Gene Gleason

“Some are born great, some achieve greatness, and some have greatness thrust upon them.”

—Shakespeare, Twelfth Night

In 1951 the economy of Hong Kong set two memorable precedents; it reached the highest level in the colony’s 110-year history and then fell flat on its face. When the year ended, it looked as if Hong Kong was finished as a world trading port.

Twelve months earlier all indicators had pointed toward a continuing boom. Red China, frantically buying goods to equip itself for the Korean war, had pushed the colony’s trade volume to an all-time high of $1,314,000,000 in 1950. Buying continued at the same furious rate until May 18, 1951, when most of the trade was choked off by the United Nations embargo on shipments to Red China. Even so, Hong Kong’s total trade volume reached a new high of $1,628,000,000 in 1951.

The U.N. embargo administered the coup de grÂce to the crown colony trade with Communist China, but it was only the last of a series of trade restrictions arising from the Korean war. The United States embargoed all its trade with Red China when the conflict broke out in June, 1950, and at first included Hong Kong in the ban. The colony voluntarily stopped its trade with North Korea in the same month and banned a list of strategic exports to Red China in August, 1950. In December, 1950, and March, 1951, the colony increased its list of strategic items banned for export to China.

The cumulative effect of these restrictions, which were critically important in checking Chinese Communist aggression, was to push Hong Kong to the edge of economic disaster. With the loss of the China trade, the colony lost half its export market and about one quarter of its imports. This was the trade which had always been the main reason for the colony’s existence.

Prospects for reviving the China trade when the Korean war was over did not look encouraging. Long before the embargoes and restrictions had gone into effect, the Chinese had begun to shift their trade from Hong Kong to Soviet Russia and Europe.

Hong Kong had grown and prospered on its ability to receive, process and reship the products of others, but its own productive capacity was insignificant. With a few minor exceptions, its industries—chiefly the building, repairing and supplying of ships—existed to serve its trade. Its banks and insurance companies, too, lived almost entirely on the colony’s trade. Accordingly, when trade collapsed toward the end of 1951, the whole economy of the colony came crashing down with it.

In the aftermath of the 1951 debacle, there was at first no thought of substituting industry for trade. For a variety of reasons, industry in the colony had never been developed independently of trade. Certainly Great Britain had not established the colony to produce goods which would compete with English manufacturers. The Hong Kong market was too small and its people generally too poor to support its own industries. There was no tariff wall to protect the colony’s goods from outside competition, and this factor alone had stifled several early attempts to launch local industries.

Many natural handicaps combined to make the colony a most unlikely place for industry. Its mineral resources were few and limited in quantity. It had no local source of power to run a plant. Its water supply was chronically short of ordinary needs and suitable land for factories was scarce and expensive. The colony could not raise enough food nor provide enough housing to take care of its potential factory workers. And if anyone were imprudent enough to invest his money in an expensive industrial establishment, how could he be sure that the Reds would not move in and take it over, just as they had grabbed the mills and plants of Shanghai?

The colony had a few assets worth noting, however. Its government was stable and orderly, and had attracted a heavy influx of capital from pre-Communist China and the shaky regimes of Southeast Asia. Its banking, shipping and insurance services were the most efficient on the mainland of Asia, and its merchant community had well-cultivated connections with the world market. Its sheltered deep-water harbor was one of the best in Asia.

The colony’s possibilities as a future industrial power were further enhanced by an unlimited supply of cheap labor and the immigration of skilled workers and experienced industrialists from Red China. Its labor unions numbered in the hundreds, but were so weakened by factional fights and political objectives that they were unable to drive a hard bargain in wage negotiations. Under Imperial Preference and the Ottawa Agreements of 1932, colonial products paid a lower tariff rate within the British Commonwealth than their foreign competitors.

Finally, any industry in Hong Kong could rely on one intangible asset of unique value; the character of the average Chinese workman. In most cases he was a refugee, uneducated and penniless but determined to reestablish himself with any job he could find. Having landed a job, he worked at it with a diligence, energy and skill that astounded Western observers.

Although industry had accounted for a very minor part in the colony’s economy before 1951, its beginnings go back to the earliest years. Its first recorded product was the eighty-ton vessel, Celestial, built and launched by Captain John Lamont at East Point, on Hong Kong Island, on February 7, 1843. The California gold rush of 1849 and the Australian gold strike two years later caused a shipping boom in Hong Kong as scores of sailing ships carried Chinese labor to work in the goldfields. Shipbuilding expanded rapidly, a dry dock was constructed on the island and a whole new industry of refitting and supplying ships came into being. A foundry for the casting of ship cannon was established in the same era when cannon were the only valid insurance against South China’s coastal pirates.

A group of ship-repair yards was consolidated in 1863 as the Hong Kong & Whampoa Dock Co., which subsequently sold its Chinese facilities and established its headquarters at Hung Hom, on Kowloon Bay. The Taikoo Dockyard & Engineering Co. began operations at Quarry Bay, on the north shore of Hong Kong island, in 1908. Between them, the two yards have completed nearly 1,400 ships, ranging from large cargo and passenger vessels to light harbor craft. Each company employs about 4,000 men, which is still the largest number employed by any Hong Kong industrialist.

These two companies, equipped to build 10,000-ton ships and capable of repairing practically any ocean liner that enters the harbor, remain the giants of local industry. But where they and about two dozen smaller shipyards employed 28 percent of the colony’s industrial workers in 1938, they now hire around 3 percent. Theirs is not a declining industry, but it has become a hopelessly outnumbered one.

The colony’s oldest export industry has a rather spicy history, antedating the establishment of Hong Kong by at least twenty years. A Cantonese hawker with an eye for trade discovered that the roots of the ginger plant when boiled in syrup had a strong appeal for British traders. Following the line of the most susceptible palates, the merchant, Li Chy, moved his ginger-preserving plant to Hong Kong in 1846. Some helpful soul introduced the product to Queen Victoria, who was so taken with its flavor that she made it a regular dessert at royal banquets, and suggested that it be named the “Cock Brand.” Whether or not the Queen’s intervention actually occurred is open to question, but there is no doubt that preserved ginger became a favorite English and European delicacy. Li Chy’s Chy Loong Co. and a dozen eager imitators kept Caucasian tongues tingling until 1937, when U Tat Chee, the Ginger King, formed a syndicate to standardize quality and prices. During the Korean war, the United States detected a perceptible Marxist taint in the ginger that grew in Red China and banned its importation. A more democratic strain was then planted in the New Territories, and with suitable documentary evidence, permitted to enter the United States. Preserved ginger exports currently bubble along at 225 tons a year, pleasing overseas tastes and being credited by the Chinese with curing the lesser debilities of old age.

