CO129-514-4 Repayment of excess military contributions advanced by Hong Kong 9-1-1929 - 10-1-1930 — Page 33

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They have accordingly caused revised

calculations to be made and I am to forward the enclosed statement from which it will be observed that the total number of dollars repayable to the Colony has been increased from $592,711 to $655,141.

In explanation of the revised calculations

I am to state that regard has been given to the fact that the total cost of the garrison, as shown in the annual statements of cost furnished for the information of the Colony, is built up of two portions, one representing local expenditure in dollars converted into sterling and the other representing actual sterling expenditure outside the Colony. The revised calculations show separately the number of dollars appropriate, to the two classes of expenditure. In the annual statements of the cost of the garrison, the items of dollar expenditure are converted into sterling at the official rates month by month, and they should accordingly be converted back at the official rates

alternatively they might he converted both ways at the commercial rates which would produce the same result). Consequently, the difference between the commercial and official rates only operates as regards the portion of the cost which represents original sterling expenditure. The rates actually used in the revised calculations are the monthly average of the daily rates, as published in the London Press, for the months concerned.

As regards (b) the method adopted by the Council was both simple and reasonable assuming that conversion into dollars of the full cost was made at the official rates of exchange. It corresponds to the method of meeting the cost of the garrison in 12 equal instalments which would be adopted if it were known beforehand that the cost of the garrison for any year would fall below the contribution based on percentage of revenue. In the revised calculation, however, a change has been introduced into the method. As regards nearly the whole of the dollar expenditure particulars are still available of the actual amounts charged month by month in the Paymaster's accounts, and for expenditure in this currency the actual charges so recorded have been substituted for the even distribution over months. The Governor's criticism therefore does not now arise except as regards the spread of the sterling expenditure. This expenditure represents

mainly/