5
the War Office, saying that the Governor of
Hong Kong has expressed his willingness to
participate in the scheme, provided that the
revenue required to meet its cost will be
exempted from the assessment of Military
Contribution; suggesting that the appropriate
course would appear to be to include the
revenue and expenditure under the scheme (in-
cluding the cost of and receipts from the Feeder Service from Hong Kong) in a special
account and to assess Military Contribution
only upon the annual net profit (if any) under
that account; and asking whether the War Office
would be prepared to agree in principle to the
adoption of that course; adding that if they are
prepared to agree in principle,it is proposed to
ask the Government of Hong Kong, in due course
when the details of the main scheme and of the
Feeder Service have been worked out sufficiently
to enable the total revenue and expenditure under
complete
the scheme to be estimated, to submit detailed
proposals for the treatment of the new service
on a net revenue basis for the purposes of
assessment of Military Contribution. The War
Office will probably take the line that under
the new scheme one method of transporting mails
is merely substituted for another, and that
as a result of that substitution the total
amount paid by Hong Kong in Military Con-
tribution will be diminished if the Service is
in future to be treated on a net revenue basis,
whereas it is at present not so treated. We
should