Sailing ships were insatiable rope-consumers, and from this demand grew the Hong Kong Rope Manufacturing Co., formed in 1883, and still doing business in Kennedy Town at the west end of Hong Kong Island.

The Green Island Cement Co., founded in Macao and transferred to Hong Kong in 1899, drew most of its raw materials from outside the colony to supply the local building industry. After replacing a kiln and four grinding mills hauled away by the Japanese in World War II, it got back into production in time to ride upward with the postwar building boom.

The Taikoo Sugar Refinery Co., established in 1884, was one of the first local companies to provide houses for its workers. Extensively modernized in 1925, it prospered until the Japanese looted and wrecked its plant so thoroughly that it was unable to resume production until the fall of 1950.

A 55,000-spindle cotton mill made a pioneer beginning in 1898, but the unrelieved humidity of the climate damaged its machinery and impaired its efficiency. Stiff competition did the rest and it was out of business before World War II. Flour mills and shell-button factories prospered for a time, then wilted in the heat of competition.

As cattle country, Hong Kong is slightly superior to the Sahara Desert. Nevertheless, Sir Patrick Manson, a doctor who specialized in tropical medicine, decided to establish a dairy company in 1886. He leased 330 acres of semi-vertical pasture from the crown and his first herd of 80 cows clambered and skidded around its dizzying slopes for a decade until an epizootic of rinderpest exterminated them. A new herd which soon outgrew its pasturage was stall-fed thereafter, living on fodder grass hand-gathered by patient Chinese women. Today’s herd includes about half the colony’s 3,000 dairy cows and is the chief domestic source of milk and butter. The dairy company has proliferated into a nutritional combine called The Dairy Farm, Ice & Cold Storage Co., which runs a chain of food stores, restaurants, soda fountains and ice and cold storage plants.

The match-making industry, dating from 1938, offers a gloomy illustration of Gresham’s Law. Factories were built on Peng Chau, To Kwa Wan in eastern Kowloon and at Yuen Long in the New Territories, turning out tiny, cheap wooden matches. Factory equipment was primitive, wages low and the matches, more often than not, splintery and unpredictable. At its peak in 1947, the industry employed almost 1,000 workers, chiefly women. Then Macao entered the market with still lower wages and skimpier matches. Every box of Macao matches ought to bear the warning: “Take Cover Before Striking Match,” but they far outsell the colony product. They have also done a lot to stimulate the manufacture of low-cost cigarette lighters.

Because of the colony’s habitual preoccupation with trade, many of its industries existed for decades without attracting much attention outside their own circle of customers. With the collapse of trade in 1951, they assumed such unexpected importance that they seemed to have been invented for the occasion. Some of them, like the printing and beverage industries, were a century old. Cosmetics, furniture manufacturing and the fabrication of nails and screws dated from the early 1900s. Three industries of considerable importance in the export market—electric batteries and flashlights, rubber footwear, and canned goods—had been around since the 1920s. Enamelware, electro-plating, machinery, tobacco, and motion picture industries appeared during the depression decade, and the leather industry emerged in 1947.

Cottage industries, or small enterprises operating out of the home or a back-room workshop, are as old as Chinese civilization, embracing everything from wood and ivory carvings to musical instruments, jade, coffins, toys, beadwork, lanterns and silk-covered New Year’s dragons. They average perhaps a dozen employees each, and number in the thousands.

The colony government has kept a careful record of total employment in registered factories (with 20 or more employees and subject to government inspection) and recorded workshops (15-19 workers and subject to inspection), but it has never had a statistical record of the number of industrial workers outside these two categories.

There are government estimates, but no precise figures, for the number of persons working in cottage industries, or such major industrial groups as building construction, engineering construction, agriculture, fishing and public transport. Estimates of the number of people working in shops, offices, and other commercial establishments are even hazier.

A purely statistical assessment of changes in Hong Kong industry that followed the 1951 trade collapse must necessarily be limited to the registered and recorded industries. Luckily, it has been the registered and recorded factories which most clearly reflected the colony’s recent economic revolution.

Between 1947, when the postwar boom began moving, and 1951, when the U.N. embargo was imposed, the number of registered and recorded industries rose from 1,050 to 1,961 and their employed force nearly doubled. The colony’s trade had been shooting upward at almost the same rate, and the Net Domestic Product (the total value of all its goods and services) had increased by 75 percent.

The embargo halted the trade boom and reduced its volume by almost one-third in 1952. Not until 1960 did the total climb back to the record level of 1951. Colony traders, abruptly cut off from the China mainland market, had to find new markets or liquidate their accumulated stocks. Some found new markets in Southeast Asia; others liquidated their stock for whatever it would bring. Colony imports rose uncomfortably above exports, investment capital began searching around for better opportunities outside Hong Kong and unemployment became an additional cause for anxiety.

One obvious need was to step up the colony’s export volume at once. It was in this situation that the “poor relation” in Hong Kong’s economy—its industry—came into its own.

Despite its rapid postwar growth, the colony’s industry had supplied only about ten percent of the products it exported. In simple desperation, the traders invested their Korean war profits in local industry. So also did the transplanted Shanghai industrialists who had lost their factories to the Chinese Communists but had retained their capital and managerial skills. The effect on Hong Kong was basic and far-reaching.

After a two-year period of readjustment, the number of industrial undertakings, or individual registered and recorded manufacturers, increased at the rate of 500 a year. Employment in the industries more than doubled; by the end of 1961, the colony had 6,359 companies with 271,729 workers. The climb continued into 1962.

Local industry, which had once contributed only ten percent of the value of colony exports, contributed more than seventy percent by 1962. Trade had made its comeback by then, but it showed no sign of regaining the dominant position it had occupied until 1952.

