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The atmosphere immediately cleared and Sir F. Lugard became all that was most charming and reasonable. then set myself to acquire knowledge informally from those members of the service with whom I was already on friendly terms and to read the papers which Sir F. put before me, ending up with several discussions with him and Sir H. May, the result of which appears in this despatch.
The circumstances of Hong Kong differ so widely from those of the Malay Peninsula that there is no need to endeavour to assimilate the salaries, except the pay of Cadets. Fere similarity is almost essential because the great majority of the young men who pass the examination know nothing about differing circumstances and naturally prefer to join the service which seems to be most attructive at the start.
The real trouble in Hong Kong is not so much that the salaries are too small as that they have been reduced. The sterling salaries were fixed so as to
be roughly equal to the old dollar salaries with the exchange compensation then paid i.e. an allowance to bring up half the salary to a value of 3/- to the dollar, but before the scheme was actually introduced it was decided to grant exchange compensation on the whole of the dollar salary of an officer i.e. to pay it all at 3/- to the dollar. This of course had the effect
of making the sterling salary in each case a good deal lower than the dollar salary. Nobody took the trouble to consider the position fully at the time.
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