CO129-265 - Public Offices & Others - 1894 — Page 347

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7. Appeals were received from the Colony and from the China Association correspon against the contribution of 40,000/., but the Government adhered to its decision, relating to and in doing so re-iterated the principle laid down in the Colonial Office Hong Kong, despatch of 20th January, 1890, "that Colonies, so far as their means allow, Nos. 24, 27, should provide the whole cost of their land defence."

31, 33, 34,

35, 37, 39,

42, 49, 50,

52, 53.

8. The following table shows the revenue and the military expenditure of the Colony (exclusive of capital expenditure on works and buildings) for the five

years ending with 1893 --

1889 (actual)

Revenue.

Military expenditure.*

dollars.

dollars.

1,978,275

134,261

1890

11

2,011,859

124,647

1891

12

2,025,303

421,002†

1892

"

2,236,933

269,005

1893 (estimated)..

2,011,615

294,353

Average..

2,052,797

248,653

* Inclusive of expenditure on local Volunteers. † Includes arrears for 1890.

9. The average charge for the five years, including local expenditure on Volunteers, amounted to 12:11 per cent. of the Colonial revenues, as against 16 per cent. estimated by the Committee in 1888 as the probable charge. If the comparison be limited to the four years for which the increased contribution was actually paid, viz., 1890 to 1893, the average revenues of the Colony amounted to 2,071,427 dollars, and its average defence expenditure to 277,252 dollars or to 13:38 per cent. of the revenue, against 17-12 per cent., exclusive of the cost of Volunteers, estimated by the Government in 1890, or 18.79 per cent. if the estimated cost of Volunteers were added. This reduction in the actual, as compared with the estimated, proportion of charge is chiefly due to the average revenues having exceeded by 495,497 dollars the revenues of 1888 on which the percentage of charge was calculated, and to the fact that Committee's the Colony has never raised the Militia force of 150 men contemplated in 1888, 1888 Report, and included in the Committee's estimates of that year. para. 22. Appendix No. 5.

Appendix No. 2.

Appendix No. 1.

10. The dollar was estimated by the Government at 3s. in 1890, while its average value, at the Treasury rate, during the four years 1890-93 was about 3.0§.

11. The establishment strength of the garrison is now 3,075 of all ranks, as against 3,018 in 1888, and its estimated cost for the next five years (excluding capital expenditure on works and buildings) is 237,1804, as against 280,0007. estimated in 1888.

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12. In the 1888 calculations of the cost of the garrison there were small over and under estimates on various items, but these nearly counterbalanced each other. The main causes of the decrease in the present, as compared with the 1888, estimate is due to the substitution of Native" battalion of Infantry, raised in India, for one of the British battalions included in the garrison of 1888, and to the fact that the local expenditure on supplies, &c., incurred in currency, will be met by a less sterling amount than in 1888, owing to the gold value of the dollar having fallen from 3s. 3d. to 2s. 3d., without any corresponding decrease in its purchasing value in the local markets.

1,557,300 dollars, as recorded in the official Blue Book of the Colony for 1888,

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13. Assuming, for the purposes of this report, that the estimated revenues of Hong Kong for 1894, viz., 2,007,210 dollars, will about equal its average revenues during the five years ending 1898, a military contribution of 40,0001. per annum, with the estimated cost of Volunteers added, would, had the Colonial currency not depreciated since 1888, represent a charge equal to about 12-79 per cent. of the Colonial revenues, as compared with 16:50 and 18-79 per cent,, the proportion which the estimated charges of 1865 and 1890 bore to the revenues on which they were based.

14. Had the Colonial currency not depreciated, the Committec would have found it necessary to consider whether the Colonial Contribution should be increased, a course contemplated in the report of 1888 (paragraphs 19 to 23).

15. Appendix No. 5 shows the fluctuations in the commercial exchange value of the dollar during the five years ending with 1892, and in the Treasury rates of exchange, for account purposes, during the six years ending with 1893, 16. Since 1893 both the commercial and the Treasury rates have fallen still further. The Treasury rate for the March quarter of 1894 was 2s. 6d., it has been fixed at 28. 3d. for the June quarter, and at 2s. for the quarter ending with September next, while the commercial rate has fallen to 2s. 14d. It seems probable, therefore, that the average Treasury rate for 1894 will not exceed 2s. 3d., the rate adopted by the Committee in their report upon the Straits Settlements contribution, even if it does not fall below that value.

17. A military contribution of 40,0001. represents about one-sixth of the estimated cost of the Imperial garrison as compared with one-seventh and one-fifth, the proportions of 1888 and 1865. If to this amount be added the average estimated annual local expenditure on Volunteer services during the period 1888 to 1894, viz.,† 10,705 dollars, the total military charge at the above rate of exchange would amount to 366,260 dollars or 18-24 per cent. of the Colonial revenues of 1894, as compared with 161 per cent. and 18-79 per cent., contemplated in 1865 and 1890.

18. In considering the burden which the defence expenditure of the Colony throws upon its revenues, it must not be forgotten that, without any increase in the Military Contribution, its burden has been considerably augmented, owing entirely to the depreciation of the Colonial currency. In 1865, when a military contribution was first paid by the Colony, and for many subsequent years, the present contribution of 40,0007, would, at the then value of the dollar, 4s. Bd., have amounted to 188,235 dollars. Owing to the fall in the value of the dollar, it is estimated that, this year, 355,555 dollars will be required to cover the Military Contribution.

19. In order to appreciate the full effect on the Colonial finances of the fall in the value of its currency, its total sterling payments must be taken into account. These, including the Military Contribution of 40,000%, amount to about 100,000%.

20. Taking the dollar at the value it possessed up to 1874 (4s. 3d.), this would have cost the Colony 470,588 dollars; at the present Treasury value of the dollar, 2s. 8d., it requires 888,888 dollars to cover the sterling payments, and the difference, 418,300 dollars, increases the expenditure of the Colony, for 1894, by over 21 per cent., without any direct counterbalancing advantage.

21. While this report was under consideration, the Committee was furnished Appendix. with copies of recent representations made by the Colony on the subject of its No. 6. Military Contribution. The main proposals made by the Colony are--

No. 2.

(a.) That the contribution should be fixed in dollars and not in fol.

sterling, on the ground that the Colony is unable, owing to Enclosure

*The average commercial rate ut Hong Kong, between 1st January and 30th April, 1894, has been about 2s. 14d.

† The expenditure on Volunteers for 1888, 1889, 1890, 1891, and 1892 was 4,056, 2,623, 2,749, 89,685, 1,822 dollars. The estimated charges for 1893 and 1894 are 12,000 dollars.

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