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The following are among the reasons which led me to this conclusion

a. On the last occasion when an increase of Revenue was found to be necessary (in 1902) practically all licenses were largely increased but no additional contribu- tion was asked from shipping. Its ability to contribute was recognised, but it was reserved for the next occasion which might arise.

b. This liability was recognised in December 1896 when the Un-official Members with one exception unanimonsly recommended that the imposition of a permanent tommage Due of 13 cents in addition to the 1 cent Light Dues on the grounds that shipping should pay its fair proportion to the Revenue.

<. It arises from the fact that shipping benefits directly both in respect of capital expenditure on works, and in respect of increased efficiency in administrative machinery. In 1842 the Colony could offer nothing but a harbour infested by pirates and ships watered from a waterfall near Aberdeen. There is now efficient police protection, hospitals, markets, better and cheaper water supply, various useful institutions like the Sailors Home, good wharfs and piers for landing and discharging cargo, and a well organized Harbour Department which regulates

native craft.

4. The principle that shipping should contribute to tieneral Revenue is recognised by the United States of America, which assigned shipping dues to National debt charges, defence, and General Revenue. In reply to a petition from the shipping interest in 1897 Mr. CHAMBERLAIN replied: If at any time hereafter urgent necessity should arise for increasing the General Revenue I should be prepared to consider any proposal for again raising the shipping dues", and again in 1902 he gave it as his view that a special tax should be levied to cover any harbour improvement.

1.

. In my view the typhoon shelter is a great harbour improvement" which more- over directly benefits Ocean shipping in that lighters and small craft which now bolt for the inadequate refuge at Causeway Bay on the first indication of a typhoon and so leave the Ocean Steamers sometimes I believe for several days unable to load or discharge, and thus subject them to much delay and expense, will when the new typhoon refuge is built be able to remain to the last moment secure in the knowledge that they can gain an entrance however late.

If however this direct benefit to Ocean shipping should be disputed, the principles put forward in (c) and (d) show that shipping is liable for con- tribution to any harbour improvement and even to purposes of General Revenue.

f. It has been argued that the imposition of any dues beyond the amount actually spent on lights and buoys would mean that Hongkong would no longer be a Free A Free Port" is one in which no Customs dues are charged. Copenhagen, a free port, charges the equivalent of sixpence a ton, while Shanghai charges the equivalent of 14 cents per ton.

l'ort.

Others have urged that the Proclamation of 1842 made exemption of all dues, and an increase would violate that pledge. The Proclamation was not in the nature of a treaty or pledge to third parties but was merely a statement of the policy of the day, viz. to attract commerce to a new and undeveloped port. The policy of to-day is to charge a very moderate rate for improvements effected on behalf of shipping.

g. It has been urged that the Colony owes its prosperity to shipping which would avoid the Port if dues are levied. There are those who maintain that shipping which would avoid the Port for dues is so small as these, were better away. The dues were raised to 23 cents between April 1890 and October 1897 to pay for the Gap Rock Lighthouse, and between these dates the tonnage increased from 4,893,783 tons to 6,063,640 tons. The inducement of ships to come to this port is not that they have nothing to pay, but in order to earn freights and proportionately as Hongkong becomes an industrial centre her shipping will increase. Our geographical position is equally advantageous to us as an industrial centre, as it is as a Port of Call.