New Zealand Training Depot, Zeitoun,
was specially opened in April, 1915, for the training
of Australian and New Zealand officers and men. In
June, 1915, a few officers of Imperial Units entered for
instruction, but otherwise it was used exclusively by the
two Dominion Forces. At the end of 1915 or beginning
of 1916, it, however, became in name the "Imperial"
School of Instruction.
Comparatively large issues of Ordnance Stores
were made to the School in question when jointly occupied
by Australian and New Zealand personnel, all such stores
representing correct charges against the two Dominions.
But, on the change, from "Training Depot" to "School of
Instruction", the equipment, etc. should have been
valued, in order that cash credit for the part-worn
stores might have been given to the Dominions concerned.
This latter action was not taken, and as it was thus
impossible to assess the proportionate refund due to the
Dominions, the War Office agreed to our recent proposal
that all issues to the training Depot be "on loan" only.
i.e. that the charges against the A.I.F. and New Zealand
for all of the stores issued to the Training Depot be
/withdrawn

- 4 -
withdrawn on the understanding that the Dominions
similarly waive claim to refund for the stores
"handed over" when the school became "Imperial".
It will be thus seen that the Dominions save the
difference between "cost price" and "part-worn" value
of the stores on hand, as well as the whole cost of
the stores consumed, etc., during our occupancy.
This was very satisfactory.
5. As soon as the War Office agreement to the above
financial arrangements was obtained, a complete review of their
claims was necessitated, this action resulting in deductions
(from the claims totalling £163.617. 19. 10d. above referred
 to) to the extent of £32,812. 6. 8d being made by these Head-
Quarters. Revised schedules and explanatory details of our
amendments, deletions, etc., of the claims were, in November
last, forwarded to the War Office, who have now signalled
their entire agreement in our figures. I have, therefore,
accepted the net charges totalling £130,805. 13. 2d. and have
credited War Office Advances Account in our books with that sum
accordingly. A summarised statement showing gross final
figures of (a) original amount of claims, (b) disallowances by
A.I.F., and (c) amounts accepted, is attached hereto for
notation.
6. In conveying this information to you I do so
with the assurance that outcome of our negotiations has
resulted in substantial saving to the Commonwealth, the War
Office having acted considerately (as will be recognised in this
resume) on several of our proposals put forward.
7. In view of the above facts, I shall be glad if my
action in accepting the charges totalling £130,805.13. 2d. may
now be confirmed, this action finalising the whole of the
Egyptian "1915" Ordnance transactions.
(Sgd) BLOW,
Captain,
O.C. A.I.F.Cadre.

Statement of War Office Claims for Ordnance Stores, etc.
supplied to A.I.F. in Egypt during 1915.

(a) This claim was originally accepted "in toto" by Brigadier
General Anderson (the then Commandant) as will be observed
from his reports to Melbourne, the original vouchers having
gone astray in transit between Egypt and England. Collation
of certain details recently received from Egypt enabled
determination of our correct liability, viz. £5,678. 9. 10d. 
As £10,973. 19. 0d. was in 1917 credited to War Office
Advances Account in our books, £5,295. 9. 2d. disallowed has
now been "written back" that rectifying the adjustment.
(b) This claim for £1,190. 9. 9d. represents Ordnance Stores
issued exclusively to the Australian and New Zealand Training
Depot and School of Instruction, Zeitoun - hence its
cancellation.
(Sgd) BLOW.
Captain.
O.C.,A.I.F. Cadre.
23/3/1921.
A.I.F. Head-Quarters,
Australia House,
Strand,
W.C.2.

241.
August 8, 1925.
Dear White,
I have one other puzzle to refer to you - the last. I
hope, for the present. It concerns the origin of our training
units. As far as I can make out, the course of events is contained
in the summary which I have made out and attached.^x The points
about which I am not clear are as follows.
[* ^xI think you will
find this interesting.
The events have never
been collated before.*]
(1) Spens was, at first, clearly faced with difficulties too
great to enable him to establish an efficient training depot. You
were in Egypt during the autumn, when sent away sick from Anzac.
Did you receive any impression as to whether he was doing as well
as possible under the circumstances?
(2)From such papers as I have here it looks as if Spens was
really the originator of our, later, very efficient training system.
Could you tell me if this, in your opinion, is so?
(3) When Godley returned to Egypt he intimated to Senator
Pearce that he had arranged to make Irving the absolute and unquestioned 
head of Australian H.Q. and Training. ^x Later , on Birdwood's
arrival, Sellheim was, in effect, reinstated. Was this
Birdwood's action?
[*^x though he (Godley)
spoke well of
Sellheim*]
(4) When Sellheim was reinstated, presumably he was nominally
in charge of Australian training. Do you know whether Birdwood
wished or intended him to have this control?
(5) In answer to a complaint from Sellheim you wrote to him
that his troops must, of course, be trained under Maxwell's command
in such a manner as Maxwell wished. From this I assume that
Maxwell desired Spens to continue training the Australians in spite
of Sellheim having the nominal authority.
(6) Murray decides to bring the Australian Training Centre
and Base Depot to Tel-el-Kebir, Maxwell apparently objects, but
about this time Murray supersedes Maxwell. It is at this juncture
that General Birdwood and yourself draw up the amended training
scheme, and authorise the establishment and appoint officers to
fill them. It looks as if Birdwood and yourself intended that the
training at Tel-el-Kebir should be carried on under an Australian
officer. The only factor that makes this seem doubtful is that in
drawing up the establishment of the Combined Training and Base
[*(and staff)/*]
Depot you allow only for a "Camp Commandant"*. Sellheim fills this
post with Spencer Browne. Birdwood's letters seem to show that he
thought that the Training Depot, after the new divisions had been
formed, would be a comparatively small command, and he may have
considered Spencer Browne good enough. Can you tell me whether, at
this stage, you and he intended that the Australian Training Depot
should be commended, under Sellheim, by an Australian Officer?
(7) On March 29 Birdwood and yourself left Egypt; and almost
immediately after^wards Murray appointed a British general and staff over
the head of Spencer Browne to train Australians and New Zealanders
at Tel-el-Kabir. I take it that this was in a line with Murray's
desire to see Australians brought up to British standards of discipline
and training by the employment of British officers, in whom he
obviously had greater confidence. Have you any knowledge as to 

2.
whether this was the case? Did Birdwood know that Murray was going to take this
line of action? Sellheim, of course did not
(8) On April 27 Godley writes to Pearce that he hopes that
Irving may be given a further trial in command of the Training
Depot at Tel-el-Kebir. But three days later Godley agrees to the
"modus vivendi", by which General Hare is definitely established in
charge of  the training. It is rather difficult to gauge Godley's
attitude towards the matter - had you any indication of it?
(9) Shortly afterwards Inglefield (late of the 54th Division
supplented Hare, and seems to have retained command until the

depots moved to England. In the meantime Godley, and especially
Delavoye, had clearly become highly interested in the training
battalions, and issued strong instructions as to the class of officer
to be employed there and the minimum length of time for which
they must be left - viz., 6 months. Godley wrote to Pearce that
Spencer Browne was weak, and what was really wanted was "a good, live,
young, active, energetic major-general". On the transfer to England.
Spencer Browne was at once eliminated by Birdwood (Godley had probably
spoken to Birdwood); and I think the course of events which
followed was as under.
(a) At the end of May Sellheim arrives in charge of A.I.F.
H.Q. and Training.
(b) Newton Moore is preparing (unofficially) for the
reception of A.I.F. Training Centre near Salisbury.
(c) Mid-June - Spencer Browne and staff arrive.
(d) Hughes is impressed with the fact that a stronger man
than Sellheim is required in London to deal with the War
Office, and favours Newton Moore.
(e) Sellheim returns to Australia; Anderson takes over
London H.Q., which is separated from training and depots;
and Moore takes over and organises training and depots.
I have not yet gone closely into the xxxxx records of the
developments in England, and would therefore at present only ask you
to let me know whether these developments (a) to (e) are, roughly
speaking, correct. No doubt later on I shall get much fuller particulars
from the documents. With regard, however, to questions
(1) to (8), I think I have been through every document available in
order to piece together the course of events, and I am asking your

assistance to help me in checking my opinion formed after digesting
those documents. Quite short answers, numbered to correspond with the questions,
will be sufficient to afford me all the assistance I need.
Yours sincerely.
C.E.W. BEAN
Major-General Sir S.B.B. White, K.C.M.G., K.C.V.0.,
Chairman,
Public Service Board of Commissioners,
Melbourne, Victoria.  

