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of falling off, except, of course, the receipts from the
Kowloon-Canton Railway, and revenues from many of the
principal sources of taxation are likely to be maintained so
long as the large body of comparatively well to do refugees
remains in the Colony. There is thus no present indication
of drastic deterioration in the Colonial Government's
financial position in the immediate future.
4:
It is, however, necessary to consider the more
distant future in which much must depend on the policy
adopted by the Japanese or whatever other administration
controls Canton. While I do not share the ultra-pessimistic
views which are being expressed in some quarters a considerable
and permanent decline in the Colony's trade with South China
is obviously one possibility and I think it only prudent to
take account of that possibility by keeping a careful watch
on the Colony's resources in the immediate future. At the
same time I feel sure that you will agree that such a policy
of conserving the Government's reserves should not be carried
to extremes and that it is part of the object of accumulating
reserves that they should be drawn upon to some extent to
meet any difficulties which may arise from possible adverse
developments.
5.
With these considerations in mind I reduced the
estimates before they came under actual consideration by the
Select Committee by excising certain items of public works
extraordinary and other special expenditure which are capable
of postponement amounting to approximately three quarters of
a million dollars. The estimated deficit in 1939 was thus
brought down to $1,659,898. I also caused it to be intimated
to the Select Committee that if the revenue position showed
serious deterioration it would be possible to curtail other
non-recurrent expenditure and also such items as maintenance
of public works.
6.