180
1
iant it is not primarily on such grounds that I venture to point out what appears to me to have been an error in the drafting of the Estimates for the current year preter to rely upon the merits of the case as it stands
3
In order to construct the railway the Colonial Government has borrowed sum of approximately £1,200.000. the annual interest on which at a little over 34 per centum with sinking fund at 1 per centum, amounts to £55,000, or, say, 8606 90 The sum which is raised annually to pay this interest is not a part of the It decreases annually as the sinking fund operates normal reveme of the Colony
to extinguish the loan, and I submit that it should not have been shown in the Estimates as subject to the 20 per centum deduction on account of military contri-
bution
The ordinary experoliture on working expenses, and maintenance of open line is in the other hand a normal charge, to be met from revenue, and the receipts from the railway (at present shown below the line and not subject to military contri Intion) appear to me to be properly considered as normal revenue liable to military Contribution I shall be glad to receive your permission to make this proposed adjustment in the Estimates for the current year, which were prepared during my absence from the Colony
I have, &c
15449
་
F D. LUGARD,
Governor, &c.
ISI
portion of the railway receipts should be included in the revenue assessable for con- tribution as would, if the railway were a commercial speculation and allowing for The the interest on capital expenditure, be available for the payment of dividend. report received the approval of the Lords Commissioners and the Secretary of State for War, and it was accordingly enacted in Ceylon, the Straits Settlements, and Mauritius that the assessable revenue from the railway should be the gross receipts less the charges for maintenance, and for interest and sinking fund on amounts borrowed for railway construction and extension.
3 In their letter of the 19th of April, 1904,* addressed to the War Office, the Lords Commissioners expressed their agreement in the principle that where a Colony has included telephone or railway expenditure of a capital nature in its ordinary annual expenditure instead of resorting to borrowing, a deduction of 4 per cent. of such capital expenditure may be made for 50 years from the gross receipts of such undertakings in computing the gross revenue of the Colony on which its military contribution is based.
At this time no railway existed in Hong Kong, and, consequently, these principles were not applied to that Colony. But the British section of the Canton- Kowloon Railway, which has been built by the Government of Hong Kong from funds raised under the provisions of the Railways Loan Ordinance, 1905, has now been opened; and in these circumstances Mr. Harcourt has no doubt that the Lords Commissioners and the Army Council will agree to the adoption in Hong Kong of the same principles which are in force in the other Eastern Colonies. He therefore proposes to instruct the Governor to introduce into the Legislative Council a Bill amending the Defence Contribution Ordinance. 1901, in this direction, and he will be glad to learn that their Lordships] [the Council] concur in this proposal.
5. A similar letter has been addressed to the Army Council [the Treasury].
I am, &c.,
1
PUBLIC RECORD OFFICE
Reference :--
C.O. 882
9 |ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-
PUBLIC RECORD OFFICE, LONDON
COPYRIGHT PHOTOGRAPH-NOT TO
No. 187
HONG KONG.
THE GOVERNOR to THE SECRETARY OF STATE. (Received 11 35 a m.. 12th May, 1911.)
TELEGRAM.
[Answered by No. 188.]
Unofficial Members of Legislative Council have asked for papers on the subject my views calculations military contribution, with reference to speech delivered by Slade. October 8th, 1908, local Hansard, page 144. I presume that no objection to my publishing my public despatch. October 24th. year before last. April 12th, this year
15449
* LUGARD.
No. 198. HONG KONG.
THE SECRETARY OF STATE to THE GOVERNOR. (Sent 5.20 p.m., May 16, 1911.)
TELEGRAM.
Your telegram of 12th May.† I would deprecate publication of earlier despatch as opinions there expressed may handicap Colonial Office in any nego- tiations with Treasury. Despatch of 12th Aprils should not be published, for reasons which will appear from my reply to it.-HARCOURT.
14924
SIR,
No. 189.
HONG KONG.
COLONIAL OFFICE to TREASURY AND WAR OFFICE. [Answered by Nos, 192 and 191.]
Downing Street, 18 May, 1911.
I AM directed by Mr. Secretary Harcourt to request you to inform the Lords Commissioners of His Majesty's Treasury [the Army Council] that he has had under consideration the question of the payment of military contribution in respect of the receipts from the newly opened British section of the Canton-Kowloon Railway.
2. Their Lordships (The Council) will recollect that the Committee on Colonial Military Contributions in Section XIII of their report, recommended that only such
Nos. 168 and 186.
‡ No. 168.
+ No. 187.
No. 186.
14924
SIR,
(No. 136.)
No. 190. HONG KONG.
G. V. FIDDES.
THE SECRETARY OF STATE to THE GOVERNOR.
Downing Street, 18 May, 1911.
I HAVE the honour to acknowledge the receipt of your despatch, No. 132, of the 12th of April,t with regard to the military contribution payable on the revenue raised to meet the service of the loan for railway construction.
2. I would explain that in the case of other Eastern Colonies which possess rail- ways the Lords Commissioners of the Treasury and the Army Council have agreed to the principle that the military contribution should be assessed on the net railway receipts after deducting working expenses and the interest and sinking fund on any loan raised for railway construction. In the case of railways built out of revenue, a sum equivalent to 4 per cent. of the capital cost may be deducted during a period of 50 years from the gross receipts.
3. You will see from the enclosed copy of a lettert addressed to the Treasury that I propose that the same principles should be adopted in Hong Kong, and that the Defence Contribution Ordinance should be amended accordingly. If the Lords Commissioners and the Army Council are prepared to agree to this proposal, a draft Ordinance will be prepared and sent to you. But I fear that, so long as the working expenses of the Canton-Kowloon Railway and the charges for the service of the loan exceed the gross receipts, the only result will be that military contribution will not have to be paid on railway revenue,
4. As at present advised I regret that I am unable to invite the Treasury and the War Office to agree to your proposal that the revenue required to meet the charges on the loan should be freed any event from liability to assessment.
I have, &c..
• Enclosure 2 in No. 38.
↑ No. 186.
24653
L. HARCOURT.
‡ No. 189.
M 3