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Illicit Distilleries gave considerable trouble during the year. Two very active centres of illicit distilling were discover- ed, one in the tiny village of Tai Pak and the adjoining ravines in the Northern part of Lantao Island facing Hong Kong, the other by the efforts of the Police in and near the village of Wong Toi Sha near Kam Tin in the Northern part of the New Territory.
Near Tai Pak no fewer than twelve illicit stills were found at various times, of which all except one were in ravines con- cealed behind rocks and brushwood. Special boilers had been built up beside streams and rather primitive methods adopted for condensing the spirit; fermenting material was concealed amongst the brushwood in the vicinity of the stills. The persons im- plicated escaped over the hills in all except one case when an arrest was made by a Police launch. This centre was most per- sistent in their efforts to work illicit stills, and it required several visits both by the Police and Revenue launches to break it up. From enquiries made it appeared that the spirit made was dis- posed of to the adjacent islands of Pingehow and Cheung Chow, and that the workers came from Yuenlong by junk and brought their own materials with them. Search of the huts in the vicinity failed to discover any yeast or sugar, or an excess stock of rice. A mixture of rice and sugar was chiefly used, giving a strong fermentation.
At Wong Toi Sha the Police had great difficulty in locating the stills, if the still was located it would not be in the same place as the fermenting material, or the supply of yeast and red rice used for fermenting. The still head of the usual country type made of earthern-ware was possibly in some cases hired out to anyone who fermented material which required distilling. Careful search failed to find the number of stills corresponding to the number of illicit distilleries found. This group were making genuine rice spirit. The Police were successful in ob- taining several convictions as the result of all-night work.
4. The Brewery at Sham Tseng, New Territories, operated by the Hong Kong Brewers and Distillers, Ltd., commenced plac- ing beer on the market in July. The product is of a Pilsener type brewed and matured at a low temperature.
At first brewing was conducted in bond, but as this was found inconvenient to the working of the brewery, an arrange- ment was made by which duty was paid weekly on all brewings which took place during the 9th preceding week. This arrange- ment has been found to work well in practice.
5. It is impossible in the case of spirituous liquors and spirits of wine used largely for compounding scents and medicines to make any comparison with the figures for 1932, since the rates of duty were changed twice during that year. On the whole it appears that the reduction in duty was in no way
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counterbalanced by increased consumption. The perfume fac- tories found their export trade with the South Seas very much curtailed by the trade depression existing, while import into China was rendered impossible by the tariff. Two Hong Kong companies worked all their Chinese trade through bottling estab- lishnients in Canton. Little skill is required in mixing the artificial perfumes and essential oils imported from abroad with Java spirits of wine, hence the business as carried on is prac. tically a bottling business and does not require much plant or skilled labour, so that it can easily be removed within the Chinese tariff wall without much outlay.
II. TOBACCO.
6. The total consumption of tobacco of all kinds for all purposes showed a decrease of 778,541 pounds, and the net amount of duty collected a decrease of $556,282. A system of Empire preference in respect of both unmanufactured and manu- factured tobacco was introduced. Partly as a result of this the imports of cheap cigarettes of Chinese manufacture decreased considerably.
7. Trade in manufactured tobacco with the South Seas was very poor throughout the year, and manufacturers of Chinese tobacco for export suffered severely.
8. Smuggling of Chinese sinoking tobacco was very pre- valent. Over 12,000 pounds were seized by the Police and this department, a very small proportion unfortunately of that which escaped paying duty. Here again the crews; of river steamers were the chief smugglers, and some, smuggled tobacco was dis- covered on every river steamer visited by a rummage party. Difficulties of search were increased by the fact that much was concealed amongst the cargo where it could rarely be discovered by the rummage party with the time at their disposal. It ap- pears probable that something like 200 pounds finds its way ashore from river steamers alone without paying duty every day. In one case the spare boiler of a river steamer was found stuffed full of Chinese tobacco in small packets already tied up in bundles convenient for taking ashore.
9. The figure given in the estimates of tobacco revenue, namely $4,600,000 proved to be excessive in view of the trade depression and the appreciation of the dollar. The cheap cigarette locally, manufactured is the backbone of the Tobacco revenue and the sale rapidly decreases with any fall in the baro- meter of trade.
III.-MOTOR SPIRIT.
10. The duty collected on motor spirit showed a slight decrease. The general opinion seems to be that little increase in the number of motor vehicles can be expected in the future,
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