14
11. Their Lordships being dissatisfied with the conclusions of a Committee to which their own representative was a conscuting party, caused the matter to be referred. to the two Secretaries of State and the Chancellor of the Exchequer, and, according to Lord Knutsford's distinct recollection, the result of this meeting was that the recoin- mendations of the Committee were accepted so far as regards Hong Kong. He cannot, therefore, adopt the view apparently underlying your letter under acknowledgment, that this conference was merely of a preliminary character, designed to clear the ground for subsequent discussion; and should the Secretary of State for War concur in this recollection of what passed at that meeting, Lord Knutsford trusts that their Lordships will reconsider their present decision, and agree to this contribution of 40,0001, for the five years from the 1st January last.
12. As regards the sum of about 9,000% for submarine mining works which their Lordships desire should be demanded from the Colony, Lord Knutsford would point out that when the Conference accepted (as according to his recollection was the case) the recommendations of Sir Arthur Haliburton's Committee, no exception or reservation was made either in respect of this sum or of the payments on account of the new barracks. And in any case he would deprecate any demand on account of this sum, not only because no similar demand has been made upon any other Colony, and no objection to the payment has been raised in Parliament, but also because the Coloniał Legislature in 1886, when voting a sum of 60,3751. in addition to the original estimate of 55,6251. for works, making together a sum of 116,0002, did so "on the distinct
50,000,000%, the local revenues of the United Kingdom, after excluding loans and Government contributions, we get a total revenue of 186,300,000!,
The foregoing figures give a military expenditure of 8. 4d, in the £ of revenue, or 18-10 per cent. for Hong Kong, instead of 1s. 10d, and 9 per cent., and 4s. 9d per head of population, instead of 18. 10; while the proportions for the United Kingdom are 4. 4d. per £ of revenue, or 21.78 per cent, instead of 78, in the £ or 35 per cent., as given in the Chancellor's muniorandum, During the past five years, therefore, an addition of about 7,0001, to the Hong Kong military expenditure would have raised its proportion of expenditure to revenue to that which exists at present in the United Kingdom for both naval and military services. Its actual proportion of military expenditure to revenue has been about the same as that of Brazil and Portugal, and con- siderably in excess of that of Belgium,
If the charge for the war debts of the United Kingdom, chiefly incurred nearly a century ago, be added to its current defence expenditure, it would augment its proportion of expenditure to revenue to 78., but it would seem doubtful whether that standard could be made applicable to a Colony which had no existence when those debts were incurred.
With regard to the next five years, ending 1893, the military expenditure of Hong Kong, assuming the recommendations of the Colonial Contributions Committee to be adopted, will average as follows:-
Contribution
Local Forces
Direct expenditure on barracks
£
40,000
8.000
8,000
51,000
To this should be added the interest at 3 per cent, on 140,000, the value of the Crown lands, which is to be expended on barracks, and which, if not so hypothecated, would be a legitimate asset of the Colony, making a total of 55,2001 a-year.
The revenue of Hong Kong for this year is estimated at 266,1204. Assuming that its revenue will increase annually in the same proportion that it has increased during the past 10 years, its average during the next five years will be 286,0207. Its military expenditure will thus be 3s. 104% in the £ of revenue, or 19-8 per cent, as against a present 4 4d, and 21.78 per cent. in the United Kingdom. An addition of 7,000% to the expenditure recommended by the Colonial Contributions Committee, would raise the Colonial expenditure to the same proportion of revenue as at present obtains in the United Kingdom.
If, in addition to its local expenditure, the Colony were required to contribute half the total cost of its garrison-vis., 140,0007, + 15,200% = 155,2001. a-year, as suggested in the Chancellor's memorandum, it would be necessary for it to more than double its taxation, and, assuming that it raised 100,0001, more revenue. its proportion of military charge to revenue would then be 88. in the £, or 40 per cent. against a present 4s. 4d. in the £, or 21-78 per cent. in the United Kingdom.
It would seem impossible to impose such a charge as this on the Colony, and, looking to the fact that the charge proposed by the Colonial Contributions Committee for the next five years nearly approximates the proportion of the home charges for both naval and military services, it would seem to be a reasonable amount to impose. At the end of five years, when the barrack expenditure has been disposed of, it may then be practicable to augment the Colonial Contribution to the Imperial Exchequer on account of the current cost of its garrison.
The Secretary of State has not gone into a detailed comparison of the expenditure per head of the population of Hong Kong, and of the United Kingdom, and various other countries.
The present population of Hong Kong is about 200,000, and of this number only 7,000 to 8,000 are whites, including the garrison, the fleet, and the general shipping.
The Colony produces nothing, and it seems impossible to make any satisfactory comparison between the tax-paying capacity of its mixed population and that of the population of producing countries, such as the United Kingdom, Belgium, Portugal, Brazil, &c.
WAR OFFICE,
15th December, 1888.
15
understanding that this vote shall be final for the military and defensive purposes of the Colony" and although Her Majesty's Government never formally accepted this condition, yet, if the demand for this 9,0007. is pressed, the Colony would naturally point to the resolution, and the difficulty would be considerably greater of obtaining the increased annual contribution and the money necessary for the new barracks.
13. For it must be remembered that hitherto all barracks at Hong Kong have on that account been built by the military authorities, and any demand upon the Colony
will be unexpected, and give rise to much opposition. And there is a matter of consi- derable importance to which Lord Knutsford desires to draw their Lordships' attention. The Colony has recently carried out, at enormous cost, certain large works for bringing into the town a copious supply of fresh water, of which the military and naval depart- ments enjoy the benefit without contributing to the cost of the works, and the Colony may claim to set off a portion of this expenditure against demands which they consider unjust, seeing that the War Office and Admiralty pay only half rates for the water they ase, and it is understood that the Admiralty have objeeted even to this. No such suggestion has yet been made by the Governor, and very possibly never will be made; but the circumstance should not be overlooked when considering the demands which it is judicious for Her Majesty's Government to put forward.
14. It only remains to notice the 8th paragraph of the letter under reply, and to observe that, if the Straits Contribution has not been paid in sterling, this is due to the Treasury having refused to accept sterling in the first instance, and afterwards, when the exchange turned in favour of the Colony, to its having for years omitted to deal with a proposal from the Colonial Office submitting a scheme which, whatever may have been its merits, was, at any rate, an honest attempt to corne to an arrangement upon the subject. Upon this question I am to refer you to the letter from this depart- ment of the 18th September.*
LANDS.
No. 9.
Colonial Office to War Office.
JOHN BRAMSTON.
Downing Street, Sir,
6th November, 1889. With reference to the lettert from this department of the 17th ultimo, enclosing copy of a letter addressed to the Treasury regarding the Hong Kong Military Contribution, I am directed by Lord Knutsford to acquaint you that the Lords Commissioners of the Treasury have forwarded to this department a copy of their letter to the War Office of the 12th October (15171), and I am to request you to lay before Mr. Secretary Stanhope the enclosed copy of a further letter to that department relative to the provision of barrack accom- modation, &c., in Hong Kong.
Sir,
In reply to your letter,
Enclosure in No. 9.
Colonial Office to Treasury.
15171, $9
89
JOHN BRAMSTON.
Downing Street,
6th November, 1889. of the 12th ultimo, I am directed by Lord Knutsford
to request you to inform the Lords Commissioners of the Treasury that, as his Lordship has not seen the previous correspondence between the Treasury and the War Office, he can offer no opinion upon the letter to the War Office of the 12th ultimo,‡ on the
* See Enclosure in No. 8 of "Correspondence relating to the Military Contribution payable by the Straits Settlements.
† No. 8.
No. 7.
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