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4. Since 1865 Hongkong has paid a military contribution of 20,0007. a year in aid of the cost of its garrison; and if you refer to paragraph 14 of the Colonial Office letter of the 25th of April 1863 to Sir Hercules Robinson, who was then in England, you will see that it was then intended that the amount of 20,000l. was to "be subject to any revision which the altered circumstances of the Colony may require." It will also be seen from paragraph 15 of the same letter and paragraph 12 of the Duke of Newcastle's despatch, No. 115, of the 5th of September 1863, that Her Majesty's Government, in fixing the amount at 20,000l., were desirous not to press too heavily at first on the "Colonial revenues, and thus possibly to "retard works of public utility." Sir Hercules Robinson, in replying on the 21st of May 1863, to the letter of the 25th of April, interpreted (paragraph 21) this expression to mean that the contribution was "to be raised to a higher rate on a "future occasion."

5. The garrison in 1863-4 was estimated at 1,000 of all ranks, and its annual cost at 100,000%. In 1888 the garrison numbered 1,445 of all rauks (exclusive of volunteers), and its cost has risen to about 160,000l. a year, while the Colonial contribution has remained at 20,0007.

6. The future garrison, including local regulars, but excluding militia and volunteers, will be approximately as follows:-

Imperial troops, 2,525 of all ranks. Local regulars,

493

The details are given in the Table A. annexed to this despatch.

7. The cost of this garrison will be about 280,000l. a year and will conse quently be nearly three times as great as was the expense of the garrison in 1863 when the Colonial contribution was fixed. Her Majesty's Government, however, do not propose that the contribution should now be increased in the same propor- tion, and will only call upon the Colony to provide 40,000l. a year for each of the three years 1890-1-2, the Colony bearing in addition the cost of any militia and volunteers which it may raise, and the contribution to be paid after 1892 being subject to re-consideration during these three years.

8. You will remember that Lord Derby's despatch, No. 213, of the 17th of September 1884, enclosed with other correspondence a letter from the War Office of the 9th of September, which stated that "Lord Hartington considers that it "should also be intimated to the Governor that the present arrangement as to "incidence of charge only applies to the works now to be constructed and armed, "and that the military contribution paid by the Colony will have to be recon- sidered with reference to the increased garrison which may become necessary in consequence of these works, and to the general defence of the Colony." And in now informing you of the amount which Her Majesty's Government demand from the Colony as its contribution to the increased garrison, I desire to draw your attention to the following considerations, which have been duly weighed before that amount was determined.

9. Hong Kong is the centre of great commercial activity, and the mercantile prosperity of the port continually increases in a very remarkable degree, as is evidenced by the following figures extracted from the Blue Books:--

Shipping.

Ships. Entered 1,822

Tonnage.

894,924

1863,.

Cleared 1,835

911,957

Entered 27,500

2,501,815

1868,.

Cleared 27,090

2,473,887

Entered 28,779

4,352,668

1878,..

Cleared 28,377

4,340,419

1898,

Entered 27,779 Cleared 27,369

·6,400,410

6,309,974