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19. My Lords have carefully weighed these recommendations, and they regret to come to the conclusion that the proposed settlement will not satisfy the just claim of Her Majesty's Government.
The fact that the Colony has in two or three past years contributed an inadequate sun to works of defence is not a reason for relieving it of a fair contribution to the charge of its garrison in the future. Nor can my Lords admit the cost of barracks as a reason for relief. The provision of barracks is a temporary and extraordinary service, such as the Imperial Government has often to meet, and such as it meets either by temporary increase of taxation or by loan. The cost of local militia and volunteers may properly be included in military expenditure, but proposals for the enrolment of such corps, though often put forward, are seldom enforced; and my Lords would prefer to know that militia and volunteers actually exist before they admit a prospective charge on their account. The plea for relief in consideration of other services performed is therefore insufficient.
20. Nor is the plea for consideration on the ground of incapacity more sound. Hong Kong is a port with 7,000,000 tons of shipping in the year. centre of financial business in that quarter of the globe. A recent governor has It is the dilated on its great and increasing prosperity, and has dwelt upon the fact that for a long time taxation had not been increased. The estimated population on the 31st December 1887 was 213,000.* The numbers were increasing at the rate of 9,000 or 10,000 a year, and in 1889 the population probably exceeds 230,000. The military contribution, therefore, is now little more than half a dollar a head, and the increase of contribution now proposed, say 43,000, including volunteers, would reach little more than a dollar a head.
21. Comparison between the sums expended by different countries on certain services are always difficult, and my Lords only offer the following figures as approximate, and in illustration of their general argument. They believe that each inhabitant of the Netherlands contributes about 18s. 7d. to defence, each inhabitant of Belgium about 6s. 7d., each inhabitant of Portugal about 7s. 2d., each inhabitant of Sweden about 68. 6d., each inhabitant of Greece about 10s. 3d., and each inhabitant of Switzerland about 5s. 147. These are small States not armed for aggression, and they afford, therefore, a fair standard of comparison with Colonies. Again, Hong Kong contributes perhaps nine per cent. of its revenue to defence, Holland contributes about 25 per cent., Belgium about 143 per cent., Portugal 19 per cent., Sweden 32 per cent., Greece 24 per cent., Switzer- land 34 per cent. of the national revenue to defence. But if it is contended that these are European powers, and therefore that the comparison is not fair, my Lords may cite the Dutch East Indies, in which the proportion is 27 per cent., or Japan, in which it is 43 per cent, If the increase proposed by the Committee were adopted, the contribution from Hong Kong would not probably exceed 18 per cent., and as the revenue steadily increases the per-centage at the close of four years will in all probability be less.
22. But the per-centage of revenue appropriated to defence affords an imperfect test of the burthen thereby imposed upon the community. It must also be ascer- tained whether the revenue raised is large in itself, and obtained by means of heavy taxation. The inhabitants of Hong Kong are exempted from Customs, and there is no income tax in the Colony, Taxation is confined, my Lords believe, to a moderate house tax, to light stamp duties producing from 20,000Z. to 30,0007. a year, and to a few license duties, the chief of which is levied upon opium. Further, the modest revenue of 266,0007. includes local taxation.
23. My Lords have shown, they think, that the contribution of Hong Kong towards its own defence is inadequate by whatever standard it may be tested. The pro- portion of its revenue set aside for defensive purposes is insignificant when compared with the like proportion set aside in States which do not maintain large armies and navies for aggressive objects. The increasing prosperity of the Colony is un- doubted. It contributes nothing to its naval defence. The charge for defence per head of the inhabitants is very small. The amount and incidence of taxation are out of all comparison light.
*Parliamentary Paper C. 5249, 1888.
If military expenditure apart from works were about 270,000 dollars (43,0007. at 3s. 2d. the do'lar), this would mean about 18 per cent. of a revenue of 1,500,000 dollars.
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23. Sir A. Haliburton's Committee state that the Colonial Office in 1863 imposed upon the Colony a military contribution equivalent to one-fifth of the cost of the Garrison, and that it was in the contemplation of the Secretary of State, who then held office, to increase it. That intention has unfortunately remained unfulfilled for a quarter of a century, and the favourable terms thus enjoyed by the Colony during that period would in itself justify a considerable increase in the proportion which Hong Kong is henceforth to contribute to defence. It certainly is not a reason for a reduction of that proportion. Yet the Committee recommend a con- tribution not equal in proportion to that which the Colony paid in 1863, and their recommendation is not accompanied by a stipulation for a more equitable arrango- ment at the expiration of the five years. This would not be a satisfactory conclusion.
25. The Empire is required to make considerable sacrifice in order to complete its defences, and as self-defence is the primary duty of every community, proper provision for that object should be one of the first charges on the revenue of each member of the Empire. The Imperial Government, in its anxiety to consult Colonial interests, has somewhat overlooked this first condition of society, and the precedent may not improbably be construed into a rule of policy that Colonial Governments are not to be asked for a proper contribution towards their own preservation. Sir A. Haliburton's Committee do not sufficiently recognise the fact that the Colony, like the mother country, must increase its taxation if existing revenues will not meet the due and proper charges of defence and government, and my Lords know no reason why the prosperous Colony of Hong Kong should be exempted in this respect from the ordinary lot of civilised communities.
26. My Lords cannot therefore agree that the contribution of 40,000%. a year is sufficient, and they will therefore propose that the subject should be referred in November to a committee of Her Majesty's advisers. But in the meantime they are prepared to accept for two years the contribution of 40,000 a year recom- mended by the Committee, and accepted by the Secretary of State.
My Lords further consider that the arrangement should be strictly observed under which, in carrying out plans of defence, the Colony provides the works, and the Imperial Government the armaments. The Colony should therefore refund 9,000. expended on submarine mining works.
Lastly, any excess of expenditure and the estimate upon new barracks should be equally divided between the Imperial and Colonial Governments.
I am, Sir, Your obedient Servant,
Rewelby
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