inconvenience to the

colony of a

Naval yard existing in the middle

of the town

from the extension to

the yard then contemplated, & the

large scheme of extension, estimated to cost £1,275,500,

was

then decided.

Considerable progress

has

been made with the scheme

The annexed form Major Pilkington shows that the

Dock enclosed plan will

probably be

available for

the end of

next

year.

6. It is worth noting

that in a private letter to Lord Selborne went rather further

than in his despatch, saying that the colony would be prepared to

pay the whole cost of a new

Naval Yard at

Quarry Bay, & that Lord

Selborne accordingly did not like to give

an absolute negative to the proposal, but decided instead to make the offer in the enclosed letter.

I think we should at once decline this offer with thanks, on

the ground that the expenditure which would be involved, is more than Hongkong

can bear having regard to the advantage which the Colony would

receive from the scheme.

It is of course impossible to

give any exact estimate of the

cost, but the following points have to

be borne in mind; -

(1) Judging from past experience

the date at which a new Naval

Yard fully equipped with dock, &c, would

be ready, if approved,

would be something

like 10 years from now, possibly more, & the Admiralty could not afford meanwhile, to stop any of the

existing works, since, if they

were stopped they would be

much needed.

(2) Therefore there would be no saving

of expenditure.

(3) The colony would have to bear the total cost of fully equipping

a new Naval Yard

with dock, &c.,

the cost of

which, apart from cost of site, could hardly be less than £2,088,880

might be considerably more, this would involve for interest &

annual charge: sinking fund, &c.

of at least

about 4% of

the present revenue of Hongkong;

In return for this large outlay, the

Colony would receive

only

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