# Europe in China/Chapter 20

CHAPTER XX.
The Administration of Sir Arthur E. Kennedy.
April 16, 1872, to March 1, 1877.
ir Arthur E. Kennedy, k.c.m.g., c.b., who had previously acted as Governor of several Colonial Possessions (West-coast of Africa, Western Australia, Vancouver's Island, and West African Settlements), arrived in Hongkong, as Governor and Commander-in-chief of the Colony and its Dependencies, on 16th April, 1872. During his tenure of office, Sir Arthur was absent from the Colony but twice. On 15th October, 1874, he left for England but, hearing in Singapore of Lady Kennedy's death, he immediately returned to Hongkong (November 6, 1874). Again, on 11th March, 1875, Sir Arthur left the Colony on furlough and returned on 2nd December, 1875. On both occasions the Government was administered during his absence by the Colonial Secretary, the Hon. J. Gardiner Austin.
When Sir Arthur was sworn in as Governor and Commander-in-chief, an error was made in the oath tendered to him by the Acting Chief Justice (H. J. Ball) and consequently he had to be sworn in again as to the part in which the wrong oath had before been administered. Major-General Whitfield, who had administered the Government previous to Sir Arthur's arrival, remained in command of Her Majesty's Forces in China and the Straits until April 1874. A public address was presented to him, on his departure from the Colony, testifying to the respect in which he was held among the community, on account of the conscientiousness and the unassuming geniality he displayed in the discharge of his several offices.
Sir A. Kennedy had hardly anything to do in the way of diplomatic negotiations with foreign Governments, but a great ​deal by way of hospitable entertainment of the representatives of foreign Powers. The only diplomatic note the Governor was called upon to write was a mild remonstrance addressed to the Governor of Macao when Mr. W. H. Forbes' yacht had been fired upon (April 27, 1876) by Portuguese soldiers. The Macao Government forthwith tendered a satisfactory apology. Another Macao Governor, Senhor C. C. da Silva, visited Hongkong (December 29, 1876) and received quite an ovation from the local Portuguese residents and the friendliest reception from the Governor.
As regards the Imperial Government of China, Sir Arthur was indeed for many years occupied with an international diplomatic question, in the shape of the Hongkong Customs Blockade, but he discussed it exclusively with the Colonial Office in Downing Street and not with the Authorities at Peking. The Governor's communications with Chinese officials were therefore confined to visits he received from the Canton Hoppo, Tsun Kai (August 11, 1876) and from Kwoh Sung-tao (December 6, 1876), China's first Ambassador to London, and to the publication in the Government Gazette (May 24, 1872) of a Dispatch from the Tsungli Yamen at Peking to the Viceroy of Canton, requesting the latter to order the issue of proclamations calling upon the Chinese people to treat foreigners with politeness because it was necessary for China that the friendly relations with foreigners should be firmly and closely knit. When the Emperor of China, reigning under the style Tungchi, died of smallpox (January 12, 1875) and was succeeded by the infant Tsai Tien, placed under a regency formed by the two Empresses under the style Kwongsui (February 23, 1875), Sir Arthur took no official notice of either of these events, although H. M. Minister at Peking sent him telegraphic information on both occasions. The Chinese population of Hongkong likewise evinced no interest whatever in those events, although they consider themselves to be still subjects of the Empire of China, whilst enjoying in Hongkong all the essential privileges of British subjects.
Among the representatives of foreign Powers to whom Sir Arthur had the honour of shewing hospitality on behalf of the ​Colony, there was the King of Cambodja, who arrived (July 10, 1872) in the French Corvette Bourayne and was entertained by the Governor with royal honours. There was further H.I.H. the Grand Duke Alexis, third son of the Czar, who arrived (September 13, 1872) as an officer of the Russian Corvette Svetlana. He held a levée on board (September 16, 1872), followed by a reception given in his honour, on the same evening, at Government House, After a visit to Japan, he returned to Hongkong (January 15, 1873) and attended various entertainments given in his honour, visiting also the race-course on every race day (20th to 22nd February, 1873). Finally there were two German Princes, Philip and Augustus of Sachse-Coburg Gotha, cousins of Her Majesty, who stayed at Government House for some days (21st to 25th December, 1872) en route to Shanghai.
The constitution of the Colonial Government was amended during Sir Arthur's administration by the issue of Letters Patent (June 8, 1875) granting a Supplementary Charter, by which the administration of the Government, in the case of the Governor's death, incapacity or absence, was vested in the Lieutenant-Governor or Colonial Secretary for the time being. The same document enlarged also the Governor's power of granting pardons to criminals.
Sir Arthur continued the work of his predecessors in perfecting the organisation of the various Departments of the Civil Service. In the Colonial Secretary's Department he amalgamated the office of Auditor General with that of Colonial Secretary (December 10, 1872), a measure against which the Hon. Ph. Ryrie made a protest in Legislative Council, but, as the motion was left unsupported, it fell to the ground. Sir Arthur created also the post of Assistant Colonial Secretary (February 10, 1875), appointing Mr. A. Lister to the post, but when the latter was soon after removed to another office, this new post was not continued. The Supreme Court organization was modified during this period (Ordinance 12 of 1873). A code of civil procedure was established (Ordinance 13 of 1873) ​and the Summary Court was abolished by conferring upon the Supreme Court, under a Judge and Puisne Judge, a summary jurisdiction at law and in equity (Ordinance 14 of 1873). The effect of this reconstitution of the Hongkong Supreme Court was to assimilate it to that which had been established in Shanghai for British subjects in China and Japan under an Order in Council. The Registrar General's Department also underwent some changes. The establishment of a system of registering all births and deaths (Ordinance 7 of 1872) necessitated the addition of a new registration branch, whilst by another measure (Ordinance 2 of 1876) the Registrar General was divested of the judicial functions he had hitherto exercised in connection with the working of the Contagious Diseases Ordinance. But the powers of the Registrar General to order persons to undergo periodical medical examinations and to be subsequently detained in hospital were still reserved to that officer. The Survey Department was not considered to work satisfactorily for some time previous to the resignation of Mr. L. H. Moorsom (October 5, 1872), provisionally succeeded by Lieutenant McHardy, R.E., who was succeeded (July 21, 1873) by Mr. J. M. Price, as Surveyor General. This Department was now enlarged by constituting the Public Gardens and Afforestation office as a Sub-Department (December 15, 1873) under the Surveyor General, assisted by that Advisory Committee (thenceforth known as the Public Gardens Committee) which had been appointed in January, 1872, and by the appointment of an Assistant Surveyor General (September 9, 1874) in the person of Mr. E. Bowdler. The office of the Head of the Survey Department, the principal spending branch of the Civil Service, was enhanced in importance by appointing the Surveyor General (by warrant of 17th February, 1877) a member of both the Legislative and Executive Councils. In the Medical Department under Dr. R. W. McCoy (since May 30, 1872), succeeded, after his death, by Dr. G. Dods (April 10, 1873) and subsequently by Dr. Ph. Ayres (since November 4, 1873), there was at first some friction which culminated in the ​resignation (September 6, 1872) of the Superintendent of the Civil Hospital, Dr. R. Young, whose place was temporarily taken by Dr. Scanlan and Dr. Drew and permanently (February 22, 1873) by Dr. C. J. Wharry. When the Hon. Ph. Ryrie asked, according to previous notice, a question in Legislative Council concerning that resignation, the reasons for which had been stated in a pamphlet circulated by Dr. Young among his friends in the Colony, the question was ruled out of order on the ground that it was not within the functions of the Legislative Council to constitute itself a Court of Appeal. To encourage and direct the study of the Chinese Language on the part of Government officers, Sir Arthur established (in 1872) a Board of Examiners, charged with the duty of examining Government officers drawing Chinese teachers' allowance, and issuing certificates of proficiency in Chinese Colloquial to European or Indian police constables. Sir Arthur connected also with this Board an office of Superintendent of Chinese Studies (A. Lister, succeeded by E. J. Eitel), but the names of the members of this Board (F. Stewart, E. J. Eitel, J. Russell, Wong Shing, A. Lister) were not published till four years after its establishment (March 17, 1876). At the suggestion of this Board, proper Chinese titles were fixed for all the various Government offices and buildings and published in Government Gazette (December 28, 1874), and the Regulations for Cadetships were also revised (September 3, 1872). Even questions of precedence and etiquette occupied the Governor's attention occasionally and it was formally decided that the Commodore on the Station should take precedence next after the Chief Justice (September 3. 1872), the Puisne Judge immediately after the Colonial Secretary (October 10, 1873), and that official Members of Council only are entitled to wear the civil uniform (April 16, 1873).
The constitution of the Legislative Council was not modified by this administration, during which the unofficial element in the Council was represented by the Hon. Ph. Ryrie, R. Rowett, W. Keswick, H. Lowcock, J. Greig and J. Whittall, of whom, ​however, no more than three officiated at any one time. The Governor amended, however, the standing orders and rules for the guidance of the Council (July 2, 1873), which had not been revised since 12th July, 1858. An important rule was also made, in connection with a protest which the Hon. Ph. Ryrie had made (August 26, 1873), complaining of the short time allowed to Members of Council to consider the Estimates before they were to be discussed in Council, when it was stated (April 16, 1874), that the Secretary of State had acknowledged that protest as reasonable.
One of the features of this administration was the attention bestowed on legislative measures. Among the many new Ordinances passed during this period, the following deserve special mention, as dealing with Relief for Trustees (7 of 1873), Dangerous Goods (8 of 1873), Emigration (5 of 1874 and 5 of 1876), Steam Launches (8 of 1875), Rates (12 of 1875), Magistrates (16 of 1875), Contagious Diseases (2 of 1876), Gambling (9 of 1876), Post Office (10 of 1876) and River-Steamers (11 of 1876). But whilst thus multiplying legislative enactments, Sir Arthur aimed also at reducing the chaos of local Ordinances by several efforts at consolidation and especially by the appointment of a Commission (September 11, 1876) for the purpose of preparing a new edition of the Ordinances of Hongkong.
