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will perceive that I found myself in an embarrassing position as to the Kowloon tenants. The difficulties might have been in a great measure avoided if a less premium and a higher rent had been originally demanded for the Kowloon lots. The capital sunk in premiums would have been a stimulus to the tenants to complete the reclamation of their lots and the outlay thereby rendered reproductive. Whereas the time for improvements was allowed to pass over, and when commercial embarrassments arose, the tenants generally preferred a release from the further payment of heavy rents to speculating in the construction of the Sea Wall - in addition to continued payment of these rents.

22. Therefore I hope the reduction of the latter during the next five years will further the reclamation of their lots, and pay up their share of the Sea Wall, will meet Your Grace's approval, being the best measure I could devise for preventing the whole undertaking, already too far advanced to be abandoned, from falling upon this Government.

23. Meantime I have formed some plantations of trees at Kowloon, and when the Marine Lots under the present arrangement shall have been reclaimed and the Government Sanatorium been completed, I trust Kowloon will become...

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