CO129-561-10 Estimates 1938 2-9-1937 - 23-9-1938 — Page 11

I have

cashed 3. a bee for this

OUG.

? Approve the variations in the Schedule,

and note para. 2 of the despatch.

4.

? Put by.

14

6.

See Table on 1936 file.

See 6.

This telegram is registered for record,

and may be put by.

5.

For the last few years Hong Kong Estimates

have been prepared under extraordinary conditions,

owing to trade depression and currency

depreciation. It was hoped when the 1937

Estimates were prepared that they marked the

end of this period and a return to more normal

conditions. A few months ago these anticipations

seemed to have been fulfilled. Hong Kong was

recovering from the trade depression, and seemed

at last to have reached a period of stability

and comparative prosperity. The levy on

salaries was finally removed in July. The

financial year for 1936 ended with a small

surplus of revenue, and the monthly revenue

figures for the first six months of 1937 also

showed a small surplus.

Now the Sino-Japanese conflict has

disturbed once again the normal life of the

Colony. At the moment its economic and financial

position does not appear to have been adversely

affected, but the outbreak of hostilities has

made calculation difficult, and there can be

no assurances of secured prosperity for next

year. At the moment the Colony has to some

extent gained from the situation by the

inevitable economic stimulus of war and from the

increased traffic in e.g. munitions. It has

also handled imports which in the normal course

of events would have reached China through

mone

Shanghai or other (northern ports. I suggest,

however,