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Subsequent to this correspondence the contribution fell into arrear, and several representations were made by the colony as to the unsatisfactory state of its finances and its inability to meet its military contribution, and pointing out that the available revenue of 1866 was actually less than that of 1863. The following despatches seem to have closed the correspondence :-

Sir,

No. 13.

The Secretary of State for the Colonies to the Secretary of State for War.

Downing Street,

25th March 1868.

I am directed by the Duke of Buckingham and Chandos to transmit to you, for the information of the Secretary of State for War, a copy of a despatch His Grace has addressed to the Governor of Hong Kong, with reference to the payment of the arrears due from that colony on account of their military contribution, and also as to the payment of the annual amounts as they become due hereafter.

Sir John Pakington will find that, in consequence of the embarrassed state of the finances, the Duke of Buckingham has, with the consent of the Lords Commissioners of the Treasury, allowed the payment of arrears, due on the 31st December last, and the contribution for the year 1868, to be spread over a period of five years. And the annual contribution of 20,0001. is to be remitted after the 1st January 1869 in regular quarterly sums.

I am, &c.,

No. 14.

FREDERIC ROGERS.

The Duke of Buckingham and Chandos to Governor Sir R. G. MacDonnell. (No. 56.)

Downing Street,

17th March 1868.

Sir,

I have to acknowledge the receipt of the following despatches which you have addressed to me, all bearing on the financial position of Hong Kong.

2. No. 361 of the 11th September, forwarding the estimates of revenue and expenditure for 1868, which had received the assent of the Council, with the usual Appropriation Ordinance, No. 14 of 1867, providing for an expenditure of 895,000 dollars. Also forwarding for adoption, if necessary, revised estimates prepared under certain contingencies for bringing the expenditure as far as possible within the revenue.

3. Nos. 372, 379 and 393 reporting that the colony had been visited by two typhoons, which had inflicted serious damage on the public buildings in the colony, the estimated cost of repairing which amounted to the large sum of 113,000 dollars.

4. No. 381 having reference to the amount of revenue derivable from the fees for licensing gambling houses.

5. I need hardly say that the information with which you have furnished me as to the depressed state of the financies of the colony, and the means by which you have suggested that they might, to some extent, be relieved, have engaged my most serious and anxious consideration.

6. I would, however, first point out to you that you are mistaken in supposing that the claim of Her Majesty's Government as to a military contribution rested on the allegation, which may, as you argue, be incorrect, that the revenue of 1866 was greater, or practically greater, than that of 1863. It rested, as may be seen by past correspondence, on the fact that the colony received certain advantages from the British Government for which it was bound to pay. It

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