In this quiet legislative activity the unofficial Members of Council, though generally in a minority, took an active share. In June 1873, the Chief Justice, Mr. (subsequently, since March 17, 1874, Sir) John Smale, having appointed the Judge of the Summary Court, who was in feeble health, to try some criminal cases, the unofficial Members of Council, together with other leading residents and lawyers, addressed to the Governor a request that the power of appointing persons to preside at the Supreme Court should be taken out of the hands of the Chief Justice and placed in the hands of the Governor. This was accordingly done in connection with the reconstitution of the Supreme Court, which was then under consideration. On 10th August, 1873, ​the Hon. R. Rowett, supported by the Hon. Ph. Ryrie, and by a letter (August 7, 1873) signed by various merchants and bankers, moved, that for the convenience and in the interest of the public, it was desirable that all Barristers at Law, admitted to practise as Advocates of the Supreme Court in this Colony, should be permitted to take business from clients personally without the intervention of attornies in all cases except those in which litigation has actually commenced in the Supreme Court. The Attorney General, however, supported by the Hon. J. Whittall and all the official Members of Council, objected to this revival of the old amalgamation question. Accordingly a compromise was resorted to in the shape of Ordinance 15 of 1873 (confirmed January 31, 1874), which slightly modified the existing practice but did not go far enough to satisfy the community. In November 1873, the Coroner took to selecting three out of five jurors instead of leaving the selection to be decided by ballot. This measure caused the burden of Coroner's juries to fall on the more intelligent portion of them. The unofficial Members of Council took the matter up and in consequence of their representations (made privately) the ballot was thenceforth resorted to, but doubts were freely and generally expressed as to the utility of Coroner's juries altogether. There is yet another case on record in which the influence of unofficial Members of Council manifested itself. On 22nd April, 1870, a Bill, to allow the China Traders' Insurance Company to subdivide its shares, was under the discussion of the Council. The three unofficial Members (Ryrie, Keswick and Lowcock) strongly objected to the principle of the Bill. But the Bill was passed and all they could do was to lodge a formal protest against the confirmation of this Ordinance (4 of 1876). The result was that the Secretary of State disallowed the Ordinance (July 25, 1876) on the ground that it would be better that any measure dealing with the question of subdivision of shares should have a general application. As the Secretary of State, however, approved of the general principle of the Ordinance which he disallowed, the Legislative Council (September 21, 1876) substituted for it an amendment ​of the Companies' Ordinance of 1865 by introducing into it the principle of allowing subdivision of shares. But now the Chief Justice joined with the unofficial Members in their opposition to the Bill, and it was accordingly withdrawn by the Government.
Among the cases tried in Court, during the period under review, there are a few which call for record. On 4th April, 1872, the French mail-steamer Ava, having collided with theBritish S.S. Rona, was detained under a warrant, issued by the Registrar of the Vice-Admiralty Court, and executed by an armed detachment of police. The French Consul forthwith protested against the arrest, which he declared to be a violation of the Postal Treaty concluded between Great Britain and France. The matter was brought before the Acting Chief Justice Ball, who heard the case at his own residence at 9 o'clock at night and ordered the warrant to be cancelled. The following year, when the same ship was sued for damages caused by collision, the Admiralty Court (February, 1873) decided that the ship was not amenable to the jurisdiction of the Court, because she had the status of a man-of-war. Previous to this case, the local Agents of the French mail-steamers had always waived their privileges as mail-steamers under such circumstances. In October, 1872, the Judge of the Summary Court refused to allow the managing Clerks of Solicitors to plead, although it had been the practice of the Court for over six years, and refused to give leave to appeal. Application was made to the Supreme Court, when the Acting Chief Justice, the Hon. (subsequently Sir) Julian Pauncefote, who had lately been appointed to the post by order of the Secretary of State (October 7, 1872), refused to grant a formal judgment but expressed an opinion adverse to the ruling of the Court below. About the same time the French Consul (October, 1872) charged the Superintendent of Sailors' Home, in the Police Court, with harbouring deserters. The case was dismissed by the Magistrate, but it called attention to the fact that the Government claims a right to prohibit the commanders of foreign vessels, whilst in Hongkong waters, from putting men in irons for breaches of ship's discipline. ​In November, 1874, the question was raised, in connection with the finding of the Marine Court in the case of the S.S. White Cloud, lost in the typhoon of 1874 by negligence of the Master, whether the Governor has power to alter or add to the finding of the Marine Court of Inquiry. No decision was however obtained to solve the question.
Turning now to the subject of the local population, it appears that, during the first year of Sir Arthur's administration, there was a slight falling off, as the population of Hongkong decreased, from 124,198 people in 1871, to 121,985 people in 1872. During the next four years, however, the population increased by 17,159 people, as the Census of 1876 proved the population to amount to 139,144 souls. It is noteworthy that the foreign population received proportionately the greatest increase, as, after the typhoon of 1874, which destroyed so many houses at Macao, hundreds of Portuguese families removed from Macao to Hongkong.
The revenues of the Colony did not advance during this period. The revenue of 1872 rose indeed to £192,714, constituting an increase of £16,752 as compared with the revenue of the preceding year, but during the following years it fell off again and amounted in 1876 to no more than £184,405. Nor did the expenditure vary much from year to year, that of 1871 being £186,675, while that of 1876 amounted to £187,569. In fact a small deficit in any one year was succeeded during this administration by a small surplus in the next year. The same sluggishness is observed in the annual produce of the stamp tax and of rates, the former decreasing from £24,574 in 1872 to £21,634 in 1876, and the latter increasing from £38,002 in 1872, to no more than £38,439 in 1876. Special pains were taken by Sir Arthur to stimulate the revenue from opium. He appointed (June 8, 1872) a Commission (Ph. Ryrie and Ch. May) to inquire into the working of the opium monopoly, because there was very good reason to suppose that the amount received from this farm was far short of what it ought to have realized. The Commissioners, however, failed to ascertain the real value of the ​monopoly, as they could not obtain satisfactory information; but they recommended (November 9, 1872), that the farm should thenceforth be let by public auction for three years at a time. This was done, but, owing to combinations among the competitors for the farm, the opium revenue, which stood at £25,500 in 1872, increased but slightly, as it amounted in 1876 to £27,708. The same standstill occurred in the yield of the land leases, which realized £24,602 in 1872 and £24,512 in 1876. Land sales were frequent during this period, and the value of land gradually increased in the central districts, especially since 1876. But while the value of land was steadily rising in the most populous parts of the town, most suburban lots, and especially those in the neighbourhood of Eastpoint, had become so reduced in value that many lease-holders could not afford to pay the crown rents and consequently wholesale re-entries by the Crown took place from time to time. Land at Kowloon began to rise steadily into importance since 1874, and by the year 1876 great plans were entertained for creating a new town, with public park, churches and schools, at Tsimshatsui. The limitation of Kowloon. garden leaseholds to 14 years (August 9, 1873), and of the compensation for lots built upon and then resumed, before expiry of the lease, for public purposes, at $1,000 per lot, caused much dissatisfaction among the holders of Kowloon garden lots. As to marine lots, a special Commission (Ch. May, E. Sharp, M. S. Tonnochy) was appointed (November 1, 1873) to investigate the title of all claimants to foreshore reclamations and to define the boundaries. Eighteen months later another Commission (J. Bramston, Ch. May, Ph. Ryrie, H. Lowcock, J. M. Price) was appointed (May 31, 1875) to inquire into complaints made that crown rents on lands, situated in the less populous parts of the Colony, were out of proportion to the real value of such lands, and to investigate the scale of rents properly chargeable. The report of this Commission (published November 27, 1875) stated that at Wantsai and Bowrington the tenants of the Crown were suffering from a general depreciation of property, that from 1865 to 1875 rents had fallen there 40 or 50 per cent., that this ​depreciation was caused by the withdrawal of business houses from the east, and by their concentration in the central and western parts of the town, and by the silting up of the harbour to the eastward. But, owing to the great and constant fluctuation of Colonial values, the Commissioners did nob see their way to recommend any general remission of rents either there or in the case of numerous speculative purchases of land made on Robinson Road and other high levels.
With the exception of the completion of the works connected with the Pokfulam reservoir and dam (commenced in 1871), the new Harbour Master's Office (1872) and the new Civil Hospital (commenced in 1874), no public works of any magnitude were undertaken during this administration. Sir Arthur had under consideration two great projects, the Taitam Reservoir and the re-construction of the Praya, both of which he left to his successors to undertake. On 1st November 1873, the Surveyor General (J. M. Price) proposed to secure, at the cost of £300,000, an efficient supply of water (18 to 30 gallons per head) to be brought into the city by an aqueduct (with a tunnel) from a large reservoir to be constructed at Taitam. As objections were raised to the costliness of this plan, a reduced scheme was proposed (March 4, 1874) to supply daily 15 gallons per head at a cost of £280,000. This reduced plan was considered in Legislative Council (March 5, 1874), when a sum of $5,000 was voted to make a detailed survey and borings which were entrusted to Mr. W. Danby. On the basis of this survey, Mr. Price proposed a new plan (July 10, 1875), consisting of an alternative scheme, viz. a high level project to cost £39,085, and a low level project at an estimated cost of £122,596. But nothing further was done in this matter for the present. Another great undertaking, the proposal to substitute a new and more durable Praya wall for the one destroyed by the typhoon of 1874, was reported upon (May 20, 1875) by a Commission (C. C. Smith, Ch. May, Ph. Ryrie, H. Lowcock, J. M. Price), which recommended that the Government should, at an outlay of $212,000, build a new and stronger wall from White's Lane ​(near Fire Brigade Station) to Murray Pier, repair the old wall from the Gasworks to White's Lane and from the Arsenal to East Point, but increase the width of the Praya all along. This work was also left to the next administration to consider. But the minor typhoon repairs were executed in 1874 and 1875 at a total cost of £15,625.
