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With regard to the constitution of the Sanitary Board I regret that I am not yet in possession of the Secretary of State's final decision which, however, I hope to receive shortly. As regards Public Works, the extension of the Wongneichong Recreation Ground has been undertaken and is progressing. The project includes the widening and improving of the roads and an addition to the Recreation Ground of about 7 acres.

The extension of the Gaol has been proceeded with and accommodation has been pro- vided within the Gaol compound for a prison for females, instead of the unsuitable house in Wyndham Street hitherto rented for that purpose.

The provision of an adequate supply of water to the City of Victoria has received my careful attention, and projects have been prepared for an ultimate supply of 4,000,000 gallons a day throughout the year. The present state of the water supply and particulars of the proposed extensions have been dealt with in an able and elaborate report by the Director of Public Works which has already been laid before you (Sessional Paper T). That report has been referred to Mr. OSBERT CHADWICK, who concurs in the proposals contained therein. The Secretary of State has communicated to me his approval of the scheme, and contracts have been entered into, with the approval of this Council, for the commencement of the works. The waterworks for Kowloon have also been completed, and a constant supply is now available over the southern portion of that peninsula.

The new system of signalling the approach of vessels has been completed in accordance with the recommendations of the Committee appointed in 1893.

The statue of the Queen in commemoration of Her Most Gracious Majesty's Jubilee has been erected on the Praya Reclamation and was unveiled by me on the 28th May, amidst general rejoicings and loyal demonstrations.

With respect to Taipingshan considerable progress has been made with the demolition of insanitary dwellings, and the necessary works for relaying out the resumed area for building purposes. Contracts have been entered into for dealing with about one half of the resumed area, and works in connection with the greater part of the remainder will shortly be commenced. A report on the subject will be laid on the table to which I direct your attention as the anticipations which I was led to form this time last year have not been fulfilled.

As to the Praya Reclamation Works, though difficulties have arisen in connection with the rapid completion of certain portions, fair progress has been made. The Marine Lot-holders have, in several instances, obtained permission to enter into possession of their portions, and fine buildings are in course of erection on some of the land reclaimed.

In addition to the foregoing works, the condition of the villages has not been overlooked, and works of drainage, water supply, and general improvements have been completed, whilst others are in hand in Shaukiwan, Aberdeen, Mong-Kok-Tsui and Tai-Kok-Tsui. The requirements of the increasing population of the Hill District have not been lost sight of, and it is proposed at an early date to commence the construction of an improved road from near Victoria Gap to the Mount Kellet Road.

The increasing requirements of the Colony in the matter of Government Offices and the question of providing new offices and concentrating them, so far as possible, under one roof, appeared to me to call for a special enquiry. I referred the matter accordingly to a Committee, whose report I have just received. That report will be published.

With respect to Education I regret to say that the experiences of the year have been some- what unfortunate. The recurrence of the plague, and the measures taken to prevent over- crowding, together with the rise in house rents resulting from those measures, caused a large number of Chinese, as I have already said, to send their women and children out of the Colony. The attendance at schools by Chinese children, and more particularly girls schools, decreased considerably; the decrease amounting to probably 30 per cent. of their normal attendance. The attendance at five Chinese schools ceased entirely and the schools had to be closed, but as three new schools have been opened in places unaffected by plague and its consequences the total number of schools under the Education Department is 119 as

compared with 121 in 1895. The above unsatisfactory experiences have been confined almost entirely to schools attended by the poorer classes of the native population. The other schools, especially those attended by non-Chinese children, have for the most part retained their normal attendance. Efforts are being made to increase the number of schools offering English teaching to natives, but only one school of this description could be opened during the present year. Steps have been taken, however, to improve the teaching of English at Queen's College, and in order to allow more time for that purpose, the purely Chinese branch of that establishment has been entirely abolished.

With regard to shipping, Hongkong continues to hold an iraportant position amongst the Ports of the Empire. During the nine months ending 30th September last, over 7,000 ships of European construction entered and cleared at the Harbour Office, bringing and taking away cargoes amounting to nearly 55 per cent. of their registered tonnage, and conveying to and from the Colony 1,026,469 passengers.

In addition to these, 53,000 trading junks carried 1,309,338 tons of cargo in and out, and conveyed 161,991 passengers.

Compared with the same period of 1895 this means an increase of 412 European con- structed vessels, carrying 233,675 more tons of cargo, and an increase of over 8,600 junks with 125,638 tons of cargo, and a total increase in the passenger traffic amounting to 1,986.

A correspondence with the Unofficial Members in regard to the proposed abolition of the Light Dues levied to cover the cost and maintenance of Gap Rock Lighthouse will be laid on the Council table.

I consider that I am bound to redeem the pledge given by my Predecessor to the effect that this special rate should cease as soon as the cost of the Lighthouse had been defrayed.

With a view of covering the deficit which will result from this abolition five of the six Unofficial Members are of opinion that a fixed charge of 2 cents per ton should in future be imposed as light dues on all shipping entering the harbour, and in that opinion I concur.

The criminal statistics are highly satisfactory. Comparing the number of cases under various headings for the 12 months ending 31st October, 1896, with those for the preceding twelve months we find decreases of 21 per cent, in robberies from the person, 53 per cont. in barglaries and larcenies from dwellings, 30 per cent, in cases of obtaining money under false pretences, 37 per cent. in cases of unlawful possession, and 7 per cent. in larcenies. There were 25 cases of wilful wounding as against 17 in the preceding period, and 14 more cases under the Women and Girls' Protection Ordinance than in the previous 12 months. The increases under various other heads are trifling and the number of murder cases was the same for both periods.

The new Home of the Pó Léung Kuk, or Society for the Protection of Women and Girls was opened by me on the 13th of November. Government contributed, towards the cost of its erection, a sum of $20,000. The Society has already done good work, and it is hoped, that now it is in possession of a Home, it will be able not only to continue its labours, but to carry them on more efficiently. It gives me pleasure at all times to aid the Chinese community of this Colony in charitable work, such as that of protecting those who are not able to protect themselves, and I shall always be ready to give them what assistance lies in my power to render such work as thorough as possible.

From the foregoing remarks, gentlemen, you will gather that on the whole the condi- tion of the Colony socially, politically, and financially, is very satisfactory. We have had during the term of my Government two visitations of plague. We have had strikes, several typhoons and on one occasion a vast and unparalleled exodus of people, but Hongkong has held its own with wonderful vitality. Government has not harassed the community with unnecessary or vexatious legislation. The law has been enforced whenever it was necessary, but the community, speaking generally, is happily a law abiding one. The revenue has increased and is increasing with the growth of population, and the only drawback to a wider and more extensive outlook is the limited area of the Colony itself.

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