Objects and Reasons.
1. It will be remembered that at the meeting of the Legis- lative Council held on the 22nd December, 1938, reported on pages 193 and 194 of the Hong Kong Hansard for that year, the Colonial Secretary bore a message from His Excellency the Governor conveying the conditional approval of His Majesty's Government in the United Kingdom of a new method of assessment for the annual contributions to that Government by the Colony for its defence, commonly called the Military Contribution ", in respect of the years 1939 to 1943 inclusive.
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2. The essential terms of that approval were that the Governor's proposal for a fixed annual contribution of $6,000,000 for the quinquennium 1939-1943 was accepted subject to the following conditions :-
(i) If in any year the sterling value of this fixed sum, calculated at the average rate of exchange for the year, should fall below £350,000, or in the event of a formal devaluation of the dollar which would reduce the value below that figure, the amount of the contribution shall be at once reviewed without waiting for the end of the quinquennial period.
(ii) The Colony shall not pay in any year more than the actual cost of the garrison in that year.
(iii) That acceptance of the system of a fixed annual contribution is regarded as an experiment subject to review at the end of the first quinquennium, with the proviso that if the experiment is found to be unsatisfactory the Army Council or the Colony may propose to revert to the present basis of calculation of the contribution at the end of the 1939-1943 quinquennium.
3. The object of this Bill is to make statutory provision for the new method of assessment.
4. A Table of Correspondence is attached showing the source of the various clauses of this Bill.
March, 1939.
C. G. ALABASTER,
Attorney General.
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