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PUBLIC RECORD OFFICE

Reference :-

C.O. 882

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH-NOT TO

24251

SIR.

184

No 194

HỒNG KÔNG

THE GOVERNOR to THE SECRETARY OF STATE

Received July 24, 1911;

Confidential)

Answered by N

203.

Government House, Hong Kong, th June, 1911 THE Unofficial Members of the Legislative Council have tor some weeks past been much exercised over the question of the military contribution paid by this Sir Paul Chater, senior Unofficial Member Colony in respect of its Land Defence

on Executive Council, who has proceeded to England with Mr Keswick as delegate for His Majesty's Coronation, informed me that he and his colleagues were anxious to raise the question, sime an opportunity might occur for the delegates while in England to approach you of the subject, more especially at a time when the Imperial Conference was sitting and questions of Defence would be discussed. Honourable Mr E. Osborne, Member of Council, and Mr. Murray Stewart, who has for some time occupied a temporary seat on the Council, would also be at home this

-uminer

The

2 I informed these gentlemen that, in any view, any action they desired to take in England could only with propriety be based on the initiative of the Legislative Council here, and I was confident that if they approached you in a private capacity At the same time. I in England you would merely reter their appeal to myself. sp ke quite frankly with them, and allowed them, under the seal of confidence, to ↑ October 25th, 190% [ 309 of October 28th. peruse my public despatch, No 49

1909 *

3 The Unofficial Members and the community at large as represented by the local Press have, as you are aware, for many years contended that the military con- tribution was much too heavy

In 1908, shortly after my arrival in the Colony. I studied the subject carefully, and embodied my conclusions in my despatch, No. 43 of October 25th, 1908,* [ 309 of October 24th, 1909), and at the same time I stated my opinion in Council that the amount of the contribution was not excessive, though I thought that the method of its assessment did not in practice give effect to Mr. J. Chamberlain's intention when he instituted it, viz. that it should rise and fall automatically with the pros- perity of the Colony. Since that date there has been a cessation of the agitation on this subject until it was revived recently, as I have explained.

4. I repeated my views to Sir P. Chater and his colleagues, and I understood that he. Mr. Keswick, and Mr. Osborne (I do not recollect to have had any conversa- tion on the subject with Mr. Stewart) agreed that the system I had proposed of devoting a specified proportion of the margin between ordinary revenue and ordinary expenditure would achieve the result desired by Mr. Chamberlain, and remove the constant friction and difficulty attendant on the present system of levying the contribution on gross revenue. Being myself of opinion that the contribution is not excessive. I proposed that the proportion should be one-half of the margin, which I estimated would leave the average amount over a series of years practically iden- tical with what it is to-day. The majority, however, if not all, of the Unofficials were of opinion that that percentage was too high. As I had stated in my speech in October, 1908, that I had made calculations and suggestions on this subject which I had submitted to your predecessor, the Unofficials informed me that they proposed to ask me to lay these papers on the table. I accordingly telegraphed t to ask your sanction to do so, but the terms of your reply‡ (in which you deprecated their being made public) compelled me to decline their request.

5. Mr. C. M. Ede, in these circumstances, at the wish of his colleagues brought forward a motion that the contribution should be fixed at $1,000,000 per annum, and this resolution was unanimously supported by the Unofficial Vote and only

‡ No. 188. ↑ No. 187.

• No. 168.

185

defeated by the Official majority. In accordance with my pledge, I have the honour to transmit to you a copy of the local Hansard containing a report of the debate. The terms of your telegram had left me entirely uncertain as to your own view on this subject. From my own point of view the result of the debate was eminently unsatisfactory, for the subject was not debated from the standpoint of Imperial responsibility, nor yet from the practical basis of the mode of assessment.

6. I desire, while writing on the subject of the military contribution, to lay before you one or two aspects of this question which appear to me worthy of con-

sideration.

(a) As to the amount of the contribution I have already expressed my views, but I venture to submit that if the proportion it bears to the revenue were identical in all Eastern Colonies (and levied in an identical way) much of the discontent would be removed. You stated, sir, in your reply in Parliament to questions asked by Colonel Yate on April 24th, that Ceylon (which is understood to be in a more pros perous condition than Hong Kong at the present time) pays only 93 per centum of its revenue for land defence, that its maximum contribution is limited to three- fourths of the cost of that defence, and that "Ceylon also provides the cost of land and buildings required for military purposes "--the inference being that Hong Kong and others do not Hong Kong pays 20 per centum of its gross revenue (the limit

of its liability was stated to be the entire cost of defence), and it also provides all lands required for military purposes. It is true that a Military Lands Account is kept on record, but it is subject to the stipulation that the Military Authorities shall never have to pay a single dollar in actual cash for any land they may require, and they possess some of the most valuable land in the Colony (as also does the Navy). All military and naval lands are subject to no Crown rent, and their buildings are not assessable for rates or taxes of any kind. I do not submit that it should-be otherwise, but it would appear from the reply to Colonel Yate that you were under the impression that the lower percentage of revenue paid by Ceylon was in some degree justified by an exceptional arrangement in that Colony in regard to military lands. The lands exclusively occupied by the naval and military establishments in the very centre of Victoria City constitute some of the very best building land in the island and the most suitable for business purposes." The naval premises were stated in Sir Paul Chater's letter of 2nd May, 1901, enclosed in Sir Henry Blake's despatch, No 182 of the 9th May, 1901.* to comprise 22:08 acres, while the military occupy 84 acres (42 48 acres of which is level land on the sea front). He estimated the value of the premia only on the naval land to be at that date six million dollars, That to say nothing of the loss to the revenue from Crown rents and taxes.' estimate is increased at the present day to $7,840,800. But the mere value of the land, and the amount of revenue lost by rates and Crown rent is, as Sir Paul Chater pointed out, the least part of the sacrifice made by the Colony by the assignment of these lands (totalling over 100 acres) to the Navy and Army. Their location in the heart of the city (as pointed out by Sir G. Phillippo's Commission of 1886) has arrested the natural expansion of the city eastwards, with a consequential congestion in the over-populated part of the city lying west of the block occupied by the Army and Navy, and this has formed a permanent handicap to the natural expansion of the Colony, which is as manifest to-day as it was in 1886.

From your reply to Colonel Yate, it further appears that the Federated Malay States (which are, I learn from their official reports, in a very prosperous condition), pay under 18 per centum ($448,213 out of $24,962,617) with no remission of Crown rents or taxes due to military occupation, while the Straits Settlements, which nominally pay the same percentage as Hong Kong, deduct certain items which Hong Kong is compelled to include, and pay only on the net, not the gross revenue of Christmas Island, &c. But the most serious discrepancy arises from another source. Hong Kong, being a small Colony, has no system of municipalities, and all municipal expenditure is included in the General Budget of the Colony. The total revenue of the Straits Settlements therefore, to correspond with that of this Colony, was in

1908

• 19847/01 not printed.

$9,837,624 $3,524,494

$18,382,118