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been advanced up to 30th June, 1938, and total advances up to 31st December, 1938. are estimated at $1,267,783. Details of both loan accounts are given in Appendix VI to the estimates.
17. The precise allocation of the 1934 loan funds between individual items has been varied by Resolutions of Legislative Council and is now as shown in Appendix VI (b) to the 1939 estimates; but some savings are expected in the net expenditure on the Shing Mun Gorge Dam and these will in due course be made available for the other works.
18. New expenditure proposed to be met from loan is confined to Water works expenditure. It is the intention to finance all new capital expenditure on water from loan for the present. Authority will be sought for the advance of $1,258,427 for the continuance of works already authorised under loan account; and it is proposed to charge also further works of a total estimated cost of $812,500, of which $382,500 will, it is estimated, be spent in 1989 and will be met for the time being by advances from surplus balances.
19. The total debt at the 31st December, 1937, was $17,158,000, made up of $4,838,000 4% Conversion Loan, 1933, repayable in 1953, against which a sinking fund of £54,325 was held; and $12,320,000 34% Dollar Loan, 1934. The latter is the balance of the original sum borrowed. $14,000,000, which is being repaid by annual drawings at the rate of $560,000 per annum. The desir- ability of raising the balance of the 1934 loan ($11,000,000) is kept continuously under review, but it has been possible so far to meet loan expenditure by advances, from surplus balances without reducing the Colony's cash resources below the necessary minimum figure.
Part II. Details of 1939 Estimates.
20. The new Budget procedure, which is being adopted for the first time this year, contains provision for the detailed examination of departmental estimates by a Select Committee consisting of the Colonial Secretary. Financial Secretary and all Unofficial Members of Legislative Council. In these circumstances it has not been considered necessary to burden this part of the Memorandum with an exhaustive analysis and explanation of minor additions and departmental changes and attention has been concentrated en explaining major changes, especially those arising from a change of policy, which are not readily susceptible of explanation in the footnotes.
HEAD 2. COLONIAL SECRETARY'S OFFICE.
21. A new system has been introduced this year whereby departmental estimates are no longer required to provide for members of the Cadet Service and the Senior Clerical and Accounting Staff other than those actually included in the standard establishment of the department. All members of these two services who are on leave or who are not yet attached to a department are provided for under a special section of the Personal Emoluments of the Colonial Secretary's Office. This innovation possesses the advantage of making the departmental estimates present a truer picture of departmental expenditure but it has had the effect of increasing enormously the expenditure under Personal Emoluments of the Secretariat.
22. The increase over 1938 under this Sub-head is $248,622, of which approximately $216,000 is the result of the new system while $27,200 is due to the inclusion of the Financial Secretary's salary which was formerly shown under Treasury.
23. With the approval of the Secretary of State two new posts of senior stonographers have been created and provision is made for one of these posts, the other being left vacant for the present.
HEAD 4.
BOTANICAL AND FORESTRY DEPARTMENT.
24. In pursuance of a more active and comprehensive policy of afforestation it is proposed to establish Forest Reserves at selected places on the mainland. Provision has been made under Other Charges for additional daily labour required for the extra planting involved by this scheme and also for extra daily paid foresters for forest protection work.
25. The depredations of timber thieves have rendered it essential to change the system of forest protection and in future forest guards and foresters will be stationed at various points in afforested areas and will be held responsible for their respective districts. It is intended to establish groups of four men at seven points in Heng Kong and at two additional points on the mainland. In the early stages of this policy temporary quarters only are required and provision has been made accordingly under special expenditure.
26. In the past firewood for use in Government departments has been pur- chased from a contractor but as a result of a successful experiment in 1938 it has been decided that departmental requirements shall in future be supplied from overnment plantations rid the Central Government Store. $2,500 has been included under Other Charges for felling and extraction of timber and $3,500 under Head 29. Stores Department, to cover storage and distribution. $13,000 has been made in the fitel votes of the larger consuming departments and A nett reduction of savings in smaller departments, which it has not been possible to reflect in any reduction of Estimates provision, will bring the final saving far above that figure.
HEAD 5. CHARITABLE SERVICES.
27. The former Sub-head General Chinese Charities Fund has been divided into three Sub-heads. Chinese Public Dispensaries, Po Leung Kik, and Tung Wal and Associated Hospitals. There is an increase of $21,000 which is mainly accounted for by an increase of $18,000 in the grant to the Chinese Public Dis- pensaries. By long standing custom the Chinese Public Dispensaries have received contributions from junks and fishing craft calculated on a percentage of the licence fees and it has been decided that in future these payments should be made from Government funds and offset by a corresponding increase in Revenue under Boat, Junk and Steam Launch licence fees.
28. The average population of the Po Leung Kuk bas risen from 60 to 100 during the year. This is almost entirely the to implementation of Government policy under the Protection of Women and Girls and kindred ordinances and provision has been made accordingly for an addition of 83,000 to the usual grant.
29. For the same reasons arrangements have been made for the reception and maintenance by the Rural Orphanage, Tai Po, of children sent to it by Govern- ment. It has been agreed that the maintenance rate shall be $60 per child per annuum and that half the total available accommodation shall be reserved for such children.
30. A building grant of $16,000 is included to assist extensions to the Orphanage and there is a promise of a further for $ grant on all new subscriptions up to a maximum of $28,000; it has not, however, been thought necessary to pro- vide for this grant in 1939 Estimates.
31. The question of providing for the disposal and maintenance of lepers found in the Colony has for many years presented a difficult problem which in the past has been partially solved with the assistance of the Shek Lung Leprosarium. In 1987. however, the authorities of Shek Lung Asylum stated that owing to shortage of funds and lack of proper accommodation they would be unable to receive any more lepers from Hong Kong.
32. Investigations revealed that the accommodation for male lepers was antiquated and inadequate and an arrangement has been made with the Asylum authorities whereby this Government provides a building grant of $26,000 for the
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