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It is unnecessary to lay stress on the important part that China New Year plays in the life of the Chinese people; and the great value that would be attached to the pos- session of a lump sum at this time. Most of these men will never rise out of the class into which they are born, and their domestic expenses exhaust all their earnings and make it practically impossible for them to collect any appreciable sum for any special occasion. A bonus such as we propose would, we believe, go a long way to make them contented, and we therefore recommend that every employee drawing not more than $20 a month be given one month's pay at each China New Year, provided he has previously completed one year's service, and half a month's pay after 7 months service. We estimate the cost of this concession would be about $40,000 a year.

27. We now proceed to deal with the various Departments of the Government on the principles which we have laid down in the preceding paragraphs of this Report. Where 15% only on sterling salaries or 20% on dollar salaries, or sums based on these percentages respectively necessary to express the scales in round figures, have been added to the existing scales of salary, we have given no special reasons for our recommenda- tions; but where we consider such amended scales inadequate we have given our reasons in detail.

1. GOVERNOR.

28. The present emoluments of His Excellency the Governor were fixed in 1904. They consist of a sterling salary of £4,800 per annum and an Entertainment Allowance of £1,200 per annum. Salary and Allowance are paid in accordance with the rules applic- able to Government servants generally so that H. E. the Governor, while in Hong Kong, draws salary at the rate of $5,376 per mensem and entertainment allowance of $1,344 per mensem when the dollar is at 27-, a total of $6,720.

29. The sterling salary of the Governor was fixed by the Secretary of State for the Colonies with special reference to the salaries payable in the case of certain other Governorships and we understand that H. E. does not desire that any alteration should be made in the amount. The High Cost of Living Allowance suggested by us in paragraph 12, supra, would of course be payable on this salary, but as the maximum allowance sug- gested is 15 per cent instead of 34.4 per cent, as at present, the number of dollars drawn locally by the Governor would be diminished unless the amount of the Entertainment Al- lowance is increased correspondingly

30. The Entertainment Allowance is payable only while the Governor is in the Colony and is available for the Officer Administering the Government when H.E. is absent on leave. The present allowance is, however, wholly inadequate to cover the cost of entertainment, and in the case of the Officer Administering the Government a period of acting is a heavy drain on his private resources. We recommend that the allowance be in- creased to £2,200 per annum on which sum also the High Cost of Living Allowance will be payable. The result will be that the Officer Administering the Government will not have to meet any part of the cost of entertainment out of his own pocket, while H. E. will not be materially affected by the reduction of the high cost of living allowance from 34.4% to 15% on his substantive salary

31. The Governor's emoluments locally will then become :-

Salary £4,800

plus 15% H.C.L. Allowance

L

Entertainment Allowance £2,200

plus 15% H.C.L. Allowance

a total of $80,500 as compared with the present figure of $80,640.

$48,000

7,200

$55,200

$22,000

3,300

25,300