CO129-568-4 Estimates 1939 8-10-1938 - 6-7-1939 — Page 58

- 2 -

59

of falling off, except, of course, the receipts from the

Kowloon-Canton Railway, and revenues from many of the

principal sources of taxation are likely to be maintained so

long as the large body of comparatively well to do refugees

remains in the Colony. There is thus no present indication

of drastic deterioration in the Colonial Government's

financial position in the immediate future.

4:

It is, however, necessary to consider the more

distant future in which much must depend on the policy

adopted by the Japanese or whatever other administration

controls Canton. While I do not share the ultra-pessimistic

views which are being expressed in some quarters a considerable

and permanent decline in the Colony's trade with South China

is obviously one possibility and I think it only prudent to

take account of that possibility by keeping a careful watch

on the Colony's resources in the immediate future. At the

same time I feel sure that you will agree that such a policy

of conserving the Government's reserves should not be carried

to extremes and that it is part of the object of accumulating

reserves that they should be drawn upon to some extent to

meet any difficulties which may arise from possible adverse

developments.

5.

With these considerations in mind I reduced the

estimates before they came under actual consideration by the

Select Committee by excising certain items of public works

extraordinary and other special expenditure which are capable

of postponement amounting to approximately three quarters of

a million dollars. The estimated deficit in 1939 was thus

brought down to $1,659,898. I also caused it to be intimated

to the Select Committee that if the revenue position showed

serious deterioration it would be possible to curtail other

non-recurrent expenditure and also such items as maintenance

of public works.

6.