Sessional_Paper_1893 — Page 300

Enclosure No. 2.

297

the trade of Hongkong. I regret that I have not had time, being anxious to des- patch the Memorial by the out-going mail, to thoroughly analyse the items which make up the totals quoted; but I have analysed them sufficiently to satisfy myself that the argument advanced is very misleading. The Memorialists state that the Chinese Customs revenue may safely be regarded as an index to the variations in trade." This is entirely erroneous. To take for example one very important item -petroleum-the Chinese Customs revenue from this article has largely diminished at some ports in 1892, but so far from the importations having diminished they have enormously increased. The explanation is that the "Battery" tax was re- duced from 40 cents a case in 1891 to ten cents a case in 1892, thereby diminishing the revenue from this source, supposing importations to have remained unchanged, by three fourths. The falling off in the Kowloon revenue does not therefore necessarily imply a corresponding decrease in importations; as a matter of fact 7,700,000 gallons paid duty at Kowloon in 1892 as against 4,600,000 gallons in 1891.

A considerable portion, again, of the falling off in the Chinese revenue derived from Opium is attributable to increased smuggling (not necessarily from Hong- kong) into various parts of China, and the accidental circumstance of a good harvest accounts for a large loss of revenue by way of duty on imported grain. The above considerations may suffice to shew the inaccuracy of the statement that "the Chinese Customs revenue may safely be regarded as an index to the variations in' (China's) "trade;" and it is almost superfluous to add that even if it might be so regarded, it would for obvious reasons by no means follow that it might be regarded as an index to the variations of the trade of Hongkong.

I may take this opportunity to invite attention to the enclosed letter published in the China Mail of 31st ultimo shewing the great development of the yarn trade in Hongkong, and I may add that I learn from reliable sources that there has been a considerable development in other branches of commerce also.

In sub-paragraphs (e) and (f) an attempt is made to minimise the benefit which the Colony derives from the Shipping frequenting its port. It can hardly be necessary for me to insist on the self-evident fact that the Colony must benefit and does benefit by its shipping. The amount received by way of light dues supplies no adequate measure of that benefit, but as a matter of fact they have in 1892 brought in the sum of $92,309, or nearly $3,000 more than in 1891.

Sub-paragraph (g) points out that the revenue derived from Opium has dimi- nished. This is so, but the variations in the amount realised by the Opium Farm depend on a number of considerations which do not, as regards many of them, by any means connote a correlative condition of prosperity or the reverse amongst the community at large, or even amongst the Chinese portion of it. What it is im- portant to notice on this head, (and the Memorialists have failed to notice it) is that in spite of a falling off in the Opium revenue, the total of our general revenue has steadily increased-a matter for unmixed satisfaction.

In sub-paragraph (h) the falling off in the revenue derived from the profit on the sale of Subsidiary Coins is mentioned. The remarks on the preceding sub- paragraph are equally applicable here, and I may add that the demand for our subsidiary coins has recently revived in a remarkable degree, and that the profit realised in 1892 amounts to about $45,000.

Sub-paragraph (i) comments on the alleged want of elasticity and productivity in the revenue. As already repeatedly stated, the revenue has continuously in- creased, and the revenue for 1892 considerably exceeds that of any previous year. The fact that it no longer exhibits the previous large surpluses over ordinary expenditure is due to a variety of causes which the Memorialists are careful to omit to mention. These causes are the increase of the Military Contribution, the fall in the value of silver which has necessarily increased the expenditure in several directions, and the growing needs of a growing community. The increases of salaries granted in 1891, which is all that I am at present specially concerned with, forms but an infinitesimal fraction of the total increase of expenditure. As regards the Estimates for 1893, it should further be noted that provision is therein made for the new item of the charges on the proposed loan. It should also be borne in mind that there is every probability that the financial results of 1893 will be more favourable than those appearing in the Estimates, as for the reasons stated in the following extract from the Colonial Secretary's speech in Committee on Supply the revenue for 1893 has been estimated with extreme caution :—

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