Entirely without warning and almost against its will, Hong Kong had become a manufacturing center instead of an entrepÔt. New industries had cropped up from nowhere, taken a firm hold and climbed to the most important positions in the colony’s productive economy. A few of the old industries had slumped, but most were expanding with the general prosperity.

During the uneasy two-year period of transition from trade to manufacturing, the colony had to lay down two sets of regulations to stabilize its trade relations with Japan and the United States.

Japanese industry, swiftly reviving during the American Occupation, began pouring cotton yarn and piecegoods, household utensils and metalware into the Hong Kong market. In 1952, Hong Kong imported four times more from Japan than it exported to her. But the colony was less concerned about export-import balances than it was over reducing the Sterling Area’s adverse balance of payments with Japan. Japanese imports were tightly restricted or suspended from early in 1952 until the second half of 1953. Meanwhile, local industries enjoyed a welcome breather from Japanese competition, especially in their home market.

Restoration of trade with the United States was essential. The volume of this trade had taken a steep dive after the U.S. and U.N. embargoes on trade with China, and the United States wanted no Communist products funneled through Hong Kong, nor any Red Chinese raw materials fabricated in the colony. The Hong Kong Commerce and Industry Department and the U.S. Treasury Department finally worked out a solution: the Comprehensive Certificate of Origin, covering every kind of goods that might be suspected of Red Chinese origin. Among these were silk, linen, cotton, jade, furniture, Chinese antiques and handicrafts. Goods of North Korean origin were similarly classified.

In enforcing the Comprehensive Certificate of Origin regulations, the Commerce and Industry Department directly supervises the raw material supply and the finished products of the factories; in some cases, it seals the goods after examination and keeps them under surveillance until they are exported. Severe legal and administrative penalties are slapped on manufacturers or dealers who are caught falsifying a Comprehensive Certificate of Origin. The colony government protects the validity of the certificates to insure trade relations with its biggest customer, and because it gives the colony a monopoly on certain goods for which Red China would otherwise have the market sewed up. The most vociferous critics of the Comprehensive Certificate of Origin are American tourists who recoil from it as if they had been handed two sets of income-tax demands for the same year.

With the road clear for industrial expansion, the response was overwhelming, and more than half the growth came in six light industries. Between 1948 and 1958, the six light-industry groups showed these increases in employment: garment-making, 20,000; metal products, 13,000; cotton spinning, 11,000; cotton weaving, 9,000; plastic wares, 8,000; and rubber footwear, 3,000.

At the end of 1961, registered and recorded industries employed a round total of 272,000 persons, with 42 percent of these workers concentrated in two categories; textile-making with 69,000, and garment-making with 45,000. Metal products were third in line with 28,000. Shipbuilding and ship-breaking employed 13,000. Plastics, non-existent until 1947, had separated into two major industries, plastic wares and plastic flowers, with each employing around 13,000 workers. Food manufacturing, printing and publishing, rubber products, machinery, electrical apparatus and chemicals were the other leaders. In the metal-products line, just one of its many specialized products, the manufacture of flashlight cases, employed more than 6,000 persons.

The success of Hong Kong’s light industries is typified by three of its leaders in plastics, textiles and metal wares. The Three Ts—H.C. Ting, P. Y. Tang and John Tung—were prosperous Shanghai industrialists when the Chinese Communists closed in on them. Each one managed to reestablish himself in Hong Kong as the head of a major industry. Together, they represent one of Red China’s unintentionally generous gifts to the colony—the exodus of capital and management skill. A whole new complex of tall, modern buildings in the North Point section of Hong Kong Island called Little Shanghai is a monument to this newly arrived capital.

H. C. Ting, managing director and principal owner of Kader Industrial Co., Ltd. at North Point, began as a battery salesman for a Shanghai factory, set up his own company, the Wei Ming Battery Works, in 1925, and began tinkering around in a laboratory to develop a long-lived battery. He picked up his chemistry as he went along and painstakingly dissected hundreds of messy cells until he evolved a really durable battery that sold well. He branched into flashlights, bulbs and carbon rods, survived the Japanese invasion of China and planned to try his luck in the plastics industry after the war. Foreign exchange limitations made it impossible to equip a plastics factory in Shanghai, so he sent a group of his employees to Hong Kong in 1947 with instructions to set up a plant.

The new factory was to include a cold-storage unit which could cool and store plastics and also make ice for sale. It was a dismal flop and Mr. Ting hurried down the following year to untangle the snarls. He soon discovered that he had, in effect, enrolled himself for a cram course in refrigeration engineering, but he learned enough to make the plant pay.

Today the North Point plant, greatly enlarged, employs 1,300 people and makes 400 different plastic items. Its four-story building of prestressed, reinforced concrete backs into a rocky hillside which is being blasted away to make room for a new ten-story plant. Mr. Ting trains all his own workers, pays them straight wages instead of the usual piece-work rates and hands out annual bonuses, in some instances, equal to ten months’ pay.

Operating on the general premise that he’ll try anything until he makes it work, Mr. Ting designs many of his own products, and if he can’t find a machine to make it, designs that also. One machine molds a plastic automatic pistol and its bullets in a single operation; the model is so precisely fitted that it works as smoothly as the original gun. Other machines mold a pair of binoculars with one press, then equip it with accurate lenses stamped out of clear Styrene plastic. A plastic doll, including the eyes, is pressed out in seconds, but the mold has been carefully developed from a hand-made clay original that is reproduced first in plaster of Paris and then in polyester before the steel die is cut. Dressing the dolls keeps 100 girls busy at Kader sewing machines. The plant works three shifts daily, but Mr. Ting sleeps through one shift at his penthouse on the roof. His latest venture is transistor radios, jointly undertaken with a Japanese electrical appliance company.

“We can compete with anything except junk,” Mr. Ting said. “If Hong Kong turns out quality products at reasonable prices, we can gradually raise the living standards of our labor to the level of other countries. It can’t be done overnight; they tried it in Red China and failed.”

P. Y. Tang, head of the South Sea Textile Manufacturing Co. at Tsuen Wan, is an engineering graduate of the Massachusetts Institute of Technology and the largest producer of cotton yarn and grey cloth in the colony. His main plant covers nine acres along the waterfront and contains 45,000 spindles and 900 looms. Its employed force numbers 2,100.

