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it is applied to Ports where ships are free and not subject to charges such as Light Dues, Tonnage Dues, &c. There is no Custom House at Hongkong and goods are free, but for the last 25 years European Shipping has been subject to a charge for Light Dues, and for 30 years native craft have been subject to Port charges.

But it is now contended that here in Hongkong "Freedom of the Port" must include both of these exemptions and that without Free Ships as well as Free Goods there is no "Free Port," a condi- tion which, so far as I have been able to discover, is not supported by precedent in any port of im- portance in any part of the world.

59. Reference has also been made by way of argument to a "Free Port" proclamation issued in 1842 when in the words of the ratepayers' petition to the House of Commons, Hongkong was "a barren rock, the abode of a few fishermen and pirates" and when as yet the treaty by which it became a British Possession had not been ratified:

60. Hongkong we are told has arrived at its present state of prosperity through being a "Free Port." Now for 30 years Hongkong has not been a "Free Port" within the apparent meaning of those who advance this statement, for from the 1st January, 1867, a charge was levied on all native craft trading to the Port which charge has been continued up to the present time, and in 1875 Light Dues was first imposed on European shipping.

61. The prosperity of Hongkong in 1867 (when charges were first levied on native craft) was represented by a European tonnage entry of 1,194,826 tons and a Junk entry of 1,367,702 tons making a total of 2,562,528 tons.

62. In 1875, when European shipping was first taxed by the imposition of Light Dues, the total entry had increased to 3,562,774 tons.

63. In 1890, when the rate of Light Dues was increased to 2 cents a ton, the tonnage entry had reached 6,688,994 tons, and last year it was 8,051,085 tons.

64. Thus the prosperity of Hongkong has increased from an entry of 2 million tons to an entry of 8 million tons during 30 years of taxed shipping, a fact which completely capsizes the assertion that its prosperity is due to its being a "Free Port" from a shipping point of view.

Also it is averred that Hongkong can only maintain its prosperity through continuing to be a "Free Port," yet it must be clear that it cannot continue to be a "Free Port" if it has not hitherto existed in that condition.

In short, Is it or is it not a "Free Port"? If its present condition is one of Freedom, I say there is no proposal to alter that condition. If it is not a "Free Port" then why apply the term to it? 65. It has also been asserted that the imposition of any tax on shipping will have the result of preventing ships coming to the Port.

I have already shown that this assertion is not borne out by our previous experience, but, after all it is only an assertion, to support which not one tittle of evidence or argument is offered.

66. From the opinion also which has been freely stated that, the entry of this large amount of tonnage is the cause of Hongkong's prosperity I take leave to differ, holding rather that it is the result thereof, the cause being found in the geographical convenience of the Port as a shipping centre, and the stability and general prosperity of trade in the East, offering a lucrative business to ships, to partake in which there is a competition of ever increasing keenness. But however this may be, there remains the fact which can hardly be disputed but which seems likely to be lost sight of, namely, that ships come here, as they go elsewhere, solely for their own benefit, and not with the object of benefitting Hongkong, so long therefore as benefits accrue to ships from the use of our waters, whether on account of their geographical position, or from any other cause, so long will ships continue to come, and the measure of these benefits, I am convinced, will not be found in a tax, even exceeding the present one of 2 cents a ton, which represents the paltry sum of £7 for a ship of 3,000 tons, a charge which makes Hongkong, in addition to its many other advantages, compare favourably as to its charges, with almost any port in the world.

67. During the year the Lighthouses have been maintained as usual. The Gap Rock suffered to some extent from the typhoon of July 29th-30th. Although on this occasion the buildings received no substantial damage, the sea reached them with some force, not only from the East-the direction from which the severe damage was done in 1893-but from the South also; the typhoon lasted about 12 hours as compared with 24 hours in 1893. It is probable that it was only owing to this that we have escaped a somewhat similar experience as on the former occasion.

68. Telegraphic and telephonic communication has been kept up with the Gap Rock and Cape D'Aguilar during the year. From the former station 550 vessels have been reported as passing and in addition 222 messages were received and 2,199 sent including the daily weather report for the Observatory.

From Cape D'Aguilar 1,007 vessels were reported and in addition 576 messages were sent and 40 received.