I In the spring of 1915 Major-General Spens arrives from England
in order to form an Australian and New Zealand Training Depot, in
which to train reinforcements. The depot is formed under him at
Zeitoun, absorbing and displacing the Base Details branch of Sellheim's
Intermediate Base Depot.
II When the Anzac Corps sails for Gallipoli a Base Depot is formed
at Alexandria. I don't think reinforcements were at this time sent
forward from the training depot to the Base Depot - the Base Depot
was practically a kit store. Reinforcements were sent from Zeitoun
to the front direct.
III As Australians return sick and wounded and become convalescent,
a Base Details camp seems to have been formed as part of the Training
Depot. Later, two such camps are formed - for "A" details and "B"
details, according to their medical classification. From these men
are passed into the training battalions of reinforcements.
IV Spens organises into battalions the reinforcements received from
Australia, and trains them in these battalions. The battalions also
receive the sick and wounded as they become fit for training (see
previous para.).
V Before August 1915 the staffing of the training battalions has
become acutely difficult, there being no establishment, and officers
and N.C.O's being continually changed. The senior officers sent
back from the front were not especially efficient, and there were few
of them. He obtains a small establishment of N.C.O's for each training
battalion from ^ through Legge. As battalion commanders he sometimes
has to appoint English instructors, they being the only seniors.
VI In August there were five such battalions. In November Spens
forms two more, and allots one battalion to each brigade at the
front - the first appearance of this principle. He also forms a
training regiment of light horse. Artillery are trained in two
sections - one N.Z., one A.I.F. - each possessing two guns. Two
more guns are cabled for to Australia on September 9.
VIII During the summer the 1st Aust. Div. Base Depot is moved to Mudros,
where it apparently acts as a base depot receiving reinforcements
 

2.
In November, in order to make room for British divisions arriving at
Alexandria for Salonica, the 2nd A.D.B.D. and the Kit Store are
brought back from Alexandria to Gizeh and Gozireh, and, I think,
the 1st Div. Ammunition Column to Zeitoun.
VIII On January 1, 1916 Spens, who has been urging that a fixed establishment 
is needed, is told to wait for Irving's arrival, since
the Australian Government is with the consent of the War Office
sending Irving to Egypt to co-ordinate, under Maxwell, training, administration,
and organisation, and to command all A.I.F. troops in
Egypt outside Anzac Corps. (Irving arrived on Jan. 27.)
IX On January 3 Spens urges on Maxwell the establishment of three
light horse training regiments, one per brigade, on the lines of the
British reserve cavalry regiments, and asks for establishment of
permanent cadre. Maxwell says to await arrival of Irving.
X On January 6 Anzac Corps H.Q., having then arrived, he forwards
this request to Godley and White.
XI January 9. White, referring to this proposal, asks Spens to
suggest establishment for officers and N.C.O's for training brigades
and training battalions.
XII January 9. Spens forwards suggested establishments for three
light horse regiments and eight training battalions (one per brigade),
and training batteries for artillery. His letter enclosing
this crosses White's letter asking him to suggest a scheme.
XIII January 10. White publishes Anzac Corps G.S. circular No. 6
containing scheme for training regiments and training brigades and
battalions. Circular states that the establishment of permanent and
acting ranks for each training unit will be laid down. It is not,
however, yet authorised.
XIV January 15. Anzac Corps H.Q. hears of the proposed formation
of three new Australian divisions.
XV January 21. Birdwood, through Murray, suggests two divisions be
formed in Egypt; February 2, Australia accepts. Apparently White
decides that the training battalions shall not be definitely established
until new divisions formed, because (a) his attention has to
be concentrated on arrangements for new divisions, and (b) he desires