CO129-389 - Governor Sir Lugard Acting Governor Claud Severn - 1912 [3-4] — Page 319

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the land apart from the house will, as far as it is humanly possible to foretell, appreciate considerably in value.

10.

For the various reasons stated in the fore- -going paragraphs, I recommend that advantage should be taken of the authority conveyed by the Railways Loan Ordinance 1905 (No.11 of 1905) and by the General Loan and Inscribed Stock Ordinance 1905 (No. 12 of 1905) to make a further issue of inscribed stock to the extent of £250,000 to meet the additional expenditure necessary to complete the construction and equipment of the British Section of the Kowloon-Canton Railway.

11..

You will observe that these proposals, in so far as they concern the method of financing the purchase of the Station site, differ from those set out in Sir F. D. Lugard's minute for Legislative Council dated 13th. March which formed enclosure 1 of his Despatch No. 96 of 1bth. March. Sir Frederick was however unaware of the extent of the liabilities outstanding under heads (i) and (ii) mentioned in paragraph 2 as the figures were not available when he wrote his minute. He refers to the

satisfactory position at the end of last year but it should be taken into consideration that the items principally responsible for the conversion of the estimated deficit of $298,937 into an actual surplus of $420,054 namely the Imperial Contribution

(8134,000), Land Sales (170,000) and a Stores Credit ($288,000)

were all three extraordinary sources of income. He does not

appear to have taken into account a very important factor in the financial situation namely the uncertainty attaching to the

revenue derivable from Opium, which constitutes no less than 10.4

per centum of the total revenue for the current year. I have given in paragraph 8 what appear to me to be strong reasons why the accumulation of surplus balances should not be mortgaged to any further extent and for the reasons stated in the two preceding

sentences, I am equally convinced that no extraordinary liabiliti-

-es should be incurred on revenue account. Also I am averse from

increasing the floating debt of the Colony which you will see

from the statement of Assets and Liabilities in enclosure 1 stood