Sessional_Paper_1887-1888 — Page 335

These however being all works, not merely remunerative as are some of the others, but such as will very quickly repay the whole of their cost with, in the case of the Re- clamations, a large profit in addition, the Governor is of opinion that there can be no reasonable objection to the provision of the required funds by loan, unless, as is by no means impossible, that course should prove unnecessary.

As regards borrowing funds for works which will benefit future generations as well as the present, especially such works as are of a remunerative character, the Governor believes that if the true position of this Colony were more fully known all reasonable objections against such a policy would be removed, and the interest required would moreover be reduced below the 4 per cent. which is the rate paid in respect of the last Loan. Considering the extremely small indebtedness of Hongkong with reference even to its immediately realisable assets, the Governor is decidedly of opinion that if there were necessity for borrowing a sum many times larger than is at all to be required, there could scarcely be offered more complete security for it.

For though the area of the Colony is small, its Crown lands are of an exceptional value, and a value which is morally certain to increase pari passu with the rapid growth of the population.

Without attaching undue weight to the many recent sales of land at distances of 14 to 2 miles from the town of Victoria at prices varying from 20 cents to 40 cents a square foot, or to the recent valuation (believed to be more than justified by existing market prices) of the reclamation about to be undertaken in front of the Praya at ($7,910,821, or including that in front of the Government property at) $9,714,777 it nay in any case be fairly considered that these figures throw a useful light on the prospect of the future, if the Colony, as there is every reason to suppose it will, should continue to prove an attraction to the people of the neighbouring Empire.

In the absence of calamity impossible to foresee and on the presumption that the Government is wise enough to maintain the present freedom of trade, there can be no moral doubt that the 20,000 acres of unsold land in the Colony (most of which is as suitable, or not more unsuitable for building than was originally that which is now covered with houses) will eventually realise an enormous sum,

Indeed at this moment,

if the necessity were to arise for changing the present policy of selling without the condition of immediate building, and of thus abandoning to speculators the profit that will otherwise be reaped by the community, there would be little difficulty of obtaining from sales within a few weeks an aggregate sum equal to several times the amount of the annual Revenue of the Colony.

But besides the land, the Colony has a most valuable asset in its two magnificent systems of water works, which unlike similar works elsewhere have been entirely paid for out of income. These could readily be sold for more than their cost viz.: a quarter of a million Sterling, while the rent-charges on land already sold, would, if capitalised, produce about half a million more. When it is further considered that there is an entire absence of import-duty in connection with the trade of a port, which in respect of the tonnage of its shipping is certainly the 4th, if not the 3rd, in the world, there seems no reason why the credit of the Colony should not be at least as high as that of the Corpo- rations and Companies which borrow at 3 and it is with a view to assist towards that end that the Governor has made this special reference to the subject.

There would, however, be a difficulty about obtaining on the most favourable terms a loan which would be repaid in four or five years, short periods not being at all in favour with investors. Some of the funds might indeed be re-invested, as they were recouped, in a road and tramway round the island at the edge of the water-a work which ought in any case to be commenced at no distant date-but even in that case, the expenditure would with equal quickness be returned from the development which would thereby be hastened of the resources of the island.

For this reason it would probably be advantageous that an arrangement should be made by which the bonds for any Loan that may prove to be required should not be issued to the public, unless the necessity for doing so actually arose, but should be deposited as security for temporary advances. By such a plan, if permitted by Her Majesty's Government, it appears to the Governor that the funds might be obtained at the Bank rate of interest; and it would have this further advantage to set against the possibility of a temporary rise of the Bank rate that it would obviate the necessity of borrowing more than was actually required at the moment. There may, as stated above, be no necessity to borrow at all, as the effective expenditure of the large surplus depends on uncertain conditions, and may not for various reasons prove practicable. In any case, the amount required on Loan cannot be estimated at the present moment.