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61. In May of this year occurred the severest storm of rain and thunder ever experienced in the Colony. During 36 hours there fell some 38 inches of rain, and lightning was constant during the whole time, fifty flashes and more being occa- sionally observable in a single minute. The effect, upon a place situated as is Victoria on the lower slopes of a ridge of high hills, may be easily imagined. Landslips caused the discharge of many thousands of tons of loosened stones and earth upon the lower levels, uprooting trees, filling reservoirs, blocking and burst- ing sewers and raising some of the waterside streets from 6 to 10 feet above their natural level. In one place a strong stone and brick sewer was burst and the nineteen-feet-deep earth above it was carried away leaving a gap 300 square yards in extent; and huge granite boulders, descending from the heights destroyed in three places the solidly built cut-stone conduit of the Tytam Water-Works. For- tunately but few houses were destroyed or seriously injured; but roads, streets, sewers and other Government property suffered greatly, costing it is estimated, $112,783 for repairs. Some few lives were unhappily lost, principally by lightning; and it is matter for wonder that the number was not much larger; indeed when it is calculated how many millions of tons of water fell on the steep incline above the Town, it is a subject of congratulation, and speaks well for the general solidity of work, that there was not a far greater aggregate of destruction. In the course of a few months reconstruction and repairs will have removed in most places all traces of the storm; but some of the damage is reparable only by time, and it will take years before Glenealy Ravine, hitherto remarkable for its abundant and luxuriant foliage, and other similar spots, can completely recover their former beauty.

62. Quite recently occurred an incident which at one time threatened a serious complication with China. Two Chinese were arrested in Kowloon, on territory belonging to this Colony, by a number of Chinese soldiers evidently acting under superior authority. There was at first much unwillingness to restore the prisoners on the ground that the place of arrest was not British. But on further investigation it became certain that the information at first received by this Government, was correct, and the news having in the meantime arrived that the men were about to be executed as actually happened in a similar case some years ago there was immediately made a second and more energetic protest on behalf of this Govern- ment, which happily produced the desired effect. The men were delivered to Mr. ALABASTER, Her Majesty's Consul at Canton, by the Viceroy of the Two Kuang and brought to this Colony.

63. The Viceroy had doubtless been misled by the reports of his officers as to the place of the arrest. They, it appears, had for some time previously been on the look-out for the chief prisoner, who lived on British ground close to the border; and at last apparently losing patience they crossed the line and seized him in his own house. I have not yet heard, however, that any of them have been punished either for the act or the subsequent mis-report of it.

64. The arrested men having, after their return bere, been tried before a Ma- gistrate on a charge of piracy and murder preferred on behalf of the Chinese Government, they were discharged from custody, the evidence against them being held insufficient to warrant extradition, and they forthwith left the Colony before their release became known to the Government. If, as there seems reason to believe at least as regards one of them, they were really guilty of atrocious crime, this result is a matter for much regret; but the case will serve to accentuate the necessity of improvement in the testimony produced in connection with extradition charges; and what is of more importance to this Colony, it will, it may be hoped, induce greater caution on the part of Chinese Officials in respect of the violation of British territory, of which this is by no means the first example, though it is, I believe, the first occasion of the restoration of the prisoners.

65. Among the leading features of the period under report, should be noticed the great rise in the price of land. Since 1881 the market value of marine lots, has become enhanced at least 50 per cent. on the average, the rise in some instances being much greater, while inland town lots have advanced 15 to 20 per cent. The greater part of this rise has taken place within the last two years, and by way of illustration, as well as to show how great is the present value of land in favourable situations, I may mention that an area of 7,037 square feet which cost $40,000, in 1883, sold for $70,000 in 1887 and is now refused for sale on a bona fide offer of $150,000-over £3 the square foot or at the rate of more than £130,000 sterling per English acre. Another area of 44,000 square feet, which cost $335,000 in 1887, actually sold in 1888 for $465,000, about 32/- a square foot or £70,000

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