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20. As all Ordinances not specified in the schedule attached to. Mr. GOODMAN'S draft Ordinance will apply to the new territory, you should carefully consider whether there are any others not alluded to in his memorandum, which it might be also desirable to exclude.
21. There are various other questions to be considered in connexion with the new territory which will require your careful consideration, and some of which have doubtless already received your attention. I do not propose, however, to do more than refer to them generally at the present moment, as their ultimate decision must depend in a great measure on the course of events.
22. You will have gathered from my previous remarks that I am in favour of utilizing the existing machinery of Government in Hongkong as far as local circumstances will allow. This principle should, therefore, be borne in mind in considering all questions connected with expenditure and taxation. Whatever expenditure is incurred should appear on the Hongkong Estimates, and whatever revenue is collected should go into the Hongkong Exchequer.
23. It will be seen from p. 13 of Mr. LOCKHART's report that the total revenue from taxation of the new territory is estimated at about £16,000, and this may be regarded as the income which you will have at your disposal for the first year or two at any rate. It should amply suffice to defray the initial cost of a simple ad- ministration which at first will amount to little more than supervising local bodies and protecting life and property, unless there is a large outlay on public works, Some expenditure on public works will no doubt be necessary from the very first. and as the territory progresses this expenditure may uaturally be expected to increase. To meet it Mr. LOCKHART has recommended that recourse should be had to a loan; but, while I am in principle not averse to borrowing for the pur- pose of developing a district, a province, or a colony which promises to be remunerative, I must keep in view the present state of the finances of Hongkong, and if the new territory can be developed without having recourse to a loan it will no doubt be preferable. I shall expect to receive your recommendations on this point after you have considered it in all its bearings. It would, however, I think under any circumstances be desirable that the Director of Public Works, possibly with other expert assistance, should consider and make suggestions as to what public works, in the nature of roads, bridges, police stations, etc. should be undertaken at once, and also to advise as to future undertakings. Whenever money is available for the purpose it will be desirable to secure the services of a mining expert to make a detailed geological report, and I shall be glad if you will bear this latter point especially in mind.
24. The question of titles to land should be settled as early as possible; and in order to expedite the work of registration, holders of land should be allowed to register their titles at an office in the new territory instead of having to waste time by coming to an office in Victoria. The officer, moreover, who is entrusted with the duty of settling the land titles should, within reason, be given for the time being full powers to deal with all questions of the kind that may come before him. When all the land titles have been settled and proper surveys made the principal land office will be in Hongkong itself. The examination into titles should not be of too technical a nature, and where lengthened occupation or improve- ments can be shown, with no adverse claims from private individuals, a Govern- ment title should be granted, even if no other is forthcoming. Security for all reasonable rights in regard to land will be a great inducement to content and loyalty and to the popularizing of British rule.
25. The land question, however, by no means ends here and there will be much left to consider after the preliminary survey is completed. The land tax will no doubt be at first the principal source of revenue, and it should be distinctly understood from the first that, as the land becomes more valuable, the tax will be subject to revision at intervals of years. It will also be necessary to consider what shall be the tenure of Crown land. Seeing that the territory is held under lease for ninety-nine years the question of freehold grants does not arise, and the land should be leased for stated periods, not exceeding the term which I have laid down in the case of the present Colony with powers of resumption on fair terms if the public service requires it.
26. In dealing with the question of what laws of Hongkong should be extended to the new territory I have not made any reference to the administration of the criminal law. In this matter I should wish you to be guided generally by the