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The civil population within the city of Kowloon, amounting to 200, lives there simply because it is dependent on the military. It does not engage in trade, there being no shops of any kind within the city. If the military remove from the city, the civil population is sure to follow, so there will be no one remaining over whom a Chinese officer could exercise jurisdiction.

In any case it appears to be entirely inconsistent with the military require- ments for the defence of Hongkong to allow a garrison town like Kowloon to be occupied permanently by Chinese military officers and troops. If that view be accepted, there seems to be nothing to justify the retention of Chinese jurisdiction in any shape or form within the city, for without the garrison the population will, it is certain, be reduced to nothing,

Should any civilians remain after the removal of the military, they might be allowed to establish a native tribunal presided over by the elders and gentry, but subject, of course, in the same way as the other native tribunals throughout the territory, to the control of the travelling magistrate, and possessing the right of appeal to the Council of the Tung, and finally to the Commissioner.

CONCLUSION.

In conclusion, it may, I trust, be gathered from the account of the new terri- tory that it will form a valuable extension of Hongkong. It is favourably situated, has good harbours with safe anchorages, possesses a rich soil, and is inhabited by an industrious. hardy, and frugal race. Under Chinese rule enterprise has been at a discount, and progress has been at a standstill for centuries. The San On dis- trict of to-day must be much the same as it was four or five hundred years ago. But when British rule is established, and the people realise that justice prevails, that they are allowed to pursue their avocations in peace and freedom from illicit extortions, and that there is no unnecessary interference with their manners and customs, the spirit of enterprise will soon manifest itself, capitalists will be attracted to a region where their capital is not liable to official squeezes," the resources of the country will be developed, and its prosperity will continue to increase.

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J. H. STEWART LOCKHART, Special Commissioner.

Appendix No. 1.

CONVENTION.

Convention for the Extension of Hongkong.

Whereas it has for inany years past been recognized that an extension of Hongkong territory is necessary for the proper defence and protection of the Colony:

It has now been agreed between the Governments of Great Britain and China that the limits of British territory shall be enlarged under lease to the extent indi- cated generally on the annexed map*. The exact boundaries shall be hereafter fixed when proper surveys have been made by officials appointed by the two Governments. The term of this lease shall be 99 years.

It is at the same time agreed that within the City of Kowloon the Chinese officials now stationed there shall continue to exercise jurisdiction except so far as may be inconsistent with the military requirements for the defence of Hongkong. Within the remainder of the newly leased territory Great Britain shall have sole jurisdiction. Chinese officials and people shall be allowed as heretofore to use the road from Kowloon to Hsinan.

It is further agreed that the existing landing place near Kowloon City shall be reserved for the convenience of Chinese men-of-war, merchant and passenger vessels, which may come and go and lie there at their pleasure; and for the con- venience of movement of the officials and people within the city.

When hereafter China constructs a railway to the boundary of the Kowloon territory under British control, arrangements shall be discussed.

* Not printed.

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