CO129-472 - Others - 1921 — Page 178

Sir G. Fiddes

I do not trouble Sir

Any further communication on this subject should be addressed to-

The Secretary,

War Office,

London, S.W.,

and the following number quoted.

10/3255 (F.1).

33574

UL 6 L 21

36

War Office,

175

London, S.W. 5 July,1921.

H. Read with this, as the subject

is new to him and painfully familiar

to you.

Mr. Gent's ainute summarizes

the present position.

I think we must answer Sir R.

Stupos as in draft herewith. As to

S.S., they are so cadly off at

present that for this reason alone

we had better leave them alone for

the time being, though of course a

general settlement will have to

De made some day. (Te hoped that

their Mil. Cont. would be settled

by the fixed contribution which

they proposed to make of 1 million

sterling a year. But that is now

ancient history, though only a year

ago.

I would simply, tell .0. that

H.. has been requested to make no

change.

Clone Pr. 9.8.20

A.E.C. 8.8.21

630

X

53601/19 Shast

gir,

I am commanded by the Army Council to refer to your letter 62303/1920 of the 13th January, 1921, forwarding a copy of a despatch from the Governor of Hong Kong proposing that only the net proceeds from Government buildings let for profit, (after deducting expenditure on repairs and improvements, the sum due for Municipal Assessment, and depreciation at the rate of 4% of capital cost) should be included in the revenue of the Colony on which Military Contribution is 28909ged.

in

The Governor of Hong Kong appears to be under a misapprehension in believing that the practice prevailing in this connection in the Straits Settlements has the approval of the Council. While it is true that the Straits Settlements hase in the past assessed only the net receipts derived from Government buildings let for profit, the Army Council has never admitted their right to do so and has consistently challenged the practice (see War Office letter b/953 of 14th July, 1909, reply to Colonial Office letter 17224 of 8th June, 1909) and subsequent correspondence. Briefly, the assessment of net receipts has never been admitted as a general principle applicable to all remunerative undertakings. The Treasury specifically limited its application to undertakings that were not different in character and productiveness from railways. The assessment of the net receipts from railways and other undertakings of similar productiveness was intended to relieve the Colony of the necessity of paying a contribution based on revenue of which a large proportion is hypothecated for

and thus expenditure essential to the production of that revenue, avoid the restrictions of enterprise that might otherwise result.

These considerations could not be applied to receipts such as those from the letting of Government buildings.

The Council regret, therefore, that for the reasons given in the above mentioned correspondence, they are unable to agree to the proposal, that only the net proceeds of the Government buildings in Hong Kong let for profit should be assessed for Military Contribution.

The Under Secretary of State,

Colonial Office,

S.W.1.

I am,

sir,

Your obedient Servant,

B Blucia