Tsuen Wan, now an industrial center with more than 60,000 residents, was a village with a few huts and no roads when Mr. Tang erected a pilot plant there in 1948. He had brought 300 technicians and skilled workers, plus his own administrative experience as managing director of the gigantic Ching Foong Cotton Manufacturing Co. in Shanghai and other cities of China.

Experience was not enough; Hong Kong had practically nothing to help the mill get started—no cotton, power, spare parts, skilled labor or parallel industries, such as weaving and garment-making, that could use yarn and doth. There was no local market and the humid climate quickly rusted the machinery.

Mr. Tang beat the rust problem and shaved his operating costs by keeping the machines in continuous use, running 8,500 hours a year, compared with 3,700 hours a year in German mills and 1,500 hours in English ones. He opened up new markets for his prolific output in Great Britain, the United States, Australia, Africa, and elsewhere. His early sales were made at a loss, but with his markets established and Red China knocked out of the market by the U.N. embargo, South Sea sales and profits soared.

The main plant is completely air-conditioned, reducing summer working temperatures by twenty degrees. The spindles and looms, imported from Japan, England, Switzerland and the United States, are the finest obtainable. Much of the carding, combing, and sizing machinery is fully automatic, tended by Chinese girls in their early twenties. Some of the girls appear to be prematurely grey, but it’s nothing more than loose cotton that has settled on their black hair; all wear breathing masks to protect their lungs from floating cotton. Every phase of the operation is under strict quality control, preserving the uniform diameter of the yarn and testing its tensile strength.

The South Sea plant sometimes disconcerts visiting textile executives, who expect a Hong Kong textile mill to look like an over-extended cottage industry. What they find here, and in several other Hong Kong mills, is a streamlined efficiency equal to the best in the world.

The young men and women employees, most of them single, live in free dormitories near the plant, pay an average of 27 cents a day for meals and have a choice of Cantonese, Shanghai or Swatow cuisine. They have workmen’s compensation, a barber shop with electric hair-dryers for the women, a vocational training program, and for high-performance workers, a lounge and recreation center. The plant is non-union, with a six-day, 48-hour week. Wages are slightly above the colony average for a registered factory, ranging from $1.38 to $2.25 a day.

Mr. Tang has been in the thick of the fight to protect the colony’s textile industry from demands—especially clamorous in England and the United States—that its exports be reduced.

“I just can’t see the wisdom of Western powers in restricting Hong Kong textile exports,” he told David Lan, a reporter for The China Mail, a colony daily. “We have no hinterland or diversified industries to which refugees may turn from a threatened textile industry.”

“From 1959 through 1961, total colony exports of cotton piece goods were less than 5 percent of Great Britain’s production, and 0.53 percent of United States output,” he stated.

“We are asking for no aid but only a fair chance to trade,” he said.

John Tung, third of the alliterative industrial Taipans, has been connected with the colony’s metalware industry since 1937. Like Mr. Tang, he was the son of a Chinese industrialist. His father started the I. Feng Enamelling Company in Shanghai shortly after World War I and established a Hong Kong branch in 1937. John, working part-time for his father while he attended the University of Shanghai, left both school and job and founded his own firm, the Freezinhot Bottle Co., to manufacture vacuum flasks. By 1940, he, too, set up a Hong Kong branch. When the Communists expropriated Shanghai industries, he moved to the colony to direct both the I. Feng and Freezinhot branches.

The I. Feng enterprise prospered, and in the familiar Hong Kong pattern, dozens of small operators rushed in to cut some of the pie. By 1956 there were approximately 30 of them in the field and Mr. Tung had to cut back his production. The marginal companies went broke in the glutted market, but I. Feng remained the largest in its line. Mr. Tung proceeded to build the Freezinhot bottles by handling all the manufacturing processes in his own plant, instead of the usual practice of contracting them out, and successfully invaded Japanese markets in Africa, Latin America and Southeast Asia.

Like many other Hong Kong manufacturers, he set up subsidiary companies outside the colony. Bet-hedging is widely practiced among colony entrepreneurs; the economic climate is unpredictable and no one wants to be caught flat-footed. In the colony, Mr. Tung also runs a firebrick works, a marble plant and a trading company, shuttling daily between his various offices.

He takes a coolly realistic view of tomorrow’s prospects, declaring that the market for enamelware and vacuum bottles in underdeveloped countries will drop when hot running water, electric percolators and refrigerators make his products less useful, or the countries develop their own industries to meet the need. He probably would not be offended if his potential competitors subscribed to this pessimistic outlook.

Mr. Tung’s survival in the 1956 enamelware boom illustrates a recurring weakness in the colony’s economy, the perennial, headlong dash to make a fast dollar. The urge is irresistible, with new industries coming over the horizon and eager money lying in wait for them. At the first sniff of profit, the money swarms into the latest bonanza, fresh companies pop up like dandelions and products flood the market. Older firms slash prices repeatedly to meet each competitive assault; presently, the bottom falls out and half the old and new companies disappear in a welter of bad debts. The frantic cycle has swept through the apparel, film, glove, plastic flower, and enamelware industries without losing any of its momentum or lure. It is often and justly deplored, but in Hong Kong it will always be difficult to find an investor panting to turn a slow dollar.

The race for a quick profit careens along at a perilous pace in the colony’s building industry, where the investor in a large apartment or office building may get all his capital back within four years, or go broke in six months. The industry moved ahead at a moderate $25 million-a-year rate until about two years after the post-embargo manufacturing boom began. Then it took off, reaching a new record of $42,000,000 in 1959. In 1960 it shot up to $69,000,000, and held the steep angle of climb into 1961.

It is the building aspect of Hong Kong’s industrial spurt that strikes every visitor at once. A skyscraper bank building and two hotels, of 600 and 1,000 rooms respectively, are going up in the central business district of Hong Kong Island. There is hardly a square block in the main business area where there is not at least one building under construction.

The transformation of the Tsim Sha Tsui section at the tip of Kowloon Peninsula is even more startling. In the 1920s, it was predominantly a quiet house-and-garden neighborhood strung along both sides of Nathan Road, the main north to south street. The Peninsula Hotel opened at the south end of Nathan Road in 1928 to become the new social center of the colony, and its Peninsula Court annex was added in 1957.

