Apperved on Thy/1620/2 Straits.
155
MEMORANDUM FOR THE CABINET.
It
There is a matter upon which a deadlock hus occurred between the Treasury and my Department. will be remembered that on the recommendation of my predecessor His Majesty's Government decided to make grants to Hong Kong in compensation for the loss of opium revenue entailed by the policy of His Lajesty's Government. The principle on which the grants were recommended by Lord Crewe was that they should be equivalent to half the direct loss of opium revenue for three years;
the other half of the loss being made good by the imposition of fresh taxacion. The War Office and the Treasury insist that military con- tribution should be paid on the grants; that is to say that the actual grants should be four-fifths of the nominal amount.
No mention of this was made at the time to Hong Kong, nor did it occur to my predecessor or my Department that such a demand would be made. Lord Crewe expressly warned the Treasury, as appears from Departmental correspondence, that he could not guarantee that the grants would be regarded as ade- quate by the Colony, and subsequent correspondence with the Governor shows that the unofficial portion of the community are by no means satisfied with the
adequacy of the amounts granted. or has the Colony been informed of the principle on which the rants were bused; it was in fact not possible to do more
than