427
PUBLIC RECORD OFFICE
Reference :-
C.O.882/11
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-
COPYRIGHT PHOTOGRAPH-NOT TO
:
C. 82756/31 [No. 11].
in
No. 110.
114
No. 71.
HONG KONG.
THE SECRETARY OF STATE
to
THE GOVERNOR.
(Sent 4.30 p.m., 11th September, 1931.) TELEGRAM.
[Answered by Nos. 72 and 74.]
Confidential. Your despatch of 11th December*. Please telegraph details showing exact nature and amount of the overpayments referred to on page 6 of the Deputy Treasurer's memorandum.-Cunliffe-Lister.
C. 82756/31 [No. 12].
No. 72.
HONG KONG.
THE GOVERNOR
to
THE SECRETARY OF STATE.
(Received 10.18 a.m., 2nd October, 1931.)
TELEGRAM.
2nd October. No. 190. Confidential. Your telegram of the 11th September, No. 110. Overpayments. Amounts recovered January to June, 1931, $18,000 under some 30 Heads such as refunds for overpayments in salaries or passages or errors in payments of vouchers for stores. Full details will be forwarded by despatch but if more detailed information on principle is required Director of Colonial Audit would be able to explain this.
C. 82756/31 [No. 16].
SIR,
No. 73.
COLONIAL OFFICE
to
WAR OFFICE.
[Answered by No. 76.]
Downing Street, 20th November, 1931.
I am directed by Secretary Sir Philip Cunliffe-Lister to refer to the letter from this Department of the 27th of February‡ enclosing a copy of a despatch§ from the Governor of Hong Kong regarding the exemption of certain items of revenue from assessment for military contribution. The questions at issue have been the subject of further semi-official discussion and I am now directed to request you to convey to the Army Council the following observations on the various points at issue.
A. Wireless Telegraphy.-Sir Philip Cunliffe-Lister understands that, as this is a new productive undertaking which was not in existence when the military contribution was assessed, the Army Council agree that there is a case for treating the revenue from this source on the basis of net receipts, the expenditure being deducted from the gross receipts in order to determine the amount to be taken into consideration in assessing the military contribution.
• No. 68.
† No. 71.
‡ No. 69.
§ No. 68.
115
As regards the suggested raising of the rate of allowance for capital expenditure met from revenue, Sir Philip Cunliffe-Lister has ascertained from the Crown Agents for the Colonies that the following are the approximate average rates at which Colonial loans have been raised in London since 1915:-
1915-1921 more than 6 per cent.
1922-1925 4 per cent.
1926 no considerable issue made.
1927-1930 5 per cent.
In view of these figures, Sir Philip Cunliffe-Lister considers it not unreasonable to assume that the Hong Kong Government would have had to pay on the average at least 5 per cent interest if a loan or loans had been raised to meet the capital expenditure on wireless telegraphy during these years. As it is understood that the old allowance of 4 per cent was based on the assumption of interest at the rate of 3 per cent and sinking fund contribution at the rate of 1 per cent per annum, he considers that a case has been established for increasing the allowance to 6 per cent. If it is suggested that the sinking fund allowance might be slightly reduced in view of the increase in rates of interest, it should also be borne in mind that it cannot be assumed that the rate of interest will remain at its present high level during the whole period of amortization and that the average rate of interest during the period since 1915 is substantially in excess of 5 per cent and that some compensation is due for the omission to make an adequate allowance for such capital expenditure in the past.
If the proposed new rate of 6 per cent is agreed, Sir Philip Cunliffe-Lister would propose that it should apply generally in the case of all Colonies paying a military contri- bution in respect of capital expenditure on productive undertakings, met from revenue
since 1915.
It is proposed that the allowance on capital expenditure at the new rate should be made for a period of 50 years from 1932. No adjustment of this allowance will be necessary in the event of the wireless telegraphy undertaking of the Hong Kong Govern- ment being transferred to any other body before the expiration of that period, unless one of the terms of transfer is the payment to the Hong Kong Government of a lump sum in return for the stations. No such payment is at present contemplated, but if one is made Sir Philip Cunliffe-Lister has no doubt that the Army Council will be prepared to consider an equitable arrangement to adjust the allowance to the new conditions.
B. Use of Government Motor Vans.-Sir Philip Cunliffe-Lister is satisfied that this is an undertaking outside the normal functions of the Hong Kong Government, i.e., besides being commercial in character, it is not an activity which that Government would normally undertake on its municipal side. He would be glad, therefore, to learn that the Army Council agree to the treatment of revenue from this source on the basis of net receipts.
C. Gap Rock Lighthouse.-Sir Philip Cunliffe-Lister recognizes that this item was included in the revenue when the present percentage was agreed. He considers, however, that it is clear that it ought not to have been so included, since, as previously explained, it is merely a reimbursement for a service undertaken by the Hong Kong Government on behalf of the Chinese authorities. The inclusion of this "revenue" is a cause of recurring irritation in the Colony, and in view of its trivial amount he con- siders that it should be excluded. The lighthouse in question is not within the waters of the Colony, being situated in latitude 21° 49′ North and longitude 113° 56′ East.
D. Anti-piracy Escorts.-Sir Philip Cunliffe-Lister understands that the Army Council will agree that the revenue from this source should be completely exempted from assessment to contribution, since the service is organized in the interests of British shipping on a non-profit-earning basis.
E. House Service Account. He understands that it is agreed that this also should be totally exempted. Sir Philip Cunliffe-Lister will ascertain from the Governor whether there is any possibility of the Government making a profit on these transactions, and will ask him to ensure that, if such a profit should at any time be made, it will be included in the revenue subject to assessment.
F. Overpayments. A copy of telegraphic correspondence* with the Governor on this subject is enclosed, and it is understood that the Army Council are now prepared
Nos. 71 and 72.