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9. I presume that ALVES' security bond has been enforced so as to recover a portion of the amount embezzled by him, and I take the opportunity of asking whether this course was actually taken in the BARRADAS case, in accordance with paragraph 11 of my predecessor's despatch No. 194 of the 11th of September, 1890.

10. I have observed with some surprise the confusion of mind exhibited by Mr. MITCHELL-INNES and others as to the relative responsibilities of accounting and auditing officers. Mr. MITCHELL-INNES, for instance, showed a disposition to advance a theory that it is not the duty of the Treasurer but the duty of the Auditor alone to see that the Government is not defrauded of Revenue. The proper view of the responsibilities of a Treasurer was set forth more than once, viz.: (1) in Lord KNUTSFORD'S despatch of the 11th of September, 1890 to which references has just been made, (2) in the Financial Instructions, and (3) quite recently in my despatch No. 70 of the 21st of April last.

I trust that it has now been made perfectly clear to the public service of Hongkong that the Audit of Revenue by the Local Auditor is intended, not to relieve the Treasurer of responsibility, but to secure the performance of his duty, that the Treasurer is responsible for the collection, receipt and safe keeping of Government money, that, if the Auditor finds that the Revenue is being defrauded by the public, it is prima facie evidence of neglect or laxity of duty on the part of the Treasurer, and that if the Treasury Staff ignore financial regulations and em- bezzle public funds, in course either of receipt or of payment, it is the Treasurer who will, unless in exceptional circumstances, be held pecuniarily responsible for the accruing loss.

11. I observe that it is stated in these papers that there is great pressure on the Treasury during the first few days after the dates at which rents or taxes become due." I would suggest that it might be possible to classify the persons liable to pay rents and taxes, and to arrange with them that they should make their payments at the Treasury during particular weeks or on particular days, within a certain limit of time after the date at which the payments fall legally due. Under present circumstances, these taxes cannot be fully collected in a shorter time than three months, and the Government would not, therefore, as far as I can judge, be seriously damnified by the proposed arrangement, which would have the advan- tage of obviating the pressure complained of.

12.

It seems to me doubtful whether the Shroffs at the Treasury, who receive public money, should be allowed to use private chops for stamping the receipts which are given to the public, and I should be glad to know whether chops could not be provided for them bearing, in addition to their own personal device, the Royal Crown or some suitable public emblem. A die-sinker would presumably hesitate to execute such a chop if asked to do so by a private person, as the pre- sumption would at once arise that he desired to possess himself of a forged chop.

13. It occurs to me, further, that if the Receipts for Crown Rents and their counterfoils are, as no doubt they are, numbered, and if, when a rent is recorded as paid in the Rent Roll the number of the Receipt were entered in that record, the Auditor, would have no difficulty in detecting any case in which a payment there recorded as made had no tally among the counterfoils or in the Cash Book.

14. In conclusion I note that it would seem from the evidence taken by the Commissioners that ALVES' dishonesty was traceable to building speculations on his part, and that these speculations were more or less matter of notoriety.

I trust that the rules which were enclosed in your despatch No. 292 of the 12th October last are being rigidly carried out, for it cannot be too soon understood in the Government service that jobbing and speculation in real property will be assumed to be incompatible with honest and honourable discharge of public duties.

15. I am not aware that there is any particular reason why this despatch and the despatch to which it is an answer should be kept confidential but leave the matter to your discretion.

I have the honour to be,

Sir,

Your most obedient,

Governor

Sir W. ROBINSON, K.C.M.G.,

&l.,

St.,

&c.

humble servant,

RIPON.