CO882-(8-9) — Page 542

PUBLIC RECORD OFFICE

Reference :-

C.O. 882

9

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

38636

(No 309.)

MY LORD,

140

HONG

No 16%

KONG

THE GOVERNOR to THE SECRETARY OF STATE

(Received November 27, 1909 )

[Ansurere by Su. 160.]

Government House, Hong Kong, 28th October, 1909 WITH reference to your telegram of the 14th ultimo,* in which you informed me that you proposed to appoint a Commission to examine into the whole question of the military contribution by the Eastern Colonies, I have the honour to submit a few observations This question occupied my attention soon after my arrival in the Colony, and I wrote a minute upon it which (with some modifications) I enclose, in the hope that it may be of use to the Commission.

2 There exists in this Colony a considerable body of opinion antagonistic to the payment of the military contribution- at any rate, in the form in which it is at present les ied

I have stated in my speech when introducing the Annual Estimates both last year and this, that in my opinion the Colony has no just ground for com plaint as regards the amount of the contribution, but I share the view that the method of its incidence has entirely failed to give effect to the object which Mr. J. Chamber- lain had in view (as stated in his despatch, No 337, of the 24th October, 1900†) when the contribution was instituted, viz., that the contribution should fall less heavily in years when the Colony was in financial difficulties, and should rise in proportion to its prosperity.

The Estimates for the coming year, which I am forwarding under separate In round figures a deficit despatch, furnish a somewhat striking instance of this. of some eight lakhs had to be faced, and additional taxation amounting to some seven lakhs at least has been imposed As a consequence the military contribution automatically increases by nearly one lakh at a time when the Colony is in greater financial difficulties than it has experienced for many years.

3 I have suggested in the attached minute an alternative system, viz., that half the difference between the ordinary revenue and ordinary expenditure should be assigned to the military contribution, with the proviso that it should never be allowed to fall below one-quarter or exceed one-third of the actual Imperial expenditure on defence in the Colony. I am aware that there are various difficulties in this suggestion, especially in regard to loan expenditure, but they do not appear to me to offer any serious obstacles. At the same time it is of importance that it should be clearly laid down which items are included in ordinary revenue and which are properly exempt from military contribution,

I have, &c.,

F. D. LUGARD,

Governor, &c.

Enclosure in No. 168.

THE MILITARY CONTRIBUTION. HISTORY IN HONG KONG.

From 1864 to 1890 the contribution stood at £20,000 per annum, and in that year it was raised to £40,000.

This was exclusive of the cost of defensive works.

Between 1890 and 1896 the dollar fell rapidly in value, and the sterling contri- In 1892 the contri- bution of £40,000 bore a very high percentage to the revenue. bution was $267,182, or 12:63 per cent. of revenue, and in 1896 this had practically doubled, being $509,679, or 21 per cent. of revenue.

• Not printed.

† 20764: not printed.

† 38637: not printed.

141

Looking to this the Imperial Government offered in that year to fix the contri- bution for the Forces at 175 per cent. of revenue, the Colony contributing separately one third of the cost of new barrack works, and the whole cost of new defence works (exclusive of the cost of their armament). After full debate it was considered that this offer was very advantageous to the Colony, and it was accepted.

Between 1896 and 1900, however, it was found that the cost of defensive works fell very heavily upon the Colony. The actual amount paid between these years, in addition to the 171 per cent, was as follows:——

1896

1897

1898

1899

1900

40,000

49,000

70,000

75,000

65,000

The total contribution in 1900 stood at 19:61 per cent. of revenue.

In that year

it was decided by the Imperial Government that the defences must be strengthened. which would involve a cost to the Colony of £90,000 for construction, and of £154,485 to the Imperial Government for armament. In addition, a further sum of £45,000, debitable to the Colony, was required for barrack services.

These sums, even though spread over a number of years, would have increased the total contribution payable by the Colony to considerably more than 20 per cent. of its revenue. Mr. Chamberlain (337 of 24th October, 1900) proposed, alike in the interests of the Imperial Government and of the Colony, that the contribution should be fixed at 20 per cent. of the revenue, excluding land sales "in full return for the annual cost of the Imperial garrison, including all capital expenditure for military lands and buildings."

This proposal was accepted and became law in Ordinance 1 of 1901, and took effect in the Estimates for 1902.

In addition to the 20 per cent. all military buildings are exempted from rates. Under this arrangement the contribution has steadily increased in amount (pari passu with the revenue), and stands in the Estimates of the current year (1908) at $1.185,578.

From this brief historical summary it is evident that the present modification of the previous system, inaugurated in 1901, was made with the full acquiescence of the Colony. That, however, would not form a valid argument against revision if it could be shown that, contrary to anticipation, the system had proved unduly onerous. More increase in direct proportion to increase in revenue does not prove this, for that increase was anticipated.

COMPARISON WITH OTHER Colonies.

(a) Self-governing.

The military contribution affects, of course, only those Colonies which borrow their defensive forces from the Imperial Government. The self-governing Colonies, with the exception of South Africa, supply their own defence, and most of them contribute steadily increasing sums towards the cost of the Navy.

These contributions were in 1907-08 as shown :—

India Australia

New Zealand Cape Colony Natal

Newfoundland

£

103,400

200,000

40,000

50,000

95,000

3,000

India, in addition, pays the entire cost of all troops borrowed from the Imperial Government. It may, in fact, be said that a wholly British Colony which is not prepared to undertake the entire cost of its land defences is not ripe for self- government.

(b) Crown Colonies and Protectorates providing their own defence. Many of the Crown Colonies and Protectorates furnish their own forces. In the case of one or two of the latter the Imperial Government gives a grant in aid of the general revenue, which, however, does not affect the matter at issue, and is in every case being gradually reduced, and will, in time, disappear.