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94 T T C 537

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the Colony undertook to pay for works, the Imperial Government for armaments. The cost of the works was estimated at 55,000l., the cost of the armanient at 37,5001. In other words, the Colony was to pay three-fifths, the Imperial Government two-fifths, of the work. As matter of fact, the works have cost 116,000, the armament has cost 209,0007., that is, the Colony has paid one-third, the Imperial Government two-thirds, in round figures, of the whole. Further barracks are to be built, and the War Office desires that the Imperial Government should pay 80,000l., and the lightly taxed Colony 40,000l.

In the next place, the garrison is to cost 280,0001. When the Duke of Newcastle first called upon the Colony to contribute towards its defence, the cost of the garrison was estimated at 100,000l., and his Grace, and Mr. Cardwell, who succeeded him, called on the Colony to contribute 20,000l. a-year towards this charge; but the Cabinet must observe that the revenue for that year (1863) was esti- mated at 118,000l. In fixing the amount of the contribution at 20,000. the Duke of Newcastle stated that he was actuated by the desire not to press too heavily at first on the Colonial revenues, and it was deliberately stated that the amount would be reviewed at the end of five years. It has remained at 20,0001. for a quarter of a century, with a small addition for some local military services, and in the meantime the garrison charge has udvanced to 280,000l. and the revenue to 270,000% The Committee on Colonial Contributions suggest the very modest increase of the Colonial contribu tion to 40,000l. The Chancellor of the Exchequer submits to his colleagues that this contribution of 40,0007, towards a garrison charge of 280,0001., and in face of the excessive amount of cost imposed on the Imperial Government for defensive works, is insuffi- cient, especially when it is noted that this Colony makes no contribution, and is asked to make no contribution, towards its naval defence, a matter indisputably of great moment to an island. It appears to him that a Colony so lightly taxed as Hong Kong should be required to contribute at least half the charge of its garrison, and should be required to levy fresh duties for the purpose. If the proportion which the Duke of Newcastle and Mr. Cardwell fixed in 1863, and which they avowedly thought too light, were now adopted, the contribution would be 55,0001. If the proportion per head paid by Switzerland for defence were

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adopted, the contribution would be over 50,0001. These amounts, however, appear insufficient to the Chancellor. The Empire is required to make a great effort to meet the modern requirements of defence. It behoves all the members of the Empire to contribute fairly towards the common object, which concerns them all vitally. Up to the present Her Majesty's Government are pro- posing that the cost of the effort shall fall almost wholly on the British tax-payer. The Chancellor

of the Exchequer demurs to such a solution of the difficulty, and trusts that the Cabinet will consider and enforce a fairer rule of partition.

The Chancellor of the Exchequer confines this Memorandum to the case of Hong Kong, because it is a fair instance upon which to raise the question of the principle of contribution from a Colony which is neither self-governing nor purely an Imperial garrison.

Treasury,

November 16, 1888.

PRINTED AT THE FORBION OFFICE BY T. HARKIHON.—27/11/88.