CO129-558-3 Levy on Salaries- petition from Chinese Civil Servants 3-1-1936 - 19-12-1936 — Page 64

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Government unawares and demanded immediate retrench-

ment of expenditure, and it was legitimate to take

the special measure of an emergency levy on salaries.

Throughout this year, however, the dollar

has been stable, and the prospect is that it will

remain so in 1937. On this account, therefore, there

is no sudden emergency to be faced as there was in

December of last year.

It is the common experience that the Hongkong

Government have never taken an optimistic view of

their financial prospects. The results of the year

1935 showed a small surplus as against expectations

of a deficit. For the year 1936 a large net deficit

of some 3 million dollars was predicted early this

year, but it seems clear now that although a deficit

will result it will be very much less than anticipated.

As regards 1937 the Governor reports that it is

distressingly clear to him that a large deficit is

inevitable. To meet the crisis in 1936 the Secretary

of State agreed to the temporary reduction of

surplus funds below the level of 10 million dollars

which has in the past been stipulated as the suitable

figure for a minimum reserve to be maintained by the

Colonial Government. It was estimated that it would

be necessary to use the surplus funds to an extent

to bring this reserve down to a little more than

8 million dollars. We are now told that at the end

of the year the surplus funds will still amount to

approximately 114 million dollars.

The Governor's proposal is that a levy on

salaries shall continue to be imposed in 1937, and

should be at such a rate as to save something between

and million dollars, and that "this should

preclude the likelihood of our surplus balances at

the end of 1937 falling below the 8 million mark".

The