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it is vital to ascertain the rental as it stood at a date when a reasonable return on capital outlay was being earned.

22. We are satisfied by the figures submitted to us, by the admissions of tenants, and from our own enquiries in the cases where both landlord and tenant appeared before us, that there is no evidence that landlords as a whole are at present raising or notifying an intention to raise rents beyond, or even so high as, the level ruling before the depression. A prominent member of the community, not himself a landlord of house property, considered that even if 1,000 complaints of increases of rent and evictions were received, which would only affect about 1% of tenement flats in the Colony, it would not be in the highest interests of the Colony for Government to take action. In fact no such number of complaints was received, and of those received many were not substantiated. Two disinterested witnesses of importance thought there were a few hard cases, but that hard cases made bad law.

PART III.

Landlords' Return on Capital.

1. At the outset of this part of our Report, we desire to quote the following extract from the Report of the Economic Commission published as Sessional Paper No. 3 of 1935:

"2.

In 1934 the rateable value (ie., of the Colony) stood at $38,641.856. This figure capitalized on the basis of 7% per annum represents an investment in rateable property of no less than $550,000,000. This huge sum, large as it is, does not include very considerable property owned by the local Government, the Navy or the War Department, or all similar property which is not included for Assessment.

3. As it is not generally appreciated how large a portion of the wealth of the Colony is invested in property, a comparison of this foregoing figure with some of the other large categories of investment may be of value.

4. For example, the total market value of the shares of local companies (other than financial institutions) listed by the Stock Exchange amounts to approximately $150,000,000, although an appreciable portion of the assets of such companies is represented by property. Similarly, the estimated total value of money invested in Chinese factories or in Chinese industry in the Colony amounts to about $50,000,000 which is only a comparatively small sum. Here again a substantial portion of such money is undoubtedly represented by the property or buildings of such factories.

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5. The total note issue, which is backed by silver and by sterling securities, amounts to about $160,000,000, but even this sum, large as it may appear, for the most part held outside the Colony and only a small portion (authorita- tively estimated at 25%) is owned within the Colony.

6. These comparative figures serve to make it abundantly clear that a very large portion, if not the bulk, of the wealth of the Colony, is represented by property.

7. That this must be so is hardly surprising in a territory where there is little agriculture, almost a complete absence of any trace of mineral wealth, and where industry is still only in its infancy." (Chapter VIII, paras. 2 to 7). The figures quoted above may require some modification at the present time, but it is abundantly clear that any measure which would have the effect of depriving those persons whose capital is locked up in land of a fair return on their money, must necessarily be detrimental to the general well being of the Colony.