C. 92622/32 [No. 18].
No.
PROOF.
COLONIAL OFFICE to WAR OFFICE.
[Answered by No.
.]
Downing Street, 7th March, 1932.
SIR,
I AM directed by Secretary Sir Philip Cunliffe-Lister to acknowledge the receipt of your letter of the 25th February,* regarding the Hong Kong military contribution and to request you to convey to the Army Council an expression of his thanks for the concessions which they have agreed to make in connexion with the basis of assessment of the contribution.
The Secretary of State is prepared to accept the suggestion contained in the third paragraph of your letter under reply regarding the rate of allowance, in respect of capital expenditure met from revenue, to be used in calculating the net receipts of recognized productive undertakings. The principle that the realized profits from invest- ments of general revenue should be subject to assessment to military contribution, to which reference is made at the end of the seventh paragraph of your letter, is also accepted.
As regards the waterworks loan charges, I am to request you to inform the Army Council that the Secretary of State is willing to withdraw the claim that the waterworks in the New Territories should be regarded as a new productive enterprise.
I am to add that the Governor of Hong Kong will be requested to submit the draft of any proposed legislation to amend the Military Contribution Ordinance and that the Army Council will be given the opportunity of considering any such draft legislation before its introduction. It is not anticipated that the Ordinance relating to the proposed new loan will be submitted to the Secretary of State in draft, but when the Ordinance is received for the signification of His Majesty's pleasure a copy will be sent to you to be laid before the Army Council for their consideration, before any decision is taken as to the tendering of advice to His Majesty regarding non-disallowance of the Ordinance.
I am, &c.,
H. R. COWELL.
* No. C. 92622/32 [No. 18].
Straits Defence Con.-Gp. 6. 131/2963.
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