During the 1950s, Tsim Sha Tsui slowly became an area of small hotels and luxury shops catering to tourists. An epidemic of building fever swept over it in 1959, and the place will never be the same again. Three huge hotels—the Ambassador, Imperial and Park—opened in 1961 with a total of 1,025 rooms. Two years later, the 800-room President was to join the Kowloon tourist parade. Tall apartment buildings, reaching almost as high as their rents, and an assortment of compact luxury hotels, sprouted through the thick crust of tourists and shoppers. Guests at the top of the newly opened Imperial Hotel looked down on a scene of general devastation at the opposite side of Nathan Road; dozens of old structures being demolished to make way for larger and more expensive ones.

New hotels opening throughout the colony in 1963 will add 3,368 rooms, doubling its tourist capacity. Many of them will show the familiar marks of speculative building—undersized rooms, insufficient elevator service, thin walls and cracked masonry. The best hotels will stay the course, but the merely flashy ones may be pulled through the same wringer as the overly eager, overnight speculators in other industries.

The construction industry, which employs 160,000 people, roughly estimated, was also active in less speculative projects. From 1957 through 1961, it erected more than 200 factories, many of them on reclaimed land. Government construction on water-supply facilities, land reclamation, and resettlement estates ran just over $40,000,000 in 1960-61, and was scheduled to increase considerably in the next fiscal year.

All of the large new hotels in Hong Kong were built to serve a tourist trade which could scarcely have supported three of them in 1940. For well over a century, Hong Kong had about as much tourist appeal as the islands of Langerhans; and in its early days, the English used to sing a derisive song, “You can go to Hong Kong for Me.” In the popular mind, it was associated with such disagreeable phenomena as rainstorms, typhoons, floods, pirates, malaria, bubonic plague, squalor and poisoners. Most of these scourges have disappeared, but it took travelers many years to forget them. People went to Hong Kong only on government or private business or because, being either rich or retired, they had been everywhere else and wanted to add one more odd-sounding place to their itinerary.

Distance alone was a formidable obstacle; by today’s shortest air route, Hong Kong is 10,611 miles from New York and 7,286 miles from London. It was much farther by ship, and it took weeks to get there. Imperial Airways opened the first regular airline service from Europe in 1936, and Pan American World Airways started weekly transpacific flights in 1937. Early flights from New York or London still required a week, more or less, and although faster piston-engined planes gradually pared down the time, it took the introduction of jet airliners in 1958 to cut the longest flights to approximately 24 hours.

The new Kai Tak Airport, whose 8,350-foot runway juts into Kowloon Bay on a strip of reclaimed land, opened on September 12, 1958, six weeks earlier than the first oceanic jet passenger service. Scheduled ocean liners and cruise ships continue to call at Hong Kong, but four-fifths of all tourists arrive by air at Kai Tak. More than 210,000 of them came in 1961, with Americans and residents of the British Commonwealth comprising the two largest groups. Not included in this total are the 132,000 members of the American armed forces who had shore leave in the colony during 1961. For many years they have been the largest group of colony visitors; liberal spenders and generally law-abiding.

After ignoring Hong Kong effortlessly for decades, Americans had their attention drawn to it by a variety of stimulants. Hollywood motion pictures such as Soldier of Fortune, Love Is a Many-Splendored Thing, The World of Suzie Wong, and Ferry to Hong Kong were of varying artistic merit, but they all helped the tourist business. Television, radio and film personalities—Arthur Godfrey, William Holden, Jack Paar, Ed Sullivan, and David Brinkley—presented documentary reports on the colony. There was even a television adventure serial about Hong Kong, but with the exception of a few on-the-spot film clips spliced in for authenticity, it dealt with people, places and customs unknown to any colony resident.

Tourism stands next to the textile industry as a source of foreign exchange and it has created thousands of jobs for hotel and restaurant workers, entertainers, guides and shop clerks. Recognizing its economic value, the colony government set up the Hong Kong Tourist Association a few years ago. The association beams its Lorelei serenade to tourists overseas, but in its own yard, it functions as a watchdog. Its warning yip is brief: Don’t flim-flam the tourists, or you’ll kill a $120 million-a-year industry.

Transportation facilities in and out of the colony are equipped to handle any foreseeable increase in freight or passenger traffic during the next few years. Seventy-six shipping lines sail to 234 ports around the world. Nineteen airlines operate out of Kai Tak, with the four busiest—Cathay Pacific (chiefly regional), British Overseas Airways, Pan American and Japan Air Lines—averaging two or more arrivals and departures every day.

No one has the exact figures on how many people are employed in all the industries of the colony beyond the registered and recorded factories and including every category. But 1,200,000 have some sort of job, whether working at home, in factories, on farms, at sea or for the government. Government employs about 50,000.

There is no minimum wage. Most workers are paid by the day or on a piece-work basis. Normal daily wages of industrial workers are 50 cents to $1.30 for the unskilled, $1.20 to $1.70 for semiskilled, and $1.30 to $3.50 for skilled men. Women get 30 percent less than men. Overtime is at time and a quarter or time and a half, with the latter prevalent. Incentive pay is given for good performance and attendance. Some companies provide free or subsidized food to compensate workers for cost-of-living jumps. A bonus of one month’s wages is paid by many companies just before the Chinese New Year.

As a rule the European firms and a few westernized Chinese firms provide a cost of living allowance on top of the basic wage. Yet in spite of rapid industrial expansion, inflation has been slight; the index rose only 22 points between 1947 and 1961. The eight-hour day and six-day, 48-hour week are observed by most European companies, but some Chinese companies have an 11-hour day. Women and all workers under eighteen are given a second rest day a week by law. Many big companies, especially those dealing in textiles, provide dormitories and free bedding for unmarried workers; some house the families of married workers, and the government encourages this practice by providing land for such quarters at half the market price. A few companies provide recreation rooms and free transportation to and from the job. Workmen’s compensation insurance has been prescribed by law since 1953. Women, as well as children under fourteen years old, may not work between 8 P.M. and 7 A.M.

Hong Kong wages look tiny to an American worker who earns more in an hour than a colony factory hand receives in a day. But the chasm between the two standards of living is not so vast. The Hong Kong worker takes the bus, streetcar or ferryboat for less than two cents a ride; his lunch costs about ten cents, and his month’s rent is under $5.00 if he lives in a resettlement estate, and below $23 a month if he occupies a low-income Housing Authority development unit.