As regards crime, the annual Police Reports of this period give proof positive that from 1872 down to 1875 (inclusive) there was a steady annual decrease in crime, and especially as regards burglaries and piracies. It is specially pointed out that, since the cessation of coolie emigration from Macao (1874), even kidnapping diminished sensibly. But in the year 1876 crime commenced again to increase slightly, and piracies began to multiply. A change in the law was suggested so as to bring marine hawkers under it, and the transfer, from the Registrar General's office to the Police Department, of the licensing of hawkers and chair-coolies, was also suggested. At the criminal session of 18th January, 1877, the Chief Justice was presented with a pair of white gloves, emblem of a session, the first since 1866, free from crime. On this occasion the Chief Justice stated that during the past ten years crime had wonderfully decreased; that in 1866 there were 384 persons convicted of highway robbery, and in 1876 only 24; that in 1866 there were 24 murders and in 1876 only 3; that in 1866 there were 26 piracies and in 1876 only 5.
The Gaol Department, which (since August 4, 1863) was for so many years under the management of Mr. F. Douglas, was, after the death of the latter, entrusted (June 8, 1874) to Mr. M. S. Tonnochy and subsequently (March 11, 1875) to Mr. G. L. Tomlin. Now in 1872 there was re-introduced Sir R. MacDonnell's system of legalizing the branding and deportation to China of Chinese criminals, on their applying for conditional pardons with the understanding that if they returned to Hongkong, after being branded and deported, they should be flogged. The new Ordinance (4 of 1872) stated in its preamble that crime had been found to increase after the discontinuance of the ​practice of branding, deporting, and flooding (on return to the Colony). At the same time when this Ordinance became law, the rules and regulations of the Gaol were made more severe (September, 1872). It is noteworthy that the above-mentioned steady decrease in crime from 1872 to 1876 commenced when severer measures, calculated to make prison discipline strongly deterrent, were introduced. It is only to be regretted that another measure, largely discussed in December, 1874, was not attended to, viz. the segregation in Gaol of youthful offenders. It was urged at the time that influences of hardened professional criminals on youthful offenders was greater in China than in Europe.
The condition and proper organization of the Police Force had been a burning public question even before Sir A. Kennedy's arrival. The Commission appointed (December 22, 1871) by Sir R. McDonnell, advised Sir A. Kennedy in their report (July, 1872), to increase the pay of the men, to form a detective staff, and to give due encouragement to European and Indian constables to study the Cantonese dialect, but as to the question of largely increasing the number of Chinese constables, the members of the Commission were equally divided. Sir Arthur at once telegraphed (August, 1872) for an additional relay of Edinburgh constables and altogether 45 Scotch policemen were enlisted in 1872. No attention was paid to the strange suggestion, made by the Assistant Superintendent of Police, Mr. Th. F. Rice (who soon after resigned, 30th September, 1872, and joined the Japanese Police Department), to fuse all nationalities in the Police Force, even if such a measure should occasionally place Westindians or Chinese in command of Europeans. The Governor resolved, contrary to the views of unofficial Members of Council, to increase the Chinese contingent of the Police Force, and when the Hon. Ph. Ryrie protested against this measure (September 5, 1872), the Governor took the occasion to state that he was satisfied with the general results of the Police administration and contended that the Colony was in as good a condition of peace and order as any of Her Majesty's dominions. After the resignation ​of Mr. Rice, the office of Assistant Superintendent was abolished and replaced (1873) by the post of Chief Inspector (G. Horspool) who acted under the orders of the Deputy Superintendent (C. V. Creagh) and Captain Superintendent (W. M. Deane), whilst the Chinese portion of the Force was placed (January 14, 1873) under a special Superintendent (H. E. Wodehouse). The action taken by Captain Deane during the height of the typhoon of 1874, in keeping those of the men, who were to go on duty next morning, indoors during the night, and in not repeating the alarm of fire which had been raised, aroused a strong feeling among a section of the community. A petition for an inquiry was addressed to the Governor, and when he refused the request, the three unofficial Members of Council (Ph. Ryrie, R. Rowett, and J. Whittall) went so far as to protest at the next Estimates Meeting (November 13, 1874) against any provision being made in the Estimates for the salary of the Captain Superintendent. Referring to these proceedings. Lord Carnarvon stated in a dispatch (published in July, 1875) that the action of the Superintendent constituted a case which only local experience could decide, and that the Superintendent had evidently adopted, from the best motives, that course which to him seemed most expedient.
The most flourishing corporation in Hongkong, the Hongkong and Shanghai Bank, acted like a thermometer indicating the periodic condition of the commercial atmosphere of Hongkong throughout Sir Arthur's administration. In February, 1872, the Bank declared a dividend equal to 12 per cent. for the year upon the paid up capital, and so also, with a little hesitation, in February, 1873, but in August, 1874, the Directors declared themselves unable to pay any dividend at all, and complained of heavy losses and failures all round, and in March, 1875, the Bank, though carefully managed in the face of adverse surroundings, was still in the same position, so much so that a Commission of Inquiry was suggested. But in September, 1876, the Bank had fully recovered lost ground, changed its Manager, rid itself of encumbered estates, and paid £1 dividend per share, ​and on 15th February, 1877, whilst continuing to pay the same dividend, the Bank increased its reserve fund to half a million dollars, which called forth, in favour of the Chairman of the Directors (E. Belilios) and the new Manager (Th. Jackson), votes of thanks, with acclamation by the very men who stated at the time that, 18 months previous, they had thought very hard things about the prospects of the Bank. The history of most local mercantile houses, and even of joint-stock enterprises like the H. & W. Dock Company and the H. C. & M. Steamboat Company, would be found, if examined, to run parallel with the experiences of the Hongkong and Shanghai Bank, and to furnish the same report concerning commercial affairs during this period, viz. that a change, amounting to a complete subversion of former conditions, came over the commerce of Hongkong from 1872 down to the spring of 1876, when the general depression had passed its nadir, and commerce began to emerge out of the gloom that had enveloped it for years and to enter upon a sunny period of prosperity under altered conditions. The collapse of the Indo-Chinese Sugar Company, the failure of Norton and Lyall (August 8, 1873), the liquidation of the Distillery Company (August 3, 1873), the closing of the Pier and Godown Company (September 17, 1873), the failure of Augustine Heard & Co. (April, 1875), the winding up of the Victoria Fire Insurance Company (May 25, 1875), form the most conspicuous milestones of the period of commercial decline which commenced in 1872, but reigned particularly from 1873 to 1875. The annual amounts of liabilities set forth in Bankrupts' Schedules filed in Supreme Court tell the same tale, for in the successive years from 1873 to 1876 these amounts were respectively as follows, in 1873 $108,396, in 1874 $121,707, in 1875 $1,996,391, and in 1876 $75,676. The only puzzle is that in 1872 the respective amount was $110,743, which would indicate that the depression had already commenced in 1872.
Proceeding now to mention particular questions which agitated commercial circles during the period under review, precedence is claimed by the brokers who came largely to the ​front all through the year 1872. The system of doing business through foreign brokers had for many years quietly made its way, cutting out the Chinese compradors who formerly were the only medium of settling transactions between foreign houses and native buyers. Yet, even in 1872, there were still influential foreign merchants in Hongkong who saw no need for European brokers except for bullion and exchange operations, and who stubbornly adhered to the comprador system. In January, 1872, it was publicly urged that the system of foreign brokers, having now obtained a recognized footing, should be subjected to Government control, or that the brokers should themselves establish an exchange and frame their own regulations. As nothing was done in the matter, the Chamber of Commerce (April 25, 1872) fixed a scale of brokerage charges, but the brokers, not having been consulted, defiantly resolved to adhere to their former rates. At last a Bill was framed, which met the views of the leading foreign brokers, and it was read a first time in Legislative Council (July 9, 1872). The Bill was then referred to a Select Committee (Th. C. Hayllar, H. Lowcock, J. Greig), published in Government Gazette (July 13, 1872), and the brokers received an invitation to communicate their views to the Committee. This Bill proposed to enact a rule that no person should act as a broker without having obtained a licence; that licences, subject to an annual fee, be granted by the Governor in Council; that brokers, in taking out a licence, should file a declaration not to trade, buy or sell, on their own account, and that any one committing a fraud or acting in contravention of that declaration, should be disqualified acting as broker. Whilst the Bill was under the consideration of the Committee, the brokers held a meeting (August, 1872), condemned the Government measure, resolved to incorporate themselves as a Brokers' Association, and appointed a Committee to frame by-laws. When the Bill came up in Council for its second reading, the Select Committee reported that there was a difficulty in applying the Ordinance to Chinese brokers (who in most of their transactions are both principals and partners), that the ​Ordinance was favourably regarded by a majority of bill and bullion brokers, but that the proposed Ordinance would not affect exchange brokers in any way, and that therefore the object of the Government would be better fulfilled by means of an Association invested with certain powers of regulation over its members. Legislation was accordingly postponed, in order to give the brokers time and opportunity to form such an Association, and the Bill was withdrawn. This was virtually the end of the whole movement, for the proposed Association was not formed, and although a spasmodic effort was made a year later (December 18, 1873) to start an open stock exchange, where shares were to be sold by public auction, the attempt was a conspicuous failure.
