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and what to the Imperial Government. This really seems a matter of no moment, as the total cost of these services will be known as well as the total cost of maintaining the coaling-station and the proportion of this total cost defrayed by the Colony. At present the cost of the garrison cannot be allocated between the two Governments paying for it. Naturally, the Imperial votes or loans for works will require some increase, while the total annual Army Vote will be credited with the additional amount received as appropriation in aid.
10. It is a question, however, if the system here suggested is adopted, at what rate the percentage should be fixed. For the total sum to 1909, inclusive, to be equal to the amount that would be raised under existing arrangements the per- centage should be about 21, on the assumption that the increase in revenue will go on at the average rate of the last eight years. A difficulty, however, at fixing it at this figure arises from the fact that at Singapore it has been fixed at 20, and the argument that Singapore being a richer Colony, 20 per cent. of its revenue means a larger sum than 21 per cent. of the revenue of Hong Kong, is not likely to appeal to the poorer Colony. If Hong Kong pays 20 per cent. in place of the present 17 per cent., of the annual payment of 45,000l. recently settled on with regard to barrack services, and of the payment of 10,0007. a-year for nine years suggested above for defence works, the War Office will lose by amounts rising from about 3,0001. in the first year to about 4,5001. in the last, or by something under 35,000l. in the whole period. This would be in effect as if the Colony only contributed 65,000%. instead of 90,000l. to the new works. The calculations are, however, based on the assump- tion that the rate of increase in the revenue will be the average of the last eight years. It is likely, however, to be much more. The administration of the territory lately taken over will necessitate very considerable increases, and it is not improbable that the additional 24 per cent. on the total future revenue will produce the amount of 14,5001. a-year required for the barrack services and defence works now in hand and proposed.
11. For the above reasons it would seem advisable that an arrangement should be made with Hong Kong, similar to that which has already been made with Singapore, according to which 20 per cent. of the Colonial revenues is payable by the Colony in full return for the annual cost of the Imperial garrison, including all capital expendi- ture required for military lands and buildings. As part of this arrangement, it should be laid down that all lands required by the War Department which are the property of private persons will be purchased at the cost, and will become the property of that Department. Lands which belong to and are occupied by, or are a source of revenue to, the Colonial Government should be similarly treated. Colonial lands not in occupation and not a source of revenue should be granted free of cost to the War Department if required for military purposes, with the understanding that they will revert to the Colony if no longer so required.
When it is necessary to buy land from private owners, the War Department should not carry out the purchase itself, but should leave this to the Colonial Govern- ment, which possesses special powers of resuming land under a local Ordinance, and could probably buy cheaper than the military authorities.
1900
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January 26, 1899.
M. NATHAN.
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