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A (1) 24
Some of this under-expenditure is accounted by vacancies in office and changes in personnel but by far the greater part is due to the rise in the sterling value of the dollar.
23. Under "Other Charges" savings were also effected, the total provision being $4,871,357 against $4,294,183 expended. For the first time for many years Public Works Extraordinary exceeded the original estimate. By a resolution of Council dated the 26th July, 1934 an extra sum of $752,000 was placed at the disposal of the Director of Public Works to be spent on a variety of services. In addition to this many small and several large supplementary votes were approved, e.g. $187,850 for the purchase of The Albany (I. L. Nos. 807 & 808) Resumption of I. L. No. 754 for the establishment of a public health centre in the Western District at a cost of $89,700. In spite of these increases, however, the head Public Works Extraordinary exceeded the original estimate by only $192,216.
the
24. Opium Sales again fell very much below the estimate, the deficit amounting to $644,932. The following are receipts from this source for the last 5 years:—
1930
1931
1932
1933
1934
$2,835,287
3,019,724
2,314,226
1,152,852
655,068
25. The receipts from Estate Duties were high due to two large estates bringing in $212,793.
26. The range in exchange froin the lowest of 1/4 in May to 1/8 in December would be considered very wide if recorded under normal trade conditions but compared with differences shown in recent years it is not remarkable. Until the wheels of commerce move more freely throughout the world, and political and economic stability is assured, wide fluctuations in our exchange will occasion no surprise. As a matter of interest it may be observed that the approximate average rate for April 1935 the date of publication of this Report is 2/13 and may be compared with the average of 1/5 for the corresponding month of 1934. ·
27. There are two marked features in the course of exchange during 1934. The first is the steady rise from May till the end of the year, due almost entirely to the silver-buying policy of the Government of the United States. This upward move- ment has been considerably accelerated during the first quarter of the current year. Its effect has certainly not realised the anticipations of those who were inclined to attribute the depression in its early stages to the then depreciated dollar. It is clear that although the wide fluctuations latterly experienced have had a disturbing effect on trade the level of exchange has until recently been a minor factor in the general depression.
A (1) 25
The second feature to be noted is the unusually high premium of the Hong Kong Dollar over the Chinese Dollar as reflected in the quotation on Shanghai. The rate that, normally should be about 110 rose in October and at times has been over 130. The trend of the premium during the first quarter of this year has been generally still higher and at the time of writing (April 30th) is
Our local dollar, though experiencing the occasional divergences from silver parity incidental speculative market has generally been kept well under control.
140.
to
a
28. The Chinese Dollar now "managed" has remained below parity so consistently that heavy shipments of silver from China have been inevitable and have seriously embarrassed the money market in Northern Ports. The continuance of this high premium is a cause of concern to local interests.
29. Trade returns show a further decline. Imports, exclud- ing treasure, amounted to $415,918,522 during the year, the total for the previous year being $500,988,794. Exports were $325,104,653 against $403,092,170 for 1933. Trade conditions are so fully examined in the recently published Report of the Economic Commission that it is not necessary to comment here on the causes of the decline and the suggested remedies.
30. The share market has been almost lifeless and prices of nearly all investments have sagged in the absence of support. Property values also have fallen though building still continues. Bank deposits remain high but notwithstanding easy interest rates there is little demand for money. Note Issues have fallen to $153-3/5 millions from $157 millions at the end of 1933, a natural decline having regard to the decreased velocity of circulation consequent on the general inactivity of trade Several of the more important Chinese Banks have opened branches in Hong Kong during the year and there have been no notable difficulties among the smaller native banks. The credit and repute of the Colony's financial institutions have never been higher than during this difficult period and it is satisfactory to be assured that ample encouragement and support are available to finance any possible demand that a revival of trade would need.
THE TREASURY,
HONG KONG. 30th April, 1935.
EDWIN TAYLOR,
Colonial Treasurer.
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