CO129-568-4 Estimates 1939 8-10-1938 - 6-7-1939 — Page 39

2.

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3.

The anticipated deficit for 1939, on the basis of

the approved estimates, was $1,659,898. The amount payable

in respect of military contribution has however been reduced

both by the fixation of its amount and by the extra payment

already made on 1938 account; and, if no other changes are

made in the approved estimates of revenue and expenditure,

the estimated deficit may be put at $650,000, and the

estimated general revenue balance at 31st December, 1939,

may be put at $12,900,000. The general revenue balance at

that date, as calculated when the estimates were passed,

was $11,867,025. The Colonial Government is thus over

$1,000,000 better off than then appeared probable. In fact,

the real improvement is even greater, since the estimates

as originally presented, which I then regarded as sufficiently

prudent and which I am assured the unofficial members of

Legislative Council would have approved before the Japanese

invasion of South China, envisaged a balance at the end of

1939 of only $11,121,000.

4. The principal reason for the curtailment of the

estimates of expenditure was, of course, the fear that revenue

might decline. So far, as the weekly reports transmitted to

you show, there has been no indication of such a decline; on

the contrary revenue since the Japanese landing in October

1938 has been at a higher level than in corresponding periods

of previous quarters of 1938, and revenue to date in 1939

is keeping close to the revenue of the first weeks in 1938.

The only large head of revenue which shows a decline is the

Kowloon-Canton Railway, but the decline there is fully offset

by increases in other heads, while there is of course some

consequent saving in expenditure on the railway and revenue

from local traffic is maintaining an unexpectedly high level.

I do not, therefore, think it imprudent to assume that the

approved estimate of revenue, i.e. $35,257,621, will be

realized