CAB11-57-2 — Page 36

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existence cost the Mother Country no less than 273,000l., should be allowed to escape any longer the duty of aiding in its own defence, except on grounds of plain necessity.

4. But it is evident that the plea of necessity no longer exists. It appears that the revenue and expenditure for the three years 1860-1-2 have been as follows:- *

1860 1861

•

1862

Revenue.

Expenditure.

£

£

94,182

72,390

127,241

131,512

109,632 122,423

that the excess of assets over liabilities on the 31st December 1862 was 98,5497., and that the estimated revenue and expenditure for 1863 were—

Revenue.

£ 118,512

Expenditure.

£ 125,000

5. The average surplus revenue over expenditure during 1860-2 was, there- fore, more than 15,000l. per annum. Meanwhile no less than 106,4657. (or about 35,000l. a-year) has been expended on public works (including, I admit, the necessary repairs to roads, streets, and bridges), and I observe that in the Estimates of 1863 a sum of 42,2007. has been set aside for objects of that nature.

6. I notice these charges because, although there is no more legitimate expenditure than that on works of public utility, the amount of that expendi- ture is in a great degree regulated by the amount of surplus revenue of which it in some degree thus furnishes a measure.

7. I further observe that this prosperous state of the revenue has been coincident with a large and general increase in the expense of public depart- ments; an increase which entitles me to assume that the existing establishments will be able at their existing salaries to perform the work required of them for some time to come, or at any rate that increased expenditure will only be called for by increased prosperity, which will furnish the means of meeting it. Although, therefore, I am aware that the receipts from land sales may be expected to fall off, I think it undeniable that the general financial position of Hong Kong is, and is likely to remain, in a highly sound and prosperous state. I can hardly doubt that, exclusive of the balance in hand, amounting as I have said to 98,000l., there will be an annual sum of 30,0001. or 40,000l. available for public works, and what may be called extraordinary purposes. This sum will be obtained by the existing taxes in a colony of which the inhabitants pay no import duties. Under these circumstances, I cannot think that Hong Kong is incapable of contributing towards her military defence, of which the average cost to the Imperial Government during the four years preceding the China War was about 70,0001.

8. It is contemplated now that the force to be permanently stationed in the colony shall be about 1,000 strong, including artillery; and although Her Majesty's Government fully admit the probability that the Imperial Force in Hong Kong will be in part maintained for Imperial purposes (which purposes, however, are closely connected with the prosperity of the colony), they cannot doubt that the force, or a large part of it, is also required for the security of the colony, and for the service thus rendered they think it but reasonable that Hong Kong should now pay an equivalent. That payment may, in my opinion,

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