368
HONGKONG.
Confidential.
GOVERNMENT HOUSE,
HONGKONG, 13th July, 1906.
MY LORD,--Referring to my telegram of the 14th and to Your Lordship's of the 19th May on the subject of relief to Government servants on account of the rise in silver seriously affecting sterling salaries, of which telegrams I enclose copies for convenience of reference, I have the honour to point out that prison warders, subordinate police officers and persons of similar salary and status with regard to whose relief Your Lordship is prepared to consider proposals are not the persons most affected by the present state of affairs. They are provided with Government quarters, fuel and light; whereas rent is a very heavy item of local expenditure on the part of persons for whom no such provision is made and a great proportion are also unmarried and live in messes, an arrangement which greatly reduces the necessary cost of living. It is the class above these such as schoolmasters and the junior European officers in the various departments that are most affected by the reduction in income result- ing from the fall of the dollar, though senior married officers with families and no private means also suffer, and of course all officers drawing sterling or exchange compensation salaries are affected to the extent of the proportion of their income expended locally.
2. In June, 1902. when the Sterling Salary Scheme now generally in force was approv- ed by Mr. CHAMBERLAIN the value of the dollar was 1/8. In June, 1906, salaries were paid at a rate of 2/14 the dollar. The dollar value of the sterling and exchange compensation salaries has thus fallen in 4 years to or to just over ths of its former value.
8.3
3. It is true that in some instances salaries have been raised beyond the amount approved in Mr. CHAMBERLAIN's despatch No. 171 of the 13th June, 1902, but this has been on account of increased work or responsibility and not on account of decline in the local value of the sterling salary or exchange compensation. It is also true that the value of so much of the salary as is sent home by officers on account of insurance policies, maintenance of relatives or education of children in England, or purchase of goods from England has not fallen in value, but it is equally true that if in 1902 it was possible for an officer to devote th of his salary to these purposes and to make provision for the future it is not possible for him to so devote any sum at the present time except by a curtailment of local expenditure which becomes less and less possible as local prices rise. I would add that, though if trade were flourishing and the chances of successful competition with the European retail merchants enhanced this should bring about a fall in the price of European goods purchased locally, no such fall has practically taken place at present.
4. The strongest argument against payment of sterling or exchange compensation salaries at any rate other than the current one is that by the agreements which officers have expressly or impliedly entered into they have no legal claim to any other rate. Against this however must be set the fact that it is impossible to expect a satisfied Civil Service in which the spending power of officers' salaries is constantly being reduced through no fault of their own and that with a dissatisfied Civil Service the work of the Colony is not likely to be efficiently performed, whlie new recruits of the desired stamp will be deterred from joining by the complaints of those who are constantly realizing with greater resentment the unfavourable conditions under which they are now serving. The fact that the Colony raises its revenue and frames its estimate of expenditure in dollars and so apparently saves at the expense of its servants when the dollar goes above the rate of exchange at which the annual estimates are made adds to the dissatisfaction arising from the present condition of affairs.
5. The suggestion embodied in my telegram of the 14th May was based on a conviction that some action in the matter was necessary. The practical effect of the suggestion if it had been carried out was to make half the sterling salaries and half exchange compensation payable at a fixed rate rather lower than that current at the date of the Secretary of State's despatch of the 20th June, 1902-178 instead of 1/83-and half at the average rate of the preceding month. In other words sterling salaries and exchange compensation become half a dollar and half a sterling emolument. By the permanent adoption of the arrangement when the dollar was above 1/8 the Government's gain and officers' loss, and when it was below that amount the officers' gain and Government's loss, would be one half what it is with existing arrangements.
a fluctu 30 year
$4,250
a concrete case of a salary of £500 and assuming possible in the future The gold value of the dollar to be about as much as it has been in the last een 4/- and 1/6, the fluctuation of the salary in dollars would be from or about half its lowest amount.