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counterbalanced by increased consumption. The perfume factories found their export trade with the South Seas very much curtailed by the trade depression existing, while import into China was rendered impossible by the tariff. Two Hong Kong companies worked all their Chinese trade through bottling establishments in Canton. Little skill is required in mixing the artificial perfumes and essential oils imported from abroad with Java spirits of wine, hence the business as carried on is practically a bottling business and does not require much plant or skilled labour, so that it can easily be removed within the Chinese tariff wall without much outlay.
II. TOBACCO.
6. The total consumption of tobacco of all kinds for all purposes showed a decrease of 778,541 pounds, and the net amount of duty collected a decrease of $556,282. A system of Empire preference in respect of both unmanufactured and manufactured tobacco was introduced. Partly as a result of this the imports of cheap cigarettes of Chinese manufacture decreased considerably.
7. Trade in manufactured tobacco with the South Seas was very poor throughout the year, and manufacturers of Chinese tobacco for export suffered severely.
8. Smuggling of Chinese smoking tobacco was very prevalent. Over 12,000 pounds were seized by the Police and this department, a very small proportion unfortunately of that which escaped paying duty. Here again the crews of river steamers were the chief smugglers, and some smuggled tobacco was discovered on every river steamer visited by a rummage party. Difficulties of search were increased by the fact that much was concealed amongst the cargo where it could rarely be discovered by the rummage party with the time at their disposal. It appears probable that something like 200 pounds finds its way ashore from river steamers alone without paying duty every day. In one case the spare boiler of a river steamer was found stuffed full of Chinese tobacco in small packets already tied up in bundles convenient for taking ashore.
9. The figure given in the estimates of tobacco revenue, namely $4,600,000 proved to be excessive in view of the trade depression and the appreciation of the dollar.
The cheap cigarette locally manufactured is the backbone of the Tobacco revenue and the sale rapidly decreases with any fall in the barometer of trade.
III.—MOTOR SPIRIT.
10. The duty collected on motor spirit showed a slight decrease. The general opinion seems to be that little increase in the number of motor vehicles can be expected in the future,