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was satisfied as to the financial position of Hongkong. When I received that despatch I saw at once the position in which this Colony would be placed if the officials in the Straits were to be paid better than the corresponding positions were worth in Hongkong. Both Colonies are recruited, and will be recruited in the future, by Cadets who go through the same examinations, and in accordance with their positions on the list these Cadets have the option of choosing where they go. Naturally, if we are the worst paid Colony in the East, we must expect to get simply the remainder. The most successful will naturally choose the best paid position. I wrote in answer to that and I pointed out this to the Secretary of State and also that we find it extremely difficult to get recruits for our Police, Water Police, and Warders, or any position for which we want Europeans in this Colony. I pointed out further the position in which this would place Hongkong. Furthermore, I went into the question of the financial position of the Colony, and I am speaking entirely to the unofficial members of this Council-I think it is unnecessary for me to say anything upon that matter. Anybody who has seen the list of public companies, shares, and other matters which are within the cognisance of anybody who chooses to take the trouble to inquire, must see that the operations in this Colony are very much larger than in Singapore ; and I think as far as I, after nearly three years' experience, can gather, the financial position of this Colony is as sound as that of any in the British Empire. I pointed out that, and in answer to that I received this telegram from the Secretary of State on the 12th - Referring to Despatch 443, I agree to proposed grant to Government officials additional exchange compensation, to begin the first of next month, on condition laid down in the case of the Straits, and subject to consent by the Legislative Council, who must be warned that more revenue may be required.' He pointed out in his despatch that possibly very large votes would have to be taken as a consequence of a possible revisitation of the plague, also possi- bly as the result of the visits from the two experts coming out, and that it was right to put this before you. But that being so, I place the matter before you. Every official member except myself is interested in this and it is, I need hardly say, a matter upon which they can neither speak nor vote. The following are the number of people who would be affected. There would be on the whole a total of 311 public officials affected by this-135 in the Police, 26 in the Gaol, 17 in the Harbour Master's office, 27 under the Sanitary Board, 32 in the Public Works Department, 9 in the Colonial Secretary's Office, 10 in Queen's College, 24 in the Medical Department, etc.-and the amount that will be necessary to pay that increased exchange compensation during their service in the Colony would be about $120,000 a year, as far as I can see. These are the facts--the only facts--I have and am able to place before you. My own view is that it would be very injurious to this Colony, if it were placed upon a basis of inferiority to the Straits Settlements and the Malay States, and further I may tell you that we have the greatest difficulty at the present moment with our present salaries in procuring men for the Gaol, the Police, the Water Police and those small appointments for which Europeans are required. The Colonial Secretary has placed in my hands a letter from the senior unofficial member, Mr. Chater. He states that he is sorry at being unable to be present and adds:-'I am very strongly of opinion that our Civil Service here should not be placed in a worse position than in Singapore, and I feel sure that the community would be of the same opinion.' That is all I have to say upon the subject, and I place it before you."

Honourable Dr. Ho KAL.--“I understand, Sir, the unofficial members are chiefly con- cerned in this matter and that the official members will neither dicuss nor vote."

His Excellency the GOVERNOR.-"No, they will not."

Dr. Ho KAI then addressed the Council, and moved the following resolution :

"That the decision of the Right Honourable the Secretary of State for the Colonies regarding the further grant of exchange compensation to Civil servants of this Colony, subject to the approval of the Legislative Council, be approved by this Council."

Mr. BELL-IRVING seconded.

Mr. WEI YUK supported the resolution.

Mr. WHITEHEAD expressed his sympathies with the Civil servants, but asked for a postponement of the motion until the next meeting of Council.

His Excellency the Governor replied.