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of the garrison, and, now that it is necessary to exercise economy in every possible direction, there can be little doubt that the Unofficial Members of Council will demand that more notice should be taken of their representations than has hitherto been the case.

6 Similar dissatisfaction has been expressed, though perhaps not so insis- tently, by the Unofficial Members of Council in the other Eastern Colonies, and his Lordship is satisfied that reconsideration of the present arrangements can no longer be postponed. I am therefore to invite the Lords Commissioners to agree to the appointment of a Committee composed of representatives of the Colonial Office, the War Office, and the Treasury, to consider de novo the whole question of the military contributions paid by the Eastern Colonies.

I am, &c.,

FRANCIS J. S. HOPWOOD.

29719

(No. 220.)

MY LORD,

No. 161.

HONG KONG.

THE GOVERNOR to THE SECRETARY OF STATE.

(Received September 6, 1909.)

[Copy to War Office, September 24, 1909. L.F.]

[Answered by No. 162.]

Government House, Hong Kong, 4th August, 1909. In reply to your Lordship's despatch, No. 104, of the 18th June last,* I have the honour to forward, for your Lordship's consideration, and for the information of the Army Council, copy of a minute by the Colonial Treasurer relative to the assessment of revenue for military contribution for the year 1907.

I have, &c.,

23601

No. 160

F. D. LUGARD,

Governor, &c.

STRAITS SETTLEMENTS.

COLONIAL OFFICE to WAR OFFICE.

Downing Street, 26 August, 1909.

SIR,

I AM directed by the Earl of Crewe to acknowledge the receipt of your letter of the 14th of July, on the question of the assessment for military contri- bution of the sums received by the Government of the Straits Settlements in respect of buildings leased for profit.

2.

In paragraph 3 of your letter you point out that the gross receipts from this source were included in the revenue of the Colony at the time when the military contribution was fixed at a percentage of the total revenue. I am, however, to observe that at that time the receipts from this source were negligible amounting to only about $3,000 in the year. In 1909 the receipts are estimated at over $30,000. The reason for this great increase is that the Government of the Straits Settlements has in recent years built a number of houses which it has let to Government Officers, who would otherwise have found a difficulty in obtaining suitable accommodation, and has also constructed buildings which it has leased to the opium and spirit farmers. In these circumstances Lord Crewe considers that the receipts from this source may reasonably be regarded as a new class of revenue, and that, in accord- ance with the general principle adopted with regard to remunerative undertakings, military contribution should be levied only on the net receipts.

3. In his Lordship's opinion, however, it is not worth while to pursue a separate, correspondence on a matter of comparatively minor importance, since he is satisfied that it is necessary now to reconsider the whole question of the contri- bufions paid by the Eastern Colonies. In the present financial position of these Colonies it is impossible for them to continue to bear the onerous burden which they have hitherto supported. I am to enclose, for the information of the Army Council, a copy of a despatcht from the Governor of the Straits Settlements, showing the effect on the revenues of that Colony of the opium policy which has been adopted in deference to the wishes of His Majesty's Government, together with a copy of letter which his Lordship has caused to be addressed to the Treasury. It will be observed that his Lordship has asked that an Inter-departmental Committee may be appointed to consider the question of the military contributions of the Eastern Colonies.

Enclosure in No. 161.

MINUTE BY THE COLONIAL TREASURER.

When the payment of the balance of the military contribution for the year 1907 was made in March, 1908, the amount was based on a total of revenue which included the sum of $28,448.34, being " interest " on Government balances during the year.

At the time of payment it did not occur to the Treasury that the proper method

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of dealing with interest amounts, whether revenue or expenditure, would be to treat them at the end of the year as virtually one account, and that therefore only the balance of such account should be put down to revenue or expenditure according to the nature of such balance.

An adjustment on this line was, however, subsequently made with the result that the revenue item "interest" disappeared, and the expenditure "interest on advances for railway construction" was reduced by the above-mentioned amount.

It appears to me that any other method of accounting would be anomalous, since it would show a large expenditure on "interest," and at the same time a smaller amount at credit of interest under revenue on which latter sum the military authori- ties would levy their contribution.

31st July, 1909.

29719

A. M. THOMSON.

No. 162.

HONG KONG.

THE SECRETARY OF STATE to THE GOVERNOR. [Copy to War Office, Søptember 24, 1909. L.F.]

(No. 216.)

SIR,

Downing Street, 22 September, 1909

I am,

&c.,

FRANCIS J. S. HOPWOOD.

* No. 155.

+ No. 156.

No. 159.

I HAVE the honour to acknowledge the receipt of your despatch, No. 220, of the 4th of August,† forwarding a copy of a minute by the Colonial Treasurer with regard to the assessment of revenue for the military contribution.

2. Mr. Thomson suggests that the interest received on Government balances

34488

* L.F. transmitting copy of No. 151.

↑ No. 161.

I 4

PUBLIC RECORD OFFICE

Reference :-

TICO. 882

9 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH...NOT TO

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