Another set of questions, which troubled the mind of the commercial community off and on, from 1872 down to 1876, was connected with the systematic adulteration of grey shirtings in England and of tea leaves in China and in England. What, in the history of British manufactures, is known as the sizing question, troubled the minds of Hongkong merchants, particularly since 1872, under the name of the mildew question, sizing and mildew being related as cause and effect. During the American War, the British manufacturers of cotton goods had to use bad and short-fibred cotton, which required proportionately more sizing with flour and tallow. But when the Russian War raised the price of tallow, the practice arose of substituting, for tallow, the cheaper China clay which increased the weight of the fabrics considerably. Now to counteract the destructive effects of the clay on the fibre of the cotton stuffs, it became necessary to use certain deliquescent salts which, while invisible in the fabrics before shipment in England, developed mildew whilst in the hold of steamers in transit through the Suez Canal. But what irritated Hongkong merchants in the matter was further this, that, whilst they looked upon this system of sizing as a fraud practiced by the manufacturers, the advocates of the latter represented sizing as a practice resorted to by order of British merchants in China, who asked for cheap and inferior goods, necessarily ​requiring more sizing than superior qualities. The use of steam in the manufacture of the yarns and the imperfect ventilation of steamers' holds and of godowns in China were also named as subordinate causes of mildew. Mr. (subsequently Sir) John Pender, of Manchester, recommended (October 30, 1872) a formal investigation and a Committee, representing both China merchants and Manchester manufacturers, was appointed to inquire into the matter with a view to remove all cause of complaint. The problem was, however, too complicated to admit of a ready solution. Strange to say, it was also found (February, 1873) that goods which, on arrival in Hongkong, were found, by official inspection, to be badly mildewed, condemned and returned to England, were, on arrival there, when inspected by official surveyors, found perfectly free of mildew. The mildew had evidently been developed by the tropical temperature and reabsorbed on return to a temperate climate. On 27th January, 1873, the Hongkong Chamber of Commerce resolved to co-operate with the Shanghai Chamber in making representations to Mr. Pender's Committee, both Chambers being convinced that the remedy must be found at Manchester. No tangible solution of the difficulty was, however, found and it appeared to all concerned, that the evil had to be left to work its own cure. Oversizing and dressing was continued by Lancashire manufacturers with little abatement, and in consequence Hongkong merchants encountered occasionally losses which kept up the irritation, whilst Chinese buyers began to take up Indian cotton goods in place of the Manchester fabrics. The same process went on in the tea trade, especially since 1874, when the import duties on tea were reduced in England by about one half, and when increased exports from China were accompanied by increasing complaints of the admixture of strange leaves and other materials and an undue proportion of tea dust. It was the mildew question over again, only in another form. The complaints were the same and the evidence equally conflicting, the blame being laid by one party upon the other, by the consumers in England on the retail dealers, by the retail dealers on the merchants, and by the ​merchants on the Chinese packers who in turn blamed all the others. But the results of this practice of adulterating tea were curiously like the consequences of oversizing. As the mildew in Manchester goods caused the Chinese buyers to take up with Indian fabrics, so the systematic adulteration of Chinese tea leaves induced the English consumer to give the preference to Indian teas. India reaped the advantage in both cases.
Two minor quetions were much discussed during the year 1873, viz. different forms of bills of lading and ocean racing. On 27th January, 1873, the Chamber of Commerce adopted the homeward bill of lading known as No. 4, drawn up, after much public discussion, by a Committee of London merchants, and resolved that shippers should, whenever practicable, give preference to steamers agreeing to make use of this form. Subsequently, however, much discussion and dissension arose in the Colony as to the comparative position of shippers under the so-called eastern bill of lading and that of Holt's line of steamers which at the time (April, 1873) commenced running on the Yangtsze also. Another subject, connected with rates of freight rather than bills of lading, but equally the subject of public attention in 1872 and 1873, was the practice of ocean racing, frequently indulged in between fast tea steamers. The loss of the S.S. Drummond Castle (May 31, 1873) having been attributed to this previously rather popular practice, the Hongkong Insurance Company addressed (July, 1873) a letter to Lloyds, pointing out the tendency which the system of graduating rates of freight, in proportion to the speed of the vessel, had towards encouraging ocean racing at dangerous speed, and thus needlessly adding to the risks of the underwriters. In consequence of this action, the P. & O. Company gave up the system of a differential scale of rates for freight, in order to avoid even the appearance of encouraging the practice of preferring speed to safety.
The currency question engaged the attention of the mercantile community and of the Government frequently during this period. The dollar had practically been the unit of value for the European community from the earliest days of the Colony and ​the Mexican dollar had been made (January 9, 1869) a legal tender. But, side by side with the dollar, the local Chinese community had all along employed the national Chinese tael standard (0.717 taels' weight of sycee silver being counted equal to one dollar), and European merchants, in dealing with Chinese in Hongkong or with any merchants in the open ports of China, had likewise to use the tael standard, side by side with the dollar standard in which they kept their own accounts. The Chinese, having no faith in foreign dollars, bored and cut them for purposes of testing and stamped or, as it is locally called, chopped them for purposes of identification. Every dollar became thus after a short time terribly defaced and mutilated or, as it was called, a chopped or chop dollar. Moroever, as the Chinese looked upon every coin, even when known to be genuine, only as so much sycee silver, they took dollars, clean or chopped, only by weight, broke chopped dollars into pieces, and used broken particles of dollars in place of small coins. Chop dollars, in different stages of laceration, and broken pieces of silver, weighed out from hand to hand and re-assayed (shroffed) by experts in every transaction, were thus the medium of business. Undefaced dollars, fancied for special purposes, were always at a premium. For small transactions, the Chinese used their national copper cash, but these cash had likewise a fluctuating value and the proportion of clean and defaced, whole and broken cash, intermixed in every hundred, also affected the value of every string of cash. At the beginning of this period there was thus, apart from banknotes, virtually no fixed money currency in the Colony, and it is one of the merits of his administration that it partially remedied this defect.
The annual circulation of local banknotes (from five dollars upwards) averaged, from 1864 down to 1872, about two and a half million dollars. But although these notes were popular among the Chinese, the experience of the past had shewn that the Chinese mercantile community are liable to sudden panics. For twelve months after the collapse of the Agra and Commercial Banks, which was followed by a run upon the Oriental and ​Chartered Banks, the circulation of banknotes in Hongkong averaged only one and a half million dollars. Now in June 1872, the Hongkong and Shanghai Bank obtained the Governor's permission to issue one dollar notes and thus to supply a much felt want. The Bank accordingly issued (October, 1872) such notes, of which there were, twelve months later, about $175,000 in circulation. This raised the total of banknotes in circulation in 1873 to three and one fourth million dollars, and in 1874 the circulation of banknotes reached three and a half millions. But in December, 1873, the Governor received an intimation that the Lords Commissioners of Her Majesty's Treasury disapproved of the issue of one dollar notes on the ground that these notes would be largely in the hands of the poorest Chinese who might be even more subject to panics than the mercantile classes. The Governor was instructed to order the withdrawal of these notes unless serious public inconvenience should result from such a course. When the Governor accordingly called upon the Bank (February, 1874) to show cause why the one dollar notes should not be called in, the whole community took up the matter and a numerously signed Memorial, supported by a special resolution of the Chamber of Commerce, was forwarded to H.M. Government (March, 1874) in favour of the retention of these one dollar notes.
There were, at the beginning of this period, three new silver dollars competing for public favour, viz., a new Mexican dollar, the American trade dollar and a Japanese dollar (yen). The Chinese shroffs and traders of Hongkong and Canton having formed a combination, with a view to reject the new Mexican dollar, the Viceroy of Canton had it assayed (March 18, 1872) and issued (November 30, 1872) a proclamation which was published in the Hongkong Government Gazette (December 7, 1872). It was thus officially announced, that the new Mexican dollar consisted of 9 parts pure silver and 1 part alloy; that to pay 100 taels' weight of pure sycee, it would be necessary to pay 111·11 in new Mexican dollars; that 100 new Mexican dollars are equal to 101·41 old Mexican dollars, the new Mexican dollar ​being, within a fraction of 1.5 per cent., better than the old. Next year the Chinese Government likewise had the American trade dollar assayed (September 27, 1873), when it was found to consist of 8,961 parts of pure silver and 1,039 alloy, and it was stated that to pay 100 taels' weight of pure sycee, It would be necessary to pay 111·6 taels' weight of American trade dollars, and that 100 American trade dollars are worth 100·07 new Mexican dollars or 101·48 old Mexican dollars, the American trade dollar being, within a fraction of 1·5 per cent., better than the old Mexican dollar. In consequence of the publication of these assays, the new Mexican dollar passed into favour with the Chinese of Hongkong. The foreign mercantile community, though practically accepting the new Mexican dollar, was anxious to obtain an English dollar which should be guarded, by special prohibition, against defacement by stamping. At a meeting of the Chamber of Commerce (January 10, 1874) a strong feeling was manifested in favour of doing away with chopped dollars altogether. A desire was expressed to obtain the necessary coins from England, instead of being dependent upon two foreign countries for them. An adjourned meeting of the Chamber (February 2, 1874) expressed an almost unanimous opinion against introducing the American trade dollar and the Japanese yen as legal tenders in the Colony, and a decided preference for a suitable dollar, to be coined by the Royal Mint in London. Later on, the Chamber of Commerce advised the Colonial Secretary to communicate with the Authorities of the Mint as to the coinage of a suitable dollar for the Colony. In reply, the Governor informed the Chamber (July 31, 1875) that Mr. Fremantle, the Deputy Master of the Mint, was of opinion that the Japanese yen might be accepted as a legal tender in Hongkong, that the American trade dollar, not being a dollar of an equivalent value, should be rejected, but that the proposal to coin in England a special dollar for Hongkong was impracticable, as it would cost two per cent. for coinage and one per cent. for freight to lay it down in Hongkong. This brought ​the movement to a standstill. But when, next year, the Shanghai Chamber of Commerce invited the Hongkong Chamber to join in an address advocating the establishment by the Chinese Government of a Mint, the Hongkong Chamber resolved (November 2, 1876) not to make any recommendation of that sort, but expressed itself in favour of the dollar being made the uniform standard of value in China. Whilst thus the general desire for a special Hongkong dollar remained unfulfilled, the Government obtained from the Mint in London a new supply of subsidiary coins for use in the Colony. A quantity of bronze cents was obtained first (July 19, 1875) and subsequently a large supply of silver five cent pieces, ten cent pieces and twenty cent pieces (June 20, 1876), which has been kept up ever since.
On 27th January, 1873, the Chamber of Commerce resolved to memorialize each of the Naval Commanders-in-chief on the Station, requesting them to assist in obtaining a new, complete and reliable survey of the coast from Hongkong all the way to Woosung. The local Government also joined in this movement, when the mail-steamer Bokhara struck (June 21, 1873) on a previously unknown rock in the fairway just outside Lyeemoon pass, and a reward of ten dollars was offered to fishermen for pointing out any hitherto unknown rock in the neighbourhood of Hongkong. The Chamber, having received favourable replies from the British and American Admirals, proceeded (August 27, 1873) to memorialize both the British and the United States Governments, to move them to take concerted action in completing the surveys required. In January, 1874, the Chamber was informed by Vice-Admiral Shadwell, that the Admiralty was going to send out at once a suitable surveying vessel to complete the survey of the coast of China.
In the matter of lighthouses, the Chamber requested the Governor (January 27, 1873) to obtain from the Secretary of State a grant from the Special Fund, to cover the cost of erecting several lighthouses. This application was indeed negatived (June, 1873), but on 27th August, 1873, the Chamber was informed that the Government had resolved to erect lighthouses ​at Cape D'Aguilar, Cape Collinson and Green Island. An Ordinance (17 of 1873) was passed (December 9, 1873) giving the Government power to advance, for the purpose, out of the Colonial Treasury, funds to be subsequently repaid out of the light dues. At Cape D'Aguilar, a round stone tower was erected, 200 feet above the sea, and measuring from base to vane 57 feet. It was furnished with a fixed dioptric white light of the first order, which was lit for the first time on 16th April, 1875, and found to be visible at a distance of 21 nautical miles. The position of the lighthouse was calculated to be in 22° 12′ 14″ Lat. N. and 114° 15′ 44″ Long. E. The lighthouse erected (July 1, 1875) on Green Island was furnished with a fixed dioptric red light of the fourth order, visible at a distance of 14 miles. The third lighthouse, that on Cape Collinson (between Cape D'Aguilar and the Lyeemoon), was completed eight months later (March 1, 1876). It was supplied with a fixed dioptric apparatus of the sixth order, shewing a white light visible at a distance of 8 miles. Light dues were forthwith (March 30, 1875) levied on every ship, entering the waters of the Colony, at the rate of one cent per ton; men-of-war, Chinese junks, and river-steamers entering the harbour in daytime only, were exempt, and river-steamers entering by night had (since September 1, 1875) to pay only one third of a cent per ton.
It appears that, previous to Sir Arthur's arrival, the British Cabinet addressed some remonstrance to the Lisbon Government with reference to the undeniable horrors of the Macao coolie trade, whereupon the Portuguese Government replied, that the coolie emigration referred to, whether slave trade or not, flourished as much in Hongkong as in Macao. This was rather a home thrust. But whilst one unofficial Member of Council (J. Whittall) denied this insinuation and stated in Council (February 11, 1873) that English merchants in Hongkong had no interest in the Macao coolie trade, another unofficial Member (R. Rowett) subsequently alleged that London commercial houses and banks of the highest standing, as well as certain men and firms in Hongkong, had derived large profits from ​the Macao coolie trade. The Chief Justice (J. Smale), now took occasion to announce from the Bench (April, 1873), that he held the coolie trade to be a slave trade, and that any one in Hongkong taking part in it, either directly or indirectly, would be liable to be punished for felony under the Imperial Act for the suppression of slavery. The result of all this agitation was that, with special reference to the fact that two Spanish ships (the Buena Ventura and Yrurac Bat) had been fitted up in Hongkong before proceeding to Macao to load coolies, an Emigrant-ship Fittings Ordinance (3 of 1873) was passed (April 24, 1873) and came into force a few months later (August 2, 1873). The effect of this Ordinance was to prevent any person in the Colony in any way supplying stores or fittings to vessels in the harbour destined to carry emigrants from any place outside of Hongkong. Not content with this Ordinance, the Governor brought before the Council (April 17, 1873), with special reference to the ship Fatchoy, which had taken emigrants to Cuba, another Bill for the repression of abuses in relation to Chinese Emigration. Messrs. Ph. Ryrie and J. Whittall strongly opposed this Bill (April 28, 1873), on the ground that the Fittings Ordinance was perfectly sufficient to rectify and prevent all abuses connected with coolie emigration, and that the present Bill was too sweeping. The protest of the two unofficial Members having been disregarded, they absented themselves from the meetings of Council until the Bill, after many alterations and additions, had passed as Ordinance 5 of 1873. When the Macao coolie trade had been entirely closed (March 27, 1874), both Ordinances were repealed (September 7, 1874) by the consolidated Emigration Ordinance (5 of 1874). This Ordinance, once more, placed the issue of warrants in connection with emigrant ships exclusively in the hands of the Governor, who was instructed to allow contract emigration only to countries where a British Magistrate could control the enforcement of the contracts. To stop abuses connected with •emigration, the Committee of the Tungwa Hospital applied for and received permission from the Governor to employ special ​detectives to discover kidnappers, and in May, 1873, whilst the Macao coolie trade was still going on, these detectives brought almost every day some two or three cases into Court. Two years later a deputation of Chinese merchants agreed (August 9, 1875) with the U.S. Consul, D. H. Bailey, to form a Committee to assist him in ascertaining the moral character of women wishing to emigrate to America, with a view to stopthe manifest abuses connected with voluntary emigration from Hongkong to San Francisco. The Dutch Government at Batavia also made an attempt to start Chinese emigration, under Dutch official management, from Hongkong to Acheen (August 20, 1875), but the Governor refused to sign a warrant or to sanction such emigration, although it was eventually proposed to do away with contracts altogether.
In the old question of the Customs Blockade of Hongkong, the mercantile community had a fertile source of constant irritation. A report of the Chamber of Commerce, published (April 30, 1872) within a fortnight after Sir A. Kennedy's arrival, stated that a Memorial to the Secretary of State, in course of preparation, had not yet been completed, because the Chinese were afraid to give evidence, but that a system of espionage within and a blockade outside the Colony existed. The Chamber also expressed a hope that Sir A. Kennedy would institute a strict inquiry with a view to prevent Chinese in the Government Service from rendering assistance to the Chinese Blockade officers. It was an open secret at the time that these remarks pointed again at the Registrar General's Office, a Chinese clerk of which resigned soon after (June, 1872). What gave the blockade question special importance in the eyes of Hongkong merchants, was the general belief that Sir R. Hart encouraged the Chinese to believe that eventually the English Government might be brought to consent to the surrender of all ex-territoriality rights over Hongkong and to include the Colony in the list of Chinese Treaty ports. Sir Arthur was very slow in taking up this grievance of Hongkong merchants, but at last (December 15, 1873) he appointed a Commission (Ph. Ryrie, H. G. Thomsett, M. S. ​Tonnochy) to inquire into abuses connected with the action of the Chinese Maritine Customs in the neighbourhood of Hongkong. Whilst this Commission was sitting, the Harbour Master (H. G. Thomsett) stated, in his official report for the year 1873. that the junk trade of Hongkong had diminished in consequence of the interference of Chinese cruisers. Moreover the latter, seizing a junk bound for Hongkong, the Kamhopsing, in the Lyeemoon pass (January 19, 1874), aptly illustrated the truth of the Harbour Master's statement. The report of the Commission (April 28, 1874) entirely confirmed the views of the community, but the Governor refused to publish it until the decision of the Secretary of State on the report was received (May 10, 1875). Meanwhile a fresh outrage occurred. A Chinese revenue junk was arrested near Cape D'Aguilar (May, 1874) in the act of firing into some fishing boats in British waters. The crew of the junk were tried in the Supreme Court on a charge of piracy, but the Viceroy of Canton wrote to the Governor claiming the vessel as a Government cruiser, acknowledging that she had no right to fire in British waters and promising to punish the men. Thereupon the Attorney General was ordered by the Governor to enter a nolle prosequi. The men were accordingly discharged to the great regret of the Chief Justice and the whole community. The Chinese community also presented (June 24. 1874) a petition to the Queen, and this petition was followed up by a decision of the Chamber of Commerce (August 3, 1874) to memorialize the Secretary of State, and by a public meeting (September 14, 1874) which condemned the blockade as an organized invasion of the freedom and sanctuary of the port and harbour of Hongkong. In reply to a Memorial agreed to at this meeting. Lord Carnarvon, in a dispatch published 11th May, 1875, admitted that abuses and excesses had occurred in connection with the action of the Chinese revenue cruisers, but pleaded that the exercise of the right of search, in close proximity to Hongkong, for the purpose of defeating attempts on the part of Chinese subjects to defraud the revenue of their country, did not affect the freedom of the port, and afforded no valid ground ​for diplomatic remonstrance. As a remedy of the existing state of things, Lord Carnarvon revived (March 22, 1875) the old suggestion of Sir R. Alcock, to entrust to a Chinese Consul in Hongkong the privilege of collecting from junkmasters the receipts for export duty levied in China and issuing to them in the Colony similar receipts for duty payable on account of importation into China. Lord Carnarvon's reply caused much discontent in Hongkong, as the position taken by him was honestly believed by Hongkong merchants to impair British prestige in China. Considerable excitement was caused soon after by the news that the British steamer Carisbrook had been fired into (June 13, 1875) when crowded with Chinese passengers and captured by the Chinese Customs cruiser Pengchauhoi (officered by Englishmen in the Hoppo's pay) for landing passengers at Hainan when that island was not yet opened to foreign trade. Great rejoicing, however, took place in Hongkong, when a dispatch from Mr. Herbert, the Under-Secretary of State, was read in Council (January 7, 1876) announcing that Lord Carnarvon had formally renounced the views of Sir Brooke Robertson and come round to see that the community of Hongkong really had a grievance and were entitled to protection and relief. Sir Arthur now at last took up the matter and recommended three proposals, intended to solve the knotty problem, viz. (1) that all Chinese revenue cruisers should be prohibited interfering with Hongkong junks with the exception of those of the Hoppo; (2) that a definite Chinese tariff of import and export duties, applicable to Hongkong junks, and fixed regulations for the Hoppo's dealings with Hongkong junkmasters be published and adhered to; (3) that a joint Board should be appointed to investigate all complaints of illegal seizure. The Chamber of Commerce endorsed these proposals (February 3, 1876) and addressed Lord Carnarvon accordingly (February 10, 1876). The matter now passed into the hands of the Foreign Office and became the subject of negotiations between H.M. Minister at Peking (Sir Thomas Wade) and the Tsungli Yamen. The latter, of course, denounced the first and second ​of Sir Arthur's proposals as utterly impracticable, but adopted a shadow of the third by including in the Chefoo Convention (September 17, 1876) a stipulation providing that a Mixed Commission, consisting of a British Consul, a Hongkong Officer and a Chinese Official, should arrange a set of regulations calculated to benefit the revenue collection of China without interfering with the commercial interests of Hongkong. When it was rumoured later on, that Sir Brooke Robertson was to be appointed a Member of the proposed Commission, the Chamber of Commerce at once passed a unanimous resolution (February 12, 1877), protesting against such a measure as defeating the ends of justice and common fairness.
