In 1862: Permanent Revenue £101,929; Premiums 29,583; Total £131,512.
For the current year the Revenue is estimated at: Permanent Revenue £103,000; Premiums 15,000; Total £118,000.
But I am not aware that any land sales have taken place, or are likely to take place this year, as since the date of the preparation of the Estimates the Surveyor General has reported the sale of the last lot within reasonable distance from Victoria on the Hongkong side of the Harbour to have taken place, so that no receipts under the head of premiums can be anticipated for this year; and after carefully going over, and straining to the utmost, every item of revenue in the Estimates for the present year, and comparing them with the actual receipts for last year—now known—I cannot, after adding £2,000 to the item of postages, which appears underrated, make out a larger probable fixed revenue than £105,000.
I have not overlooked the fact that the increase in what I have termed the permanent revenue has been at the rate of about £12,000 per annum for the last four years, but this has arisen in a great measure from exceptional causes which no longer exist. The increase in the "Rents" ceases with the sales. The Opium Monopoly has for the present, I think, almost reached its limits. The Police Rates are limited by law to the Police Expenditure, which was fixed last year by Ordinance upon a new and extended basis which will not require immediate alteration. And the Postal Receipts—an item but recently brought to account—is more a nominal than a real increase, being caused by the transfer to the Colony of the local Post Office, which brings with an increase in the revenue the expenses of a large Establishment.
In estimating the permanent revenue, I have not taken into account the possible sale of lands in Kowloon, as, even if the questions connected with the appropriation of that Peninsula are settled in a way more favorable to the Colony than at present appears probable, the acquisition could not be made remunerative for several years. If the Government sells land there, a concurrent outlay must be made for Police Stations and other Government Buildings, Piers, Roads, Streets, Bridges, and Drains, which will exceed any sums that can possibly be received for premium on land sales for some years, but which must nevertheless be undertaken by Government if the land is to be sold at all. I therefore leave Kowloon out of both sides of the present calculation.
And here I may notice an error into which I think you have fallen in your letter upon the subject of public works, and which appears to me to spring from a want of appreciation of the exceptional character of Hongkong. You state that the Duke of Newcastle has directed you to bring to my notice the large expenditure which has taken place during 1860-2 on public works "because although there is no better way of disposing of surplus revenue than on works of public utility, the amount of that expenditure is in a great degree regulated by the amount of surplus revenue of which it in some degree thus 'furnishes a measure:'" in other words, I apprehend, that public works are undertaken because there is a surplus, which, however, if necessary, would be available for other purposes. This may be the case in a great measure in Colonies which have been long established and in which the development of wealth and population is gradual, but it is not so in Hongkong. There the population has nearly doubled in four years, and although this increase has brought, no doubt, an annual addition to the revenue, it has necessarily involved a large and immediate capital outlay in public works. If British Institutions are not to fall into disrepute, the enlargement of Gaols, Courts of Justice, Police, and consequently Police Stations, Hospitals, Schools, Markets, and other Government Establishments must keep pace with the growth of the population. Such outlay is not, therefore, as your argument assumes, optional, and large as it has been in Hongkong of late, I do not hesitate to state that it has not been as large as it should have been solely in consequence of the inability of the Surveyor General's Department, although largely reinforced, to get through the additions as fast as they have been required.
Again, an increase in the population leads to an increase in sales of land, and consequently to a large addition under the head of Premiums. But sales of land render it necessary for the Government to undertake Roads, Streets, Bridges, General drainage, Public Piers, and other works without which the land either would not sell, or would produce comparatively nothing. So far then from the recent expenditure on public works furnishing in Hongkong any measure of the real available surplus, I think without such Expenditure there would have been no surplus, and good government—the condition upon which the increase in the population rests—would have been impossible.
Taking then the present and probable future revenue of the Colony for some little time at £105,000, I find that the fixed ordinary Expenditure, without the outlay of one shilling upon public works, amounts at present to £85,000. In May last, when the Estimates for 1863 were under consideration, the ordinary Expenditure was put down at £82,500. Since then, there have been some additions to Gaols, and other Establishments, which will make the actual ordinary Expenditure, as approved by the Secretary of State, not less than the sum I have named of £85,000, and this leaves but an annual surplus of permanent revenue over ordinary Expenditure of £20,000—a sum, in my opinion, barely sufficient, without the commencement of a new public work of any description, to maintain the existing ones in serviceable repair.
This will be readily understood by any one acquainted with the peculiarities of Hongkong and the extent of the public works. In no place that I know of do buildings require such constant repair and become so soon ruinous if neglected. The Town is situated within the Tropics and is built on the face of a steep mountain at an angle of about 40 degrees. It has a Sea wall and road extending along its face for nearly four miles.
No human foresight or precaution can guard against the casualties which, under such conditions, accompany typhoons and mountain torrents. 7 inches of rain fall in a night, bringing down floods and rocks from the mountain overhead, I have known, which destroyed main drains, and culverts, converted the principal thoroughfares into impassable ravines, and otherwise did damage estimated at £5,000.
There remains, therefore, to be considered with respect to the ability of the Colony to meet the contribution demanded of it, only the balance in hand, which it is estimated in your Despatch will be on the 31st December next £90,000.
In the financial Estimate for this year, which will be found on the first page of the Estimates for 1863, it will be seen that I estimated the excess of Assets over Liabilities at the close of the year at £75,000. I think this sum should rather be reduced than increased. I am aware that the excess of assets over liabilities at the commencement of the present year was £16,000 in excess of my Estimate, but this was caused almost altogether by the unexpected produce of the last land sales in 1862, and by arrears of superannuation contribution not calculated on, and this excess will be covered by the corresponding abatement to which I have already referred in the probable revenue of the present year.
The Estimate, as corrected by subsequent experience, stands thus: Excess of Assets over Liabilities on 1st January 1863, £98,000; Probable Revenue 1863, Ordinary £105,000; Public works £...; Total £203,000.
Expenditure 1863: Ordinary £85,000; Public works £45,000; Total £130,000.
Probable Excess of assets on 1st January 1864, £73,000.
From revenue, I have deducted £15,000 for premiums and added £2,000 to Postages. To Ordinary Expenditure, I have added £2,500, as explained before, and to public works £2,500 to cover the cost of purchasing and fitting out a Convict Hulk not estimated for. If the result is found to differ much in the way of excess from this amended Estimate, it can only be by the inability to expend within the year some of the money voted for public works, which will only have to be expended next year, and will make no real difference in the statement.
Thus, from the nominal excess, however, of Assets over Liabilities, it must always be borne in mind that a considerable abatement must be made to arrive at the actual available surplus at any moment; because the revenue accrues due half-yearly, while the debts of the Colony are paid monthly, so that there is always far more due to the Colony than it owes. I find that while on the 1st of January last the excess of Assets over Liabilities was estimated at £98,549, the actual Cash on hand, including the current balances in hands of Treasurer and Agents General, amounted only to £83,841. In the same way, a nominal excess of Assets over Liabilities of £73,000 at the end of this year would represent but a cash balance of about £58,000: the whole of which sum, even, would not be available for disposal, as small balances must be retained in the Treasury in Hongkong and in the Crown Colonies Office in London, besides a stock of the subsidiary Coinage for issue to the public as required.
Against this real available balance of between £50,000 and £60,000, which is likely to...
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