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Military Works Loan for works at Hong Kong. The demands on the finances of the Colony have, however, lately been and
are likely for some time to come, to be so heavy, owing to the necessary development of its new territory, as well as cwing to military requirements, that the Colony is unable to meet those due to the latter cause except by spreading the expenditure over a long series of years Their Lordships
will bear in mind that this is being done in the case of new
barracks under construction, on an arrangement by which the
actual expenditure each year is defrayed by the Imperial Government, the Colony paying back annually a fixed amount
until the proportion of the cost, payable by the Colony, hus
been attained. This will not be the case for some years
after the barracks have been completed.
4
A similar arrangement would be necessary in the
case of the Defence Works, if the present system of the
incidence of cost of works being entirely on the Colony is retained. A proposal has however been made (since the
report of the Conference of July 1899 was sent to Their Lordships), and is under consideration, by which all military expenditure in the Colony (exclusive of cost of local volunteers- is proposed to be defrayed by the Imperial
Government, the Colony paying to that Government a fixed
proportion of its revenue as an inclusive military
contribution.
5.
Whether this new system, which would have the great
advantages of simplicity and of removing friction with the
Colony, is adopted, or whether the old system,worked out as
in the case of the contribution to barracks so as to dis-
tribute any abnormal expenditure over a series of years, is
retained, it will be necessary for the cost of the defence
works now under consideration to be defrayed in the first
ins tance
instance by the Imperial Government, which, with the new system, would be indirectly recouped by the increased, Military contribution, and with the old system, by an agreed sum being recovered annually from this Colony until the whole cost of the works has been refunded
6.
•
If he views of the Lords Commissioners of the
Admiralty in which Lord Lansdowne concurs, are to be met
it will be necessary for the sum of £12,000 to be provided in the current year from Imperial Funds to allow of the works being commenced at once. But as this will be at any rate a temporary departure from the principle hitherto adopted of Hong Kong de fraying the cost of works constructed for the defence of the Colony, I am directed to request the sanction
of Their Lordships to the proposed expenditure of funds from Imperial sources, pending the settlement of an arrange- -ment by which repayment in one form or another may be obtained from the Colony. With regard to this arrangement
a further communication will be addressed to you at a later
date. It will of course, be the object of this office to
secure that the Colony pays for these works either directly, or in the shape of an increased percentage, as already explained .
7.
Lord Lansdowne proposes that this £12,000 required for the present year for works at Hong Kong shall be taken
from the funds provided under Head 1 of the Military Works
Loan in 1899. He has under consideration a revision of the
programme already submitted to Their Lordships for works
under this Head, which will be communicated to you as early
as possible .
(Sa)
I am, Sir,
1
Your obedient servant
A Higgins
Per Acct:Genl: