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But it is otherwise with the demand which has now been made, that the additional £20,000 should be paid for last year although no addition to the garrison has yet been made. That demand is considered in the Colony to be unjust, and this Association cannot but sympathize with the feeling. Not only does it involve a departure from what was held, on one side at least, to be a distinct understanding, but it seems to involve the assertion of a principle which the Colony views with grave apprehension.

The situation of Hong Kong and the nature and extent of its resources cannot be two clearly stated, in considering its liability for military contribution. It is not the centre of a great territory, from which it can draw revenue and wealth and which it is concerned to protect. It is a rocky island, originally rude and in- sanitary, which has been made habitable at great cost and by prolonged effort, through public works which require constant maintenance and extension. It is purely a depôt, owing its great commercial importance to its position in the China Sea; and its very existence in this capacity depends on its being a free port. It has a population of only about 200,000, the great majority of whom are Chinese labourers. Its resources are, therefore, rigidly limited; and the very fact that your Lordship has, in requiring payment of the increased grant, ordered the stoppage of various much needed public works, indicates an apprehension on your Lordship's part that the limit of taxation has been nearly reached.

This Association is aware that the contribution demanded represents still only a fourth of the cost of the garrison; but it is submitted that this proportion fully equals the relative importance of local and Imperial interests. For Hong Kong is not only a commercial entrepot; it is an important coaling station and base of operations for our Fleet, which finds there dockyard and other accommodation. Assuming, for the sake of argument, that it were effaced as a place of residence and of trade, Her Majesty's Government would still have to fortify and garrison it \ for Imperial purposes, as a strategic centre from which to extend protection, in

case of need, to our trade with China and Japan.

It must be remembered, further, that a large proportion of the commerce which apparently converges upon Hong Kong is a passing trade. Hong Kong, like Singapore, is one of the stations upon our maritime highway to the East. Unlike Singapore, it has been unwilling to hamper the absolute freedom of its trade by the collection even of statistics of the value of cargoes entering and leaving its harbour; but it will be sufficient to point out that the ocean steamers which contribute to swell the aggregate of its tonnage are on their way to and from Shanghai and Japan, and leave or take in at Hong Kong, as the case may be, only so much of their cargoes as may be destined for, or derived from the region that is the southern provinces of China and in a certain degree Cochin-China, Siam and Manila-for which Hong Kong is a commercial centre. It is in respect of this share only that Hong Kong can be held directly interested. The ships themselves and the cargoes they carry past the port constitute, so far as Hong Kong is concerned, an Imperial interest for the protection of which the Colony cannot be reasonably held responsible. Mr. CARDWELL indeed accepted, in 1866, in a despatch having reference to Singapore, a principle which must be held equally applicable to Hong Kong--that "the Straits could not be called upon to incur any charge that might be required for troops stationed there for Imperial purposes."

There has been, however, no desire in Hong Kong to look at the question in a narrow or niggardly spirit. The truth is recognised, that a great incidental benefit is derived by the Colony from the safety afforded by Imperial protection; and it has shown willingness to contribute, to the extent of its means, towards the increased measure of protection which Her Majesty's Government has decided to afford. The exaction, however, of an increased contribution for which no additional equi- valent has been given implies a different principle which this Association speaking on behalf of the Colony, feels constrained to combat. The revenue of the Island is not at present an expanding one, and it is evidently felt that the exaction of so