6.
35
exemption fran Military Contribution in respect of these
realizations would have been granted as readily as the Trade
Loan was granted to enable the Colony to tide over the
emergency, for I am reluctant to believe that the ar
Department would have desired to extract financial benefit
from realizations which were forced upon Hong Kong by
adversity.
9.
It is incorrect to assume, moreover, that the
Colony stands in any way to gain from a fall in the dollar
exchange. Its revenue which is almost entirely in dollars
? remains unaffected; but its expenditure, being largely in
sterling, is automatically increased, for Crown Agents'
expenditure, and salaries of sterling officers amount to
about 50% of the total. And, of course, dollar salaries
and local prices sooner or later adjust themselves upwards.
10. The dollar appreciation of investments is due
entirely to the fact that the Colony's dealings have to be represented partly in silver and partly in gold. If the currency of Hong Kong were, like most Colonial currencies,
on a fixed gold basis or, if a dual system of accounting
obtained, no fluctuations would appear; and it is only
because all accounts have to be finally embodied in a single
and fluctuating currency that a difference of dollar values appears. Hong Kong being unique in that it is linked to the silver currency system of China, this adjustment cannot be avoided, though it does not in reality mean actual revenue or expenditure. But, owing to the incidence of Military Contribution, it operates singularly to the disadvantage of
the Colony in that the apparent dollar book profit involves a 20% Military Contribution Liability, whereas there was no
rebate when the books in 1919 shewed a loss of $786,665.
11.
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