There are 245 labor unions in the colony, but they lack biting power in wage negotiations. Three have more than 10,000 members each: the seamen’s union; the spinning, weaving and dyeing workers; and the motor transport workers. These three, with the unions of the seafarers, workers in Western-type employment, restaurant and cafÉ employees, government workers and teachers, represent 40 percent of all union membership. The unions split into a pro-Communist Federation and a pro-Nationalist Council. The pro-Red unions are strongest among seamen, public utilities, shipyards and textiles; the anti-Reds are most influential in the building trades, food and catering and numerous small industries. Only 25 of the 245 labor unions are free of political leadership. Collective bargaining is generally confined to the transport, printing, and enamelware industries, and to taxi drivers.

Most wages are set by agreement between the worker and his employer; the agreement is verbal and follows no uniform wage-scale. Family connections, references from friends, or the contracting system are used to get jobs. Except in the large shipyards and textile mills, the apprentice system is mostly a matter of observation and imitation. Several private trade schools train boys and girls in various jobs, and Hong Kong Technical College and Hong Kong University teach engineering, commerce and highly advanced technical specialties, with the university giving a full range of professional training. But when all are combined, they fall far short of the demand.

The majority of the colony’s industrial workers impress both employers and outside observers as industrious, purposeful, capable and intelligent. They are unwilling to make bold, independent decisions, some employers complain. On the other hand, they are seldom encouraged to do so.

In the last few years, an increasing number of American businessmen have found the risks and rewards of the colony’s economy well worth their interest. The first American trading concern, Russell & Co., was established there in 1850, but the road was rocky, and Russell, along with several later Yankee traders, faded out of the picture before 1900. About a dozen American companies located agencies in Hong Kong in the early 1900s. Most notable of these was the International Banking Corp., which opened a Hong Kong branch in 1902; after a series of mergers and name changes it became a major branch of the First National City Bank of New York, occupying its own large building in the central financial district.

Except for First National City, Singer Sewing Machine Co., National Cash Register Co. and a few others, most of the American offices were agencies or area representatives until the last decade.

Anker B. Henningsen, a Montana-born businessman of Danish ancestry, came to Hong Kong from China, where his family had been in business since 1913. With his son A. P. Henningsen, he heads a group of companies that distribute Coca-Cola and other soft drinks, export and import women’s wearing apparel, run a quality dress shop called Paquerette, Ltd., and act as agents for a number of American chemical, pharmaceutical and manufacturing companies. They employ 300 people.

The older Henningsen’s father, a Danish immigrant to the United States, had built a prosperous produce business in the Northwest and later supplemented it by shipping eggs from China to the U.S. Eggs came in by the boatload until his competitors sabotaged the business by circulating the canard that the Chinese eggs were hundreds of years old. Mr. Henningsen turned then to Europe for his primary market, but his American produce operations took a beating in the 1919 to 1921 depression. A. B. went out to China in 1923 to start his own ice cream and frozen-drink-on-a-stick business. He had to install refrigeration units in all his retail outlets, working out of a central plant with 3,000 employees. In cold months, he packed and shipped eggs; in summer, he made and sold 125,000 frozen suckers a day. Sticks for the suckers were stamped out of Idaho pine planks, shipped from the U.S. in the form of heavyweight packing crates to avoid lumber duty. It was no small item; the Shanghai plant used 250,000 board feet of Idaho pine a year.

In 1933 he set up a dairy business, imported 500 head of American cattle and a full line of equipment for a modern dairy farm. A few years later, Japanese bombers killed the entire herd. He was president of the American Association and the American Chamber of Commerce in Shanghai when he and 1,500 other Americans were interned by the invading Japanese. As head of the American business community, he was permitted to organize a hospital, school and food facilities for the prisoners. Repatriated to the United States in September, 1943, he operated a dried-egg plant for the Army during the rest of the war. He returned to China after the war, and ran produce and export companies until the Reds began to gain control of the country. Liquidating his interests in China, he came to Hong Kong and organized a soft-drink bottling company in 1948.

He and his son extended branches to Japan, Korea and Taiwan, but closed them down after a time, he said, because he could not find executive personnel capable and willing to run them. He expects Hong Kong to survive and prosper, despite the ever-present threat from Red China.

“Hong Kong is China’s best source of foreign exchange,” Mr. Henningsen says. “If the Reds took it over, the whole economy would collapse, just as it did in Shanghai. The Communists have mismanaged their food supply so badly that their people can’t work. All they get to eat is a small rice ration, a few vegetables, very little fish and no meat at all. If people are underfed, they just die on the vine.”

Robert J. Newton, another native of the American Northwest, has established his own prosperous business in the colony. Born in Salem, Oregon, he worked as a construction engineer in California, Hawaii and the Philippines. He made his first Hong Kong visit in the early 1930s, found it easy to do business with the people there and was deeply impressed by the skill of its workmen. He returned to the colony often in succeeding years.

He had made the building of boats his lifetime hobby, and was frequently praised for the quality of his craftsmanship. But it was not until the 1950s that he began to consider boat construction as a possible business. His two sons, Whitney and John, became his associates, with John heading a distributorship for Bireley’s soft drinks. Whitney became the manager of American Marine, Ltd., the boat-building yard established by his father.

In 1958, the company set up operations in a tin-roofed shed that was not much larger than a two-car garage. The yard site was along the shore of an inlet on Clear Water Peninsula, nearly five miles due east of Kowloon. Well away from other industrial areas, it lay just across Junk Bay from the Chinese Nationalist refugee settlement at Rennie’s Mill Camp.

American Marine, which produces pleasure boats for the American market, outgrew its corporate cradle in a few weeks; its present shed is 500 feet long and 300 feet wide, and will be doubled in area during 1962. The company turns out 40 to 50 yachts a year, selling from $7,000 to $70,000 each. Mr. Newton and his son are the only Americans in the company; all of their 300 workmen are Chinese.

Mr. Newton’s basic assumption was that he could produce a sailboat, modified luxury junk, motor sailer, or power cruiser to the finest design specifications, ship it to the United States as deck cargo on a freighter, and still undersell American boat-builders by a fair margin. The idea appears to be sound. His yard crew is working on 30 boats at a time and expects to raise its annual output to 80 or 100 boats a year when the enlarged shed has been completed.