Besides harassing the junk masters and subjecting the local junk trade to severe exactions, the Customs Blockade caused a portion of the Chinese trade, formerly confined to junks, to be conducted by means of foreign-owned steamers and sailing vessels. The Hoppo at Canton, whose revenues accrue exclusively from the junk trade, found his monopoly seriously impaired by the preference which Chinese merchants now gave to the employment of foreign vessels. Accordingly he did everything in his power to counteract this movement and sought even to draw away from foreign steamers goods which for years past had always been conveyed by them. It was discovered (July, 1874), that the Hoppo had for some time charged differential duties on cotton imported in Chinese junks, lowering the duty so far below the tariff rate levied by the Foreign Maritime Customs that, even if foreign steamers had offered to carry cotton gratis, it would still have paid Chinese importers better to import the cotton by junks charging heavy freight. But the movement in favour of foreign vessels continued to spread among the Chinese. This movement, however, did not stop at giving business to foreign steamers, but Chinese merchants gradually took to purchasing steamers and working them on their own account. The starting of the first merchant steamer, Aden, under the Chinese flag (December, 1872), by a Chinese Company which would not allow foreigners to hold ​any of its shares and which sought to obtain admission for its steamers to ports in China not open to foreign trade, heralded a change in the share which foreign merchants had hitherto enjoyed in the coasting trade, and the movement was viewed by many with serious apprehensions. This Company, which (in 1874) developed into the well-known China Merchants Steam Navigation Company, failed indeed to obtain the privilege of trading, by means of steamers, with ports not opened to foreign commerce, but instead of that monopoly the Company received official recognition and organization and the privilege of carrying 627,000 out of a total of 1,800,000 piculs of the annual tribute rice. There was at the bottom of this movement the vain hope of developing this Chinese Company to such an extent as to drive foreign-owned steamers entirely out of the coasting trade. But although the Company was well supplied with funds, strongly supported by Chinese officials and merchants in every port, and purchased (January 15, 1877) the whole of the steamers, real estate, wharves and plant of the Shanghai Union Steam Navigation Company, it only proved how unfounded was the fear that the whole coasting trade would pass into native hands. This Chinese Company obtained no more than that share in the coasting trade which naturally belongs to the Chinese, and its history demonstrated the truth that it is in the matter of money where the strength of the foreign trade in China lies, and that the greater the share which the Chinese take in the minor portions of the trade, the greater will be the growth of the more important portions of the foreign trade with China, loss in one direction being directly compensated by gain in another.
Sir A. Kennedy was the first Governor of Hongkong who invited prominent Chinese merchants, although they were mostly the servants (compradors) of the principal English firms, to social gatherings and public receptions at Government House. This practice, which was rather distasteful to most English merchants, Sir Arthur stoutly adhered to. He also for some time encouraged the Chinese to bring any public grievances, ​they might have, before him. Shortly after his arrival, a Chinese deputation waited on him (April 4, 1872), when he told them that the Chinese could always see him when they had matters to lay before him, if they gave notice before hand and brought an interpreter with them. The Chinese were not slow in availing themselves of this offer which rescinded sans façon the policy initiated by Sir H. Robinson. The outgoing and incoming Directors of the Tungwa Hospital now made it a rule to wait on the Governor once a year. The first thing they asked of the Governor (December, 1872) was that he should pass an Ordinance punishing adultery in the case of Chinese women. Considering that nearly every man in the deputation had formally married several wives and was, if English law had been applied, liable to be punished for bigamy, it was rather naive of these Chinamen to ask that their runaway concubines should be punished under English law for adultery. The next thing they asked (July, 1873) was that the Governor should grant the Chinese community some form of municipal government, and, to begin with, authorize the election, by the people, of a Chinese Municipal Board, consisting of two Chinese residents from each district, to assist the Registrar General withtheir advice in all Chinese municipal matters. In December 1874, they urged the Governor to pass an Ordinance making it compulsory for all Chinese shops and firms to register the names of all their active and sleeping partners. In the following year they solicited an improved Bankruptcy Law, the erection of a harbour of refuge to be used by small craft in case of a typhoon, the grant of a site for the erection of a Chinese townhall, and the opening of a lepers' asylum on some small island. It is only to be regretted that Sir Arthur could not see his way to take up any of these suggestions, with the exception of a site for a public meeting hall which he promised to give them, and that he failed to make good the promise he had hastily given. Towards the close of his administration, when he knew the Chinese character better, Sir Arthur changed his attitude towards the Chinese and made an order (January 8, ​1876), couched in language of extraordinary circumlocution, the effect of which briefly was, that the Chinese, whenever they had any grievance or petition to present, should communicate with the Government through the Registrar General.
How little hold the Government really had on the Chinese population, was shewn by several incidents during this period. In August, 1872, the Executive ordered a small tax to be levied on coolie lodging houses, with a view to bring these, generally overcrowded, places under sanitary surveillance. But small as the fee was, the Chinese at once resisted and the whole community was put to great inconvenience by a general strike of all carrying coolies, kept up for three days. The coolies did not resume work until they were given to understand that, as soon as they returned to their work, the Government would entertain their petition and repeal the tax. Another case in point is the Servants Registration Ordinance (7 of 1866). Efforts were made during Sir A. Kennedy's administration, and especially in August, 1874, to prevent this Ordinance continuing to be a dead letter, but it was found impossible to enforce its provisions. The Chinese managed to evade the law or persisted in disregarding it. The same was the case with the measures taken by the Government to repress public gambling. The Registrar General and the Captain Superintendent of Police, having been appointed special commissioners to see to the suppression of public gambling, caused prosecutions to be instituted (May, 1872) against landlords owning houses in which secret gambling establishments were kept, but the prosecutions broke down and whatever the Government did in the matter proved fruitless. Public gambling continued as before by means of pretended clubs and other arrangements which proved to be entirely beyond the reach of the law.
As regards sanitation, Dr. Dods, in his report for 1872, formulated the theory that fever is most prevalent in Hongkong when the rainfall is below the average and the range of the thermometer is small, and Dr. Ayres added, in 1873, the axiom that the heavier the rainfall, the better is the health of the ​community. One hundred men of H.M.S. Barossa were attacked with fever in 1872, whilst the ship was in dock at Aberdeen. Genuine typhoid fever was not noticed in the Colony until 1874, when some cases were imported by ships. Dengue fever occurred in Hongkong for the first time in September, 1872, imported from the North. It was officially declared an infectious disease (October 4, 1872). In 1874. many cases of phthisis occurred both among the European and Chinese communities. But on the whole there was no extraordinary outbreak of serious disease during this period. The attention of the Government was drawn by Dr. Ayres, in spring 1874, to the extraordinary defects of scavenging and domestic sanitation in the Chinese quarters of Taipingshan and Saiyingpun, where it had become customary to keep, under Government licences, pigs on the upper floors of densely crowded houses. The scavenging arrangements of the town were somewhat improved in consequence (October 2, 1874). but otherwise the sanitation of the Colony remained as it was. The annual death rate of Hongkong per 1,000 of the whole population was 22·57 in 1873, 32·20 (owing to the many deaths caused by the typhoon) in 1874, and 24·29 in 1875, but Dr. Ayres remarked, in his report for 1876, that, considering the defective sanitation of the town, it was a wonder to him that the mortality was so small. Mount Davis and the hill side above Kennedy Road were covered with fir trees in 1876 and a large number of eucalyptus trees, imported from Australia, were planted in different localities. Building operations on the Peak multiplied in summer 1876 and residence on the Peak now commenced to be widely popular as a summer resort. The Civil Hospital having been demolished by the typhoon of 1874, the patients were accommodated in the former Hotel de l'Univers in Hollywood Road whilst a new and larger hospital was erected. The private Seamen's Hospital, erected by Jardine, Matheson & Co. on the hill above Wantsai, having for years been carried on at a loss, was closed in March 1873. The Small-pox Hospital, which from 1871 to 1873 had been located on Stonecutters' Island, was also closed in April, 1873, and the patients were thenceforth ​accommodated in town at the Civil Hospital. A new Lock Hospital was established, in connection with the new Civil Hospital, and a series of regulations for it published in the Gazette (November 2, 1875). The Chinese also started what was at first intended to be a branch of the Tungwa Hospital at Wantsai (December, 1872) but subsequently developed into a separate public dispensary at the Wato Temple.
