Aries paid elsewhere in the Colonial service having due regard to the cost of living in Hong Kong, I am not satisfied that the existing rates of pay can be regarded as insufficient. Moreover, since Mr May's despatch was written, it has been decided that sterling salaries shall in future be paid at the rate of 2/- to the dollar, with the result that a considerable addition has been made to the emoluments of all officers in Hong Kong, and in these circumstances I am not prepared to consent to a further increase.

Mr May adduces figures to show that the prospects of officers in Hong Kong compare unfavourably with those of their colleagues in the Straits Settlements. If, however, any such comparison is to be made, it should be not between the service of Hong Kong and that of the Straits Settlements but between the service of Hong Kong and that of the Straits Settlements and the F.M.S taken together. A comparison on that basis shows that the prospects of Hong Kong compare rather favourably than otherwise with those of officers in the Malay Peninsula, but I will not labour the point as I regard any such comparisons as inadmissible.

The services of Hong Kong, the Straits Settlements, and the F.M.S. are not distinct services but branches of one amalgamated service, officers appointed to any one branch being appointed on the clear understanding that they may be transferred to either of the other branches. Therefore, in considering an officer's prospects, it is necessary to look not only to those appointments which are open to him in the place in which he happens to be serving but to the opportunities for promotion afforded by the service of Hong Kong, the Straits Settlements, and the F.M.S as a whole.

I have &c.

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