Wood for his boats comes from many countries—Sitka spruce, for spars, from the American Northwest; teak from Thailand; and other hardwoods from Borneo and mahogany planking from the Philippines. Engines and fittings come from the United States. The largest of his boats to date is a 59-foot motor sailer, and all are built to the specifications of American marine designers and architects such as Sparkman & Stephens, Inc. of New York, and William Lapworth of Los Angeles. It takes six to eight months to finish most boats.

One problem he has, Mr. Newton explains, is training Chinese workmen to use power tools. Ten years ago power equipment was a great rarity in the colony; now American Marine has 50 electric drills, planers, bandsaws and a bolt-threader. Some of his workmen had never seen a power tool before they were trained to use them at the boatyard. Whitney Newton’s ability to speak Cantonese is helpful, but the instructor has to proceed with the utmost caution in introducing a greenhorn to a bandsaw.

American Marine builds a few modified junks, using American equipment and finishing them like yachts. The three masts of the typical Chinese junk are retained, but the rigging is simplified and the usual ponderous rudder is greatly reduced in size. They sell for $10,000 or more. The Newtons built one for Don the Beachcomber, Hollywood restaurant owner. Americans are often infatuated with the romantic outline of a large working junk, but they would soon go aground trying to handle its complicated sails.

American Marine follows the Chinese practice of paying one month’s bonus to its workers at the New Year. Trucks carry the men to and from work. A barracks and mess hall accommodate those who live at the yard. The hamlet of Hang Hau, half-destroyed by fire years ago and still in ruins, was American Marine’s only neighbor in 1958. Now there is a mill for cold-rolled steel and a ship-breaking shop, with the light-colored buildings of Haven of Hope Sanatorium arrayed along the hills of the opposite shore.

Mandarin Textiles, Ltd., best known in the United States for its Dynasty line of high-styled women’s apparel, is also directed by an American, Linden E. Johnson. Mr. Johnson, who served with the U.S. armed forces in China during World War II, stayed on to become a Shanghai textile executive. When the Reds drove him out of China, he came to Hong Kong and founded Mandarin with a Chinese partner who was murdered by a fellow-Chinese in 1957. Mr. Johnson kept the business going, completed an eight-story plant in Kowloon, near Kai Tak, in 1958, and expanded it into one of the colony’s finest tailoring and designing houses.

Mandarin, which makes the Empire line in cottons in addition to the Dynasty silks and brocades, employs up to 1,300 workers. It provides a recreation room, catered meals and classes in English for its work force. Most of its permanent staff are highly skilled people, like the young sewing-machine operator who stitches intricate rose and tea-leaf designs on quilted fabrics at high speed, working from memory with unerring accuracy. The cutters, tailors, and pressers are advanced craftsmen, trained by long apprenticeship.

Mandarin introduces about fifteen new silk and brocade patterns each year, originated by its own designer, Doris Saunders, with such names as Cherry Blossom, Ivory Blue, Sing Song and Garland. Its stockroom carries nearly 500 patterns, including as many as eight different color variations on a single pattern. Wives of visiting VIPs often tend to go haywire when exposed to this exciting inventory, and have had to be led or dragged away from the shelves. Most of the brocades are woven by the Fou Wah mills in Tsuen Wan. Finished garments are packed in waterproof paper and special shipping boxes and sent to the U.S. by air express or sea freight.

Mandarin keeps its finger on the high-fashion pulse through its Dynasty Salon in the colony’s Hotel Peninsula, but it also cagily remains in touch with a wider and less sophisticated market by noting what the American sailors buy at its servicemen’s outlet in Wanchai, where the fleet comes in.

Textiles have become the largest single factor in the colony’s economy. Textile exports totaled $273.5 million in 1960, or 55 percent of the colony’s entire domestic exports. In 1961, textiles constituted 52 percent of all exports. The industry employs 42 percent of all the workers in registered and recorded industries. It has a capacity of 614,000 spindles and 18,700 looms.

All this is cause for rejoicing in Hong Kong textile circles, but to textile producers in England, the United States and Canada, it is a problem that becomes greater all the time. The United States absorbed 31 percent of the colony’s textile exports in 1960, and the British Isles were a close second with 26 percent. Textile exports to the United States took a sharp drop in 1961, while those to the British Isles showed only a slight decline.

There was much concern among Lancashire mill-owners when Hong Kong cottons began to hit the English market. American textile producers and textile union leaders joined in a protest that was echoed with lesser volume by the Canadian textile industry. In all three countries, textile men declared that if they had to compete with Hong Kong’s low wage-scales, they would be driven to the wall.

American textile producers have their own special complaints against the Hong Kong industry. They point out that because of the existing price differential, Hong Kong can buy U.S. cotton at 8½ cents less per pound than American mills can, and that the colony has been stocking up heavily on it. In 1960, Hong Kong imported 55 percent of its raw cotton from the United States. The U.S. textile men say that while Japan’s textile exports have been held down by a five-year quota limitation, Hong Kong has rushed in to sell America the items that Japan agreed not to sell.

The demand for restrictions on colony textile exports to the United States began in 1958. United States officials visited the colony in 1959 with a proposal for a voluntary cut in the exports. The Hong Kong garment manufacturers proposed a three-year quota arrangement, starting in July, 1960, to hold exports to the 1959 level, plus 15 percent on cotton blouses and blouse sets, shorts and trousers, sport shirts, brassieres and pajamas. American textile producers immediately rejected the proposal as far too generous to Hong Kong competitors.

During the negotiations, American importers placed huge orders with Hong Kong to get in ahead of the threatened limitations. When the agreement blew up, they found an interesting variety of reasons why they couldn’t accept most of what they had ordered, such as late deliveries, and unsatisfactory quality. Exports to the U.S. dropped and the decline persisted into 1961.

In May, 1961, President Kennedy proposed an international textile conference to work out some agreeable way to control textile exports. The United States then suggested that Hong Kong cut its textile exports at least 30 percent below the levels of 1960. But the word “quota” had assumed a fearsome aspect in Hong Kong because of a textile agreement involving the colony, England, India and Pakistan. Hong Kong had agreed to limit its exports to the British Isles, provided that Pakistan and India would do the same. In 1961, the Hong Kong industry began to suspect that India and Pakistan might jump the traces, leaving the colony interests holding the bag.