In the educational problem of the Colony Sir A. Kennedy took much interest, but only as an uncompromising secularist. The Hon. Ph. Ryrie having mentioned in Council (April 29, 1872) the need of a Public School for the education of the children of middle-class Europeans, the Governor stated at the next meeting of Council (May 16, 1872) that in his opinion the Government should not move in the matter until the views and requirements of the community upon the subject had been fully ascertained. Accordingly a public meeting was held at the City Hall (June 25, 1872) and attended by the Governor himself, who spoke strongly in favour of a non-denominational scheme, and the general feeling of the majority of those present appeared to be in favour of that view. A Committee was appointed to report upon the suggestion, made at this meeting, to resuscitate St. Paul's College, to turn it into a secular European middle-class school and to work it as a feeder of the Government Central School. Eventually a Grant-in-Aid school, under the management of the Hon. Ph. Ryrie, was established by Mr. and Mrs. Hanlon, called the Victoria English School, but it failed to fulfil its purpose and soon became a Portuguese school under the management of the Roman Catholic Mission. For the better promotion of elementary education in the Colony, Dr. Stewart recommended to the Government (February 14, 1873) the introduction in the Colony of an adaptation of Forster's Education Act of 1st August, 1870. But in adapting Forster's Scheme to the peculiarities of Hongkong, Dr. Stewart stripped it of the concessions which the Education Act of 1870 made to the recognized needs of a religious education. Instead of adopting Forster's conscience clause, Dr. Stewart made the Hongkong ​Grant-in-Aid Scheme an absolutely secular measure, offering to all schools, willing to devote four consecutive hours a day to exclusively secular teaching, annual grants, on the basis of definite results in secular instruction, ascertained by examining each individual scholar. This Scheme having been approved by the Legislative Council (April 24, 1873) and provisionally accepted by the Protestant and Catholic Missionaries, was at once put in operation, 5 Protestant and 1 Catholic school being placed under the Scheme. To conciliate objections raised by some of the Missionaries (Dr. Eitel and Bishop Raimondi) to the absolutely secular teaching demanded of Grant-in-Aid schools, whilst the Government schools used Chinese school books containing Confucian and Buddhist religious teachings, a compromise (refused by the Catholics) was made, allowing the Grant-in-Aid schools to use Chinese reading books containing an admixture of religious teaching. To compile these reading books, the Governor appointed (April 17, 1873) Dr. Eitel as chairman of a Schoolbook Committee which produced without delay a set of three graduated readers after the pattern of the Irish National Schoolbook Society's publications. By the end of the year 1876 there were 11 Protestant schools under the Grant-in-Aid Scheme, but the Roman Catholics withdrew entirely, being dissatisfied with the rigid exclusion of religion from every one of the four hours of daily instruction required by the Scheme. The attendance in schools under Government supervision rose during Sir Arthur's administration from 1,480 scholars in 1872 to 2,922 scholars in 1876. There was similar progress made, during this period, in the sphere of religious education. Bishop Burdon resuscitated St. Paul's College, in 1876, by opening a Church of England school for Chinese and European scholars under an English Headmaster (A. J. May) and two Chinese Assistant Masters. Most striking, however, was the manner in which the Roman Catholic schools now came to the front under the direction of Bishop Raimondi. When the latter first arrived in the Colony, in 1858, there was only one Catholic school in existence, numbering eight boys, but in 1874 there were ​18 Roman Catholic schools at work with 723 scholars under instruction, and in the following year (November 15, 1875) the Christian Brothers re-organized the former St. Saviour's School as a College dedicated to St. Joseph which, by the end of the year 1876, numbered 165 boys. The establishment of a Morrison Scholarship in connection with the Government Central School (January, 1874), the selection and clearing of a costly site for new and extensive buildings for the use of the Central School (May 30, 1876), and the collection of funds in the Colony in aid of the new Chinese Professorship at Oxford (September 15, 1876), indicate the interest taken during this time in matters educational.
The religious history of the period under review is characterized by the opening of St. Joseph's Church (November 30, 1872), by the installation of two Bishops, Bishop Burdon (December 31, 1874) and Bishop Raimondi (January 19, 1875), and by the passing of two Ordinances, a Marriage Ordinance and a St. Paul's College Ordinance. The former Ordinance (4 of 1875) was passed (April 8, 1875) to secure more accurate registration of Christian marriages (Chinese non-Christian marriages being left out of consideration) and to give equality in privileges to the various religious denominations. In deference to objections raised by Bishop Raimondi, this Ordinance was subsequently repealed and another (14 of 1875) substituted and passed (January 7, 1876) after a most acrimonious debate in Council concerning the objectionable attitude taken by the Roman Catholic clergy. That attitude was described by the Governor in very strong terms which were afterwards deliberately recorded in the Gazette (March 4, 1876). As regards St. Paul's College the revocation, in consequence of the resignation of Bishop Alford (November 1, 1872), of the original Letters Patent (of May 11, 1849, and January 14, 1867), having abolished the See and Bishopric of Hongkong, a Missionary Bishop (J. S. Burdon) was appointed Warden of the College whilst the lease and site vested in the Archbishop of Canterbury (Ordinance 7 of 1875). The Chinese community also had some ​religious excitement during this period by the appearance in the harbour (January 22, 1874) of a large junk fitted up as a floating temple for the worship of three large idols. The vessel, known as 'the spiritual junk,' was visited daily by thousands of worshippers admitted on payment of a fee. Finding the business extremely profitable, the proprietors hired the Tunghing Theatre where the idols were exhibited and worshippers admitted on payment of 15 cash a person. As the matter was thus plainly a financial speculation, the Registrar General (C. C. Smith), with the approval of the leading Chinese merchants, interfered on the ground that the theatre was not licensed for religious purposes and the proprietors were fined $15 in the Police Court.
There was annually during this period the usual number of conflagrations in the town, but since 1875 their frequency appeared to increase. Yet none of these conflagrations extended beyond the destruction of two, or at the utmost six, houses at a time. But quite a number of vessels were on fire within two years. The Peruvian ship Columbia was burned in the harbour (February 15, 1871) and the Pacific mail-steamer Japan was destroyed by fire at sea, in close proximity to Hongkong (December 18, 1874), causing the death of a large number of Chinese passengers. The S.S. Panay (August 30, 1875), the coalship Pilgrim (September 20, 1875) and a Chinese junk laden with hay (November, 3, 1875) were on fire in the harbour in one and the same year. In the one year 1874, three ships were wrecked at or near Hongkong. The S.S. Wanlung, built in Hongkong, capsized (February 13, 1874) on her first trip with passengers to Canton, within a few minutes after leaving the wharf, when some 30 lives were lost in the harbour. The S.S. Mongol was lost on a rock near Cape D'Aguilar when 17 persons were drowned (December 12, 1874), and the S.S. Japan ran on a rock, near Wantsai, in the harbour (December 17, 1874). Several collisions occurred during this period. The barque Glimt was sunk in harbour in consequence of a collision with the S.S. Geelong but was successfully raised again (March, ​1872). The steamship Glendarrock and the barque Parame also collided in the harbour (December 7, 1876). In consequence of the explosion of the superheater of the river-steamer Kinshan (June, 1876), by which a passenger was killed, two engineers of the steamer were charged with manslaughter and tried in Supreme Court, but they were found not guilty.
The severest disaster that ever befell the Colony of Hongkong (since July, 1841) was caused by a typhoon of unprecedented suddenness and power. It commenced on the evening of 22nd September, 1874, when small boats were still plying on the harbour, and was at its height shortly after midnight. The tide was exceptionally high at the time and an earthquake appears to have occurred whilst the typhoon was raging. On the morning of 23rd September, 1874, the town looked as if it had undergone a terrific bombardment. Thousands of houses were unroofed, hundreds of European and Chinese dwellings were in ruins, large trees had been torn out by the roots and hurled to a distance, most of the streets were impassable, being obstructed with fallen trees, roof timber, window frames and mounds of soil thrown up by the bursting of drains. Business was at a complete standstill for several days. The Praya was covered with wrecked sampans and the debris of junks and ships, whilst in every direction dead bodies were seen floating about or scattered along the ruins of what was once the Praya wall. Thirty-five foreign vessels, trusting in their anchors, were wrecked or badly injured. Over 2,000 lives were lost in the harbour within the space of about six hours, during which time the screams of Chinese in distress on the water were heard by residents, on the upper levels of the town, to rise above the terrific din of the storm. The Hospital-ship Meanee, the only ship in harbour which held on to her anchors, had her four anchors twisted into one mass of tangled iron, the photograph of which is a curious sight. Special attraction for sightseers, who came out in thousands to view the havoc which had been wrought, was afforded by two steamers, the Leonore and the Albay, wrecked on the Praya wall near Victoria wharf, and the Pacific mail-steamer Alaska, ​blown ashore and left high and dry on the beach at Aberdeen. The loss of the river-steamer White Cloud near Macao also attracted much attention. The amount of property destroyed in Hongkong within those six terrible hours was estimated at five million dollars. A fire that broke out while the typhoon was at its height was actually put out by the force of the wind. Her Majesty sent (November 18, 1874) a message expressing her 'sincere regret for the suffering which this sad calamity occasioned.' The brothers Tauffer, who had specially distinguished themselves by daring and successful efforts to save lives, were presented (January 7, 1876), at the hands of the Governor, with a testimonial by the Royal Humane Society. But very little was done to utilize the lessons taught by this typhoon. Meanwhile another typhoon swept over the Colony (May 31, 1875). It did little damage, however, though Macao and Canton suffered severely, as evidenced by the wreck of the river-steamer Poyang, on her way from Canton to Macao, when some 100 lives were lost. A Humane Society was now formed in Hongkong (July 2, 1875) for the special purpose of preventing the frequent loss of life in the harbour and particularly to give assistance during typhoons. This Society, under the presidency of the Hon. Ph. Ryrie, entered upon its labours with great enthusiasm, officers were appointed and stations fixed, funds were raised and left, after the purchase of the needful apparatus, in large sum in hand (June 6, 1876). A life-boat was talked of, additional funds were voted by Legislative Council (December 11, 1876), and after that the whole scheme was allowed to drop.
The social life of the period under review is notable for two sensational incidents. In March, 1872, Mr. D. Welsh, a highly talented and respected English merchant, head of the firm MacGregor & Co., having freely commented, in a local paper, on the public conduct of the Acting Chief Justice Ball, was sentenced, without the option of a fine, to fourteen days' confinement for contempt of Court. The whole foreign community, filled with indignation, petitioned the Governor to remit the sentence. The Acting Chief Justice, having thereupon ​suggested that the petition to the Governor should first be withdrawn and an application for clemency made to the Court by prisoner's Counsel, released Mr. Welsh as soon as these conditions were complied with. To mark its sense of the proceedings, the Chamber of Commerce, at its next meeting, elected Mr. Welsh as Member of the Chamber. Another sensational event of the same year was a duel fought with pistols (July 29, 1872), on Kowloon Peninsula, on account of some card debt dispute between the Consuls for Spain and Peru, the latter being wounded in the arm. Warrants for the arrest of every person present at the affair were issued, but bail was allowed. The two duellists were tried in Supreme Court (August 25, 1872) and, having pleaded guilty, were fined each in the sum of $200.
Quite a number of new institutions brightened social life in the Colony during this period, the year 1872 being specially productive in this respect. The Philharmonic Society (Choral Society) which had been established in July 1872, gave concerts every winter, including also a choral festival held at the Cathedral (April 18, 1876). A Debating Society was established in July 1872 but came to an end in the following year. A series of lectures given at the City Hall found considerable favour with the public. The undertaking was inaugurated in the presence of the Governor (November 5, 1872) by a lecture on Hongkong reminiscences by Dr. Legge, and followed by four other lectures, by Dr. Dennys on Folklore (November 19, 1872), by Dr. Eitel on Fengshui (December 6, 1872), by Mr. J. J. Francis on Jesuitism (December 19, 1872) and by Mr. J. W. Torrey on American Humourists (February 4, 1873). Another institution of the year 1872 is the Victoria Recreation Club which was formed (May, 1872) by the amalgamation of the Boat Club, Gymnasium and Swimming Bath, and opened in its new form on 30th November, 1872. The publication of the China Punch was resumed on 5th November, 1872, and continued at irregular intervals until 22nd November, 1876, when its talented editor (Middleton) left ​the Colony. Subsequent years produced a few additional new institutions. The Horticultural Society, which for many years thereafter held an annual flower and vegetable show at the Public Gardens, was established (February 13, 1873) by the official Garden Committee. Three years later (November 23, 1876) the Government formally withdrew its control of the Horticultural Society which, under unofficial management, continued to exist for some years longer. The members of the German Liedertafel gave their first performance on 4th November, 1873, and continued to enliven winter evenings under the direction of Dr. Clouth, whose departure from the Colony (April, 1874) was felt as a public loss. Another institution of the year 1873 was the opening of the first Good Templars' Lodge in Hongkong (September 25, 1873), which was followed by a steady spread of the Temperance movement in the Colony and led eventually to the opening of a Temperance Hall in Stanley Street (April 17, 1876), subsequently removed to Queen's Road East.
During the time of Sir Arthur's administration the relations, always friendly, which existed between the American and English sections of the foreign community, were particularly cordial. This was specially evidenced by the success of a reception given by Admiral Jenkins, in 1872, on board the U. S. Flagship Colorado, when the Governor and all leading residents attended, and especially by a grand promenade concert and supper, given, at the City Hall, by the American residents (July 4, 1876) on the occasion of the centennial celebration of American Independence. The Yacht Club attracted special attention in 1875 by an ocean yacht race (January 27, 1875) from Hongkong to Macao and back, won by the Wave, by the yacht race for the American cup (December 4, 1875) won by Naomi, and by the enthusiastic farewell demonstration made on the occasion of the departure (January 27, 1876) of the Yacht Club's Commodore (W. H. Forbes) when the whole of the Club's yachts escorted the mail steamer as far as Long Island.
The annual regattas and races were largely patronised during this period. The Amateur Dramatic Corps gave very frequent ​performances between 26th January, 1872, and 19th February, 1877. The District Grand Lodge of Freemasons invaded, in 1875, the Cathedral when a Masonic sermon was preached (December 23, 1875) by the Grand Chaplain, the Rev. H. H. Kidd. The arrival of the Flying Squadron (April 7, 1876), consisting of four frigates, gave a new zest to social life in 1876. The latter year is also distinguished: by the first loan exhibition of works of art, held in the City Hall (July 18, 1876). This exhibition became eventually the parent of the Sketching Club.
In addition to the foregoing general description of the progress made by the Colony during Sir A. Kennedy's administration, the following particulars have yet to be mentioned. The sphere of Hongkong's commercial operations was considerably extended during this period by the opening up of new countries and ports and by the starting of new lines of communication. The famous expedition, under M. Dupuis and M. Millot, which eventually led to the opening of Tungking (the North-east of Annam) to foreign trade, started from Hongkong on 25th October, 1872. The direct object of the expedition was to convey, on behalf of the Chinese Government, munitions of war to the Chinese army operating in the South of Yunnan against the Mahomedan rebels. But the personal aim of M. Dupuis was to demonstrate, in the eyes of France, the importance of northern Annam as possessing, in the Red River, an artery of trade by which the commerce of South-western China might conveniently be tapped and directed to the Gulf of Touquin. The expedition returned to Hongkong (July 2, 1873), having successfully pushed its way by the Red River route from Hanoi by way of Laokai to Talifoo in Yunnan. That the Hongkong Chamber of Commerce also looked to the opening up of South-western China is evidenced by the above mentioned exploration of the commercial capabilities of the West River, undertaken by Mr. Moss in 1872. Quite a number of ports in different countries were opened to Hongkong commerce during this period. The commercial ports of Legasbi in Albay (Island of Luzon) and Tacloban (Island of Leyte) were opened by the Spaniards (December 3, 1873) and so also the ​Tungking ports of Hanoi and Haiphong (September 15, 1875) under French protection, the Chinese port of Hoihow (on Hainan Island) forming the harbour of Kiungchow (April 1, 1876), and the Annamese port of Quinhou (November 1, 1876). New steamship lines also were established during this time. The China Trans-Pacific Steamship Company (December 30, 1873) brought Hongkong and San Francisco still nearer together and was succeeded on this line by the Pacific Mail Steamship Company (March 25, 1875) and the Oriental and Occidental Steamship Company (May 27, 1875). On the Canton River, Messrs. Butterfield and Swire started (July 20, 1875) a new line of large river-steamers to run side by side with the older Company's steamers between Canton and Hongkong. The progress made by the Colony in the direction of ship-building, is indicated by the completion (October, 1875) of the Cosmopolitan Docks, where forthwith a small steamer (Fookien) of 200 tons was constructed and by the launching of two gunboats (January, 1877) which were built for the Chinese Customs Service, one by Messrs. Inglis & Co., at Spring Gardens, and one at Captain G. U. Sands' Patent Slip at Westpoint. The invention by Dr. Dennys, of a hydraulic cofferdam, for the purpose of facilitating repairs to the hulls of ships (June 12, 1873), must also be mentioned in this connection.
Further indications of progress are the establishment (February, 1872) of a new Bank, the Comptoir d'Escompte, the formation of a Volunteer Fire Brigade (April 11, 1873) under the auspices of the Hongkong Fire Insurance Company, the establishment of the exchange of Post Office money orders between Hongkong and India (August 28, 1875), the reduction of postal rates on letters to England (July 1, 1876) and the entry of Hongkong into the Postal Union on payment of £3,150 per annum (September 21, 1876), and finally the establishment of a steam laundry (January, 1877). The Rev. J. Lamont, pastor of Union Church, collected in Hongkong and forwarded to the British Museum (April 25, 1874) a collection of 1,100 different Hongkong plants, among which there were as many as 90 different ​species of Hongkong ferns. The Government also published (January, 1877) a complete alphabetical catalogue, compiled by Mr. C. Ford, of the plants in the Public Gardens.
The Chinese community shared in the general progress of the Colony. Whilst previously the Chinese newspapers of the Colony were exclusively under foreign management, the Chinese started (March, 1873) a Company, in which no foreigner was allowed a share, for the purchase of the London Mission type foundry, and published forthwith in Chinese a newspaper of their own (Universal Circulating Herald). Another instance of Chinese enterprise is the attempt made, in July 1873, to run steam-ferries between Hongkong and Kowloon city, though the movement was stopped at the time through the action of the British Consul in Canton, who represented to the Viceroy that the ferry-boats were merely intended to bring customers from Hongkong to the Kowloon gambling houses. That Hongkong had risen in the estimation of China, is evidenced by the fact that the Imperial Government of China condescended, in December, 1874, to contract a loan of £600,000 at 8 per cent. with the Hongkong and Shanghai Bank and pledged as security for the loan the whole of the revenues of the Imperial Maritime Customs.
The obituary of this period includes, among many, the following most prominent names:—Lady Kennedy, who died in England (October 1874) highly revered by Hongkong residents as she had always given a tone of gentleness to the sterner rule of even the least severe Governor of Hongkong; F. Douglas (June, 1874), for over 12 years Superintendent of the Gaol; G. B. Falconer (died in London, August 5, 1875), the founder of the jewellers' firm of the same name; D. R. Caldwell (October 2, 1875), formerly Registrar General and latterly agent and general adviser to the leading members of the Chinese community by whom he was greatly trusted and respected; the Hon. W. H. Alexander, Registrar of Supreme Court, who died in Chefoo (February 22, 1876); Inspector O'Brien (July 21, 1876); Thomas Green, of the P. & O. Company (August 4, 1876); ​A. Dalgarno, of the Ordnance Store Department (September 14, 1876).
When the time came for Sir A. Kennedy's departure, enthusiastically laudatory addresses were presented to him by the Protestant Missionaries, by the Members of Council, and by the Chinese residents. The whole community testified to the regard in which they held their Governor by a public dinner given (February 27, 1877) in his honour at the City Hall. Sir Arthur started from Hongkong (March 1, 1877) to take up the Governorship of Queensland, leaving behind a kindly message to the Police Force and a farewell address to the whole community, published in the Gazette. When the news of his death (June 3, 1883), on board the mail-steamer in the Red Sea, reached the Colony, a public meeting resolved (July 14, 1883) to erect in his memory the statue which now decorates the Public Gardens. Sir A. Kennedy indeed was in the estimation of the Colony one of those few men who deserve a statue because they do not need one. It was acknowledged that he had not done much, but he had made himself pleasant to all and his memory was cherished by the Colonists who looked upon him as the Governor 'who ruled them always with their own consent.'