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3. Before finally deciding the question he will be glad to consider any observations you may wish to offer, but I am to ask that any representations may be made at your earliest convenience as the Governor wishes to be informed by telegraph of Mr. CHAMBERLAIN's decision.

I am, etc.,

SELBORNE.

The Secretary to the

PENINSULAR and OrientaL

STEAM NAVIGATION COMPANY.

SIR,

(Secretary, P. & O. S. N. Co. to Under Secretary of State.)

PENINSULAR AND ORIENTAL STEAM NAVIGATION COY.,

122, LEADENHALL STREET, LONDON, E.C.,

10th March, 1897.

I have the honour to acknowledge the receipt of your letter of the 6th instant, No. 3982 of 1897, enclosing, by the direction of Mr. Secretary CHAMBERLAIN, for the information of the signatories to the letter of the 13th ultimo, copy of a despatch from the Governor of Hongkong relative to the proposal to maintain, as Harbour Dues, the charge of 2 cents per ton levied at present as Light Dues on shipping at Hongkong, also adding that Mr. CHAMBERLAIN concurs in the view that it is not unreasonable to levy moderate Harbour Dues in Hongkong, provided that the proceeds do not exceed the total expenditure on the Harbour Department, including Lighthouses, Water Police, etc.

In reply, I am desired to state, on behalf of the signatories to the letter above referred to, that they regret that Mr. CHAMBERLAIN does not consider it expedient to reinstate Hongkong in the position of an absolutely free port, that having undoubtedly been the mainspring of the importance it has arrived at as a port of call and converging centre for the bulk of the shipping visiting the Far Eastern Seas.

In view, however, of Mr. CHAMBERLAIN's opinion that the amount levied as Harbour Dues should not exceed the total expenditure on the Harbour Department, I am desired to draw attention to the following facts, which, it is considered, conclusively indicate that, on this basis, there is no ground for increasing the levy of 1 cent per ton which has been hitherto collected as fixed Light Dues.

In the letter from His Excellency the Governor of Hongkong it is stated that the tonnage which visited the port in 1895 amounted to 5,772,289 tons, which at 1 cent per ton yield a revenue of upwards of $57,000. In the letter from the Shipping Firms of the 13th ultimo, it was pointed out that the present total expenditure of the whole Lighthouse Establishment of Hongkong is under $17,000. There is consequently a balance of upwards of $40,000 available from this source for General Harbour Expenditure and, as is shown in Sir W. ROBINSON's letter, there is a further revenue of $50,000 a year emanating from the charge on native craft also available for that purpose, but in addition to this sum of $90,000 per annum, I am able to state that there are further charges on shipping_collected by the Harbour Department, such as native Emigration Fees, taxes on Moorings and Lighters, etc., which bring in a considerable annual revenue, though I am unable, from the information at my disposal in this country, to state what the amount is. It is considered, however, that the foregoing statements may be fairly held to indicate that the revenue at present collected by the Harbour Department (exclusive of the special levy of 11⁄2 cents per ton as Light Dues in connection with the Gap Rock Lighthouse) is already in excess of the total expenditure of that Department, and it is therefore respectfully urged that no further tax of any description may be levied upon shipping, as such charge would be exclusively applicable to the general expenditure of the Colony, and is absolutely not required to meet any expenditure either directly or indirectly connected with shipping.

It is satisfactory to note that the Secretary of State is of opinion that no charge should be forced on shipping in the interest of what may be called the general Budget of the Colony.

I am, etc.,

H. H. JOSEPH, Secretary.

THE UNDER SECRETARY OF STATE,

Colonial Office.