A large section of the Hong Kong press is rabidly pro-textile industry, and every American move toward textile controls is headlined as a thrust at the heart of the colony’s principal industry. Communist papers shoved their way into the act by crying that American restrictions would starve the refugee workers who left the People’s Republic of China to escape that very fate.

After the July 1961 International Textile Conference at Geneva, the Hong Kong government, following long bilateral discussions with the U.S., agreed to limit its exports according to the Geneva Textile Agreement, with July 1960-June 1961 as the base year, and dividing the affected export items into 64 different categories. Starting date of the agreement was October 1, 1961.

Meanwhile, the United States Tariff Commission began to study the 8½-cents-a-pound cotton export differential at the direction of President Kennedy. Genuinely alarmed, Hong Kong business groups hired Dean Acheson, lawyer and former American Secretary of State, to represent them before the Commission and help to retain the price differential.

The textile volcano erupted again in March, 1962, when the colony government, acting under the one-year agreement that went into effect the previous October, banned eight categories of textile exports to the United States. The Hong Kong Tiger Standard, clamorous advocate of the textile interests, excoriated the move as a prelude to economic ruin. Pandemonium ran through the industry. The government ban was lifted almost immediately. Prospects of a peaceful solution seemed as poor as ever.

On September 6, 1962, the U.S. Tariff Commission voted to retain the 8½-cent export differential and rejected a proposal to raise the duty on cotton imports. This action coaxed the Hong Kong manufacturers out of their sulks, but it sent the American textile-makers into a fresh tantrum.

Hong Kong’s motion picture industry is one of the world’s most prolific, and least-known, producers of feature films. More than 300 feature-length pictures were made in 1961 by its six major studios and scores of independent producers who rented working space from the big studios. All were in Cantonese or Mandarin, aimed at the Overseas Chinese market in Taiwan, the Philippines, Southeast Asia and elsewhere. Mandarin features are generally based on heroic or historical themes, with rich costuming and elaborate sets; each one takes 35 to 40 days of shooting and costs around $40,000. A few Mandarin films have contemporary stories. Cantonese films, usually drawing on time-tested plots from Cantonese opera, can be run off in 10 or 15 days for less than $20,000 and are more popular than Mandarin with the Hong Kong fans.

As might be guessed from their shooting schedule, many of these quickies are rubbish. But the quality of the Mandarin films has improved, and a few super-productions costing as much as $175,000 are made every year. Hong Kong films have won top honors at the East Asian Film Festival for the last four years.

The Shaw Brothers, Run Run Shaw and Run Me Shaw, bill themselves with typical cinematic restraint as The Greatest Purveyors of Entertainment in the Far East, and are the kings of the local industry. Late in 1961 they moved their Hong Kong organization into a modern and elaborate studio at Clearwater Bay in the New Territories. Its four sound stages were to be increased to six within a few months, and its employed force numbered several hundred, plus an equal number of low-paid extras.

Lin Dai, twenty-six-year-old beauty and box-office queen of the Shaw Brothers studio, took the 1961 best-actress Golden Harvest Award. As the highest-paid star, she earned $42,000 annually on a three-picture-a-year contract. A singer, actress and dancer, she is stunning by any standards, East or West, and the studio plans to release some of her best films in the American art-theater circuit. Thus far, their American audience has been restricted to Chinese-American viewers.

The Shaws, who also own studios in Malaya and a chain of 120 theaters in Southeast Asia, began operations in Hong Kong three years after Grandview Film Co. founded the local industry in 1933. After a slow start, the industry boomed in the early 1950s, overexpanded and crashed, leaving only four companies in the field by 1956. Pro-Nationalist studios such as Shaw Brothers have no market in Red China, but there are a number of Hong Kong film-makers who have a pro-Communist slant. Shaw’s new studio can produce wide-screen pictures, overcoming one of the handicaps that has limited the growth of the industry in the colony. Generally speaking, there is still plenty of room for technical and artistic improvement.

The 1961 Hong Kong census reported a total of 337,000 women in all the employed forces, yet women have played a disproportionately small part in the direction of industry and public affairs until the last twenty years or so. It is not surprising that Chinese women were excluded from public life, since they had few rights outside their homes until the establishment of the Chinese Republic in 1911. But British women, presumably well-educated and qualified to take executive responsibilities, found few opportunities to do so. The fact that Queen Victoria ruled the colony for the first sixty years of its existence should have helped, but it didn’t. What influence women had was unseen, and was exerted through their husbands or other men.

Even today there is not one woman in the top echelon of Hong Kong government, although women constitute about one-twelfth of the government’s Class I and II administrative staff officers (more than a third of these women are Chinese).

In nongovernmental posts, there are about ten women conducting their own retail shops, chiefly in fashions, jewelry and objets d’art. Rosalind Henwood, an American, heads an air freight forwarding business.

There are about a dozen women of prominence in writing, advertising and publicity. Two of them, Mrs. Beatrice M. Church and Miss Elma Kelly, direct their own advertising and publicity agencies. Mrs. Church, a former Far Eastern correspondent for the London Daily Mail, survived Japanese air attacks and ship-sinkings during World War II, served in the SWANS, a women’s service affiliated with the British Navy, and returned to Hong Kong to reestablish the pioneering advertising and publicity firm she had founded with her husband, Captain Charles Church. Captain Church, his health shattered by Japanese tortures during imprisonment at Singapore, died of the effects of his injuries in 1950. Mrs. Church assumed sole control of the business, the Advertising and Publicity Bureau, and has successfully operated it since then. Miss Kelly, a native of Melbourne, Australia, began her career as an analytical chemist. She also was a Japanese war prisoner before setting up her own agency, Cathay, Ltd., in Hong Kong.

There are about 20 women executives and administrators in private or semipublic health and welfare agencies. Women staff officers in government health and welfare work number approximately 150—by far the largest group of women in civil-service staff posts. The colony has a small number of women doctors, educators and lawyers, plus one architect, but most women professionals in these fields are government officers.

Women employed in art or cultural activities total about fifteen, including several