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The educational work of the Colony was also temporarily paralysed. An endeavour was made to counteract the panic that set in at first by keeping the schools at work in spite of the diminished attendance caused by the removal of Chinese families from the Colony. Since September, the schools throughout the city are filling again by the return of fugitives, and in a few months more the decadence will be made good by the recuperative force which is evidently inherent in the educational movement.

For reasons connected with retrenchment, three Government schools have been perma- nently closed. Of the grant-in-aid schools 9 were closed, but 7 new schools have taken their place. Queen's College will, I believe, shortly be placed under the direction of a Governing Body, and the Police School has come under the inspection of the Education Department.

There are now 21 Government schools and 100 grant-in-aid schools at work in the Colony in addition to a considerable number of private schools.

In regard to crime I may observe that there has been a marked decrease in the number of serious offences brought to the notice of the Magistrates.

Larcenies, burglaries, kidnapping offences against the Women and Girls' Protection Ordinance, all show a decline up to the 31st October as compared with 1893. Many of the offences that did occur were directly attributable to the plague and its attendant circum- stances, whilst, on the other hand, much of the decrease is doubtless owing to the existence of that scourge and the flight of the criminal population. Nevertheless, during every month of the year (to the end of October), crime appears to have been at a satisfactorily low ebb. Within the last three weeks, I regret to say, there have been several most serious cases which, we may be sure, will be dealt with rigorously.

With the exception of a new Public Health Ordinance, it will not be necessary to trouble you with much legislation during the ensuing session. This is an announcement which you will receive with gratification.

The question of exchange compensation is one of some difficulty not to say delicacy. You are aware that it has been granted in Ceylon and the Straits Settlements and the Retrenchment Committee suggested that when a favourable opportunity occurred, it should be extended to the Civil Service of Hongkong. The MARQUIS OF RIPON has agreed to terms which, not being so favourable as those granted to the Straits Settlements, the majority of the Hongkong Civil Service have at present declined to accept, whilst others, to the number of about 55, have agreed to accept them. You will be asked by the Senior Unofficial Member to vote $80,000 on this account, a sum sufficient to cover the compensation to be awarded to all the officers entitled to it. Not nearly the whole of that amount will be required unless the officers who now reject the offer agree later on to accept it. For this year the cost can be paid out of balances, which stand, in round numbers, at the very satisfactory figure of $600,000, exclusive of all monies derived from loans. The compensation is as follows:-In future half of an officer's salary while on active service will be calculated at 3/-, and his salary when he is on leave of absence will be paid at the same rate. In the Straits Settlements 4/- is to be granted to officers on leave.

The majority of public officers in Hongkong consider that they are being treated in this respect less favourably than their brother officers in the Straits. They have, consequently, memorialised the Secretary of State, and it is hoped that his Lordship will reconsider his decision in the matter, as the principle of higher remuneration has been recognised in the other Eastern Colonies and the amount involved is only about £1,400 a year.

In conclusion, Gentlemen, I thank you for the attention with which you have listened to my somewhat lengthy statement. In these very critical times it would be rash to attempt to forecast the future, but it seems quite possible, if not probable, that one of the results. of the present war will be an expansion of commerce. In that case it is not too much to hope that Hongkong will have its full share in any such development.

I shall faithfully co-operate with you in any measures having for their object the public good, whilst on the other hand I shall rely upon you to assist the Government in all matters which may be conducive to the welfare of the community.

War with its attendant horrors still overshadows the North of China, Corea, and Japan, and the clouds of the recent pestilence in our midst cannot yet be said to be thoroughly dispersed.

Whilst we trust that Great Britain and the other Western powers may not be involved in the former we hope for the merciful preservation of Hongkong from a recurrence of the latter.

Whatever happens, however, we must be prepared at any cost to do our best to guard the public health from danger, to meet any difficulties that may arise, and above all to protect, cherish, and, if possible, develop the large and valuable commerce of this important Colony.

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