C. 52802/28 [No. 17].
MY DEAR GRINDLE,
No.
MR. J. B. CROSLAND (WAR OFFICE)
to
SIR G. GRINDLE (COLONIAL OFFICE).
[Answered by No. C. 52802/28 [No. 20].]
PROOF.
War Office, 27th November, 1928. MANY thanks for your note of 31st October,* enclosing copies of two telegrams† which have passed between the Colonial Office and Hong Kong as to the effect of certain claims for relief under the existing system (if these were all agreed to) on the Colony's military contribution. We shall be in a better position to appreciate this aspect of the matter when the promised despatch furnishing details is available.
In the meantime perhaps I might put to you semi-officially some points that have arisen so far in our consideration of the proposed change in the method of assessment. The Colonial Office has probably formed some valuable opinions on the subject during the two years since the Governor sent you his original despatches in 1926, and you may be able to set at rest some of our doubts before we reply officially.
(1) It is realized of course that we for our part do not want to make a change of method which might unintentionally give us in the future smaller con- tributions on the average than we should receive if the present system continued. It appears, however, that if the proposed new method had been in operation in the past, we should have received considerably less than we have received on the existing basis. The tablet referred to at the end of paragraph 16 of the Governor's despatch of 24th June, 1926, § was not enclosed with the copy of that despatch sent to us with Colonial Office letter of 12th October, 1928,|| but we make out that if the proposed new basis had existed since 1901 we should have received a total of about 11,000,000 dollars less than we have in fact received. It is true that the Governor's despatch gives reasons why the revenue basis yielded much more in certain years (1922-25), but is this much comfort to us? Even if we miss out those years our total loss since 1901 would apparently have been over 5 million dollars.
(2) So much for the facts of the past. Endeavouring to peer into the future, it has been suggested to us by one of our own people who has recently served in Hong Kong that we are likely to lose on the change, and for this reason. In the past, rents (and presumably valuations) have been excep- tionally high owing to the fact that the main residential and business area has been in Hong Kong itself, where building on steep slopes is expensive and where sites and accommodation are scarce. The extension of the Colony is now taking place on the Kowloon side. Land there is practically unlimited and building is cheaper, as sites are level. Rents are much lower in Kowloon and this is tending to bring down the level of rents in the whole Colony. As Kowloon extends this will be more and more the case. Is it not possible then that of all the main items of revenue, rates will show the smallest proportional increase? Your opinion would be of value.
(3) We notice that the proposed rateable valuation is not to cover the whole of the Colony but "the most important districts." I am not quite clear as to this limitation; are you satisfied that the point may not give rise to controversy as to the area of assessment?
(4) If a change from the basis of revenue to that of rateable valuation is made for Hong Kong, will it be followed by a similar proposal for the other Eastern Colonies, or are the conditions in Hong Kong so different as to call for such a change there more strongly than elsewhere?
(5) Mr. Amery, in alluding to this subject in his letter of 29th October¶ to Sir Laming Worthington Evans on the Straits Settlements contribution, remarks that the Hong Kong proposals "involve dropping a claim for at refund of £114,000 which would be decidedly embarrassing to you at present. We were very glad to receive this assurance; no reference appears to have been made to it in the correspondence received from your Department as to the Hong Kong proposals.
* No. C. 52802/28 [No. 15].
§ No. 14661/26. Straits Defence Con.-Gp. 6.
† No. C. 52802/28 [Nos. 11 and 14].
|| No. C. 52802/28 [No. 13]. 131/2963. 24. 8/34. (18271) M. & S., Ltd.
‡ Not printed.
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