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12. I shall be glad to receive at an early date an accurate statement showing all the public works which are in contemplation with the estimated cost of each, the amount spent on each up to the 31st of December last, and the amount which it may reasonably be expected that the Public Works Department will be able to spend on each during the year. I need scarcely point to the futility of placing on the Estimates sums largely in excess of the powers of that Department to make use of. The statement requested should include details and explanations of the item for "Sanitary Works" which was originally $1,500,000 (of which about $500,000 has been spent), and as to which no information has ever reached me.

The public works to which the Colony is actually committed should be distinguished, and a statement made as to the comparative urgency of all. It seems that even if funds are forthcoming it will take many years to carry out the programme now contein- plated, and unless some works are altogether postponed others of pressing necessity must be delayed.

13. Pending the receipt of the information above asked for, I limit my appro- val to those works to which the Colony is already committed, and to those which are deemed to be of urgent necessity.

I have the honour to be,

Sir,

Your most obedient

humble Servant,

KNUTSFORD.

P.S.-I have to add that if it should be decided that any general increase of salaries should be given in Hong Kong and the rate of exchange. for drawing salaries on leave and pensions in this country be lowered as a condition of the increased salary, (as has been proposed in similar circumstances at the Straits Settlements), the same condition will be applied to the increases of salary to the Schoolmasters and the Surveyor General sanctioned in the present Despatch,