CO129-566-21 Military contributions 7-5-1938 - 31-1-1939 — Page 4

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was turned down by the War Office and Treasury largely

on the ground that it might involve a decreased con-

tribution but partly also because it was feared that

this method would give rise to as many difficulties in

practice as the old. The story is fully set out in

the attached bundle of prints.

The difficulty in accepting any proposal

for a change in the basis of contribution is to get

the War Office and the Treasury to agree, the main

point being, from their point of view, that the actual

amounts paid should not be decreased.

The Governor's

proposal should, I think, avoid this and the comparison

with the statement of previous contributions is as

striking. It is in fact a matter for consideration

whether the sum is not in fact too great a burden on

the Colony and whether we should agree to it, but I

think it is probable that the next few years at least

will show an increased level of expenditure, and

therefore of revenue, in Hong Kong. The amount pay-

able in respect of the current year may in fact be

higher than $6,000,000 but this is due to the

artificial boom created by the Sino-Japanese hostilitie a

and as the Governor points out, a similar revenue

cannot be counted upon for the future. It seems to

me therefore that the present proposal is one which is

sufficiently generous to the War Office but has many

advantages from the point of view of Hong Kong and

we may therefore approve it for our part.

The recent discussion about the amount of

the Straits Settlements' contribution may not have

disposed the Treasury and the War Office favourably

to this proposal but it does not include the feature

that

which