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Appendix B., No. 1, paras. 12, 13.

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7. In 1866, the colony proposed to provide a local naval force for the suppression of piracy at an estimated cost to the colony of 20,0007. a-year, on condition that the Imperial Government would assign from the military contribution 10,000l. a-year towards its cost. This would have raised the total colonial expenditure on defences from 20,000l. to 30,000l. a-year.

8. This scheme, though concurred in by the Treasury, fell through, as did also a subsequent proposed modification reducing the estimated cost from 20,000l. to 10,000l. a-year, towards which the Imperial Government was to assign 5,0001. from the military contribution.

9. In 1884-85, the colony proposed to raise a local Volunteer flotilla, the Imperial Government providing the armament. This scheme appears to have been carried out to some extent, the charge for it in the Hong Kong estimates of 1837 and 1888, amounting to 902 dollars.

10. When the colonial military contribution was fixed in 1863-64, the strength of the garrison was estimated at 1,000 of all ranks, and its annual cost at 100,0001. The charge to the colony at that time was therefore one- fifth of the total estimated cost of the garrison.

11. The present garrison numbers 1,445 of all ranks, exclusive of Volunteers, and its cost to Imperial funds has risen to about 160,000l. a-year, while the colonial contribution has remained unaltered, and now amounts to only one-eighth instead of one-fifth of the total cost of the garrison.

12. The revenue of Hong Kong during the four years preceding the fixing of the contribution-viz., from 1860 to 1863, both inclusive, averaged 567,615 dollars; its estimated revenue for 1888 is 1,637,670 dollars, an increase of nearly 200 per cent.

13. The proportion of contribution to revenue when the contribution was fixed, was about 16 per cent. Had the value of the local currency not depreciated, the present proportion of military charge to revenue would have fallen to 6 per cent. The depreciation of the currency augments the charge from 6 to 8 per cent. of revenue, still leaving it, however, only one-half the proportion which it formerly bore.

14. The future garrison as recommended by the Colonial Defence Committee, including local Regulars but excluding Militia and Volunteers, will be as follows:-

Appendix A.

Imperial troops Local Regulars

2,525 all ranks.

493

""

3,018

The cost of this garrison will be about 280,0001. a-year.

15. The Committee have been unable to obtain an exact and detailed estimate of the cost of the garrison. There does not at present exist sufficient information as to the organization of the local auxiliaries to enable the details of their cost to be worked out. The foregoing estimate may, however, be accepted as approximately correct.

16. In addition to the above garrison, it is proposed that the colony shall augment its Volunteer force to a strength of 200, and raise a force of 150 Militia for submarine mining purposes.

17. The present Volunteer force appears to cost the colony 3,000 dollars, or 4871. a-year. Assuming that this may be doubled, and that the 150 Militia may cost about 2,000. a-year, a further charge for the garrison of about 3,000l. a-year will be incurred, making the total cost of the garrison 283,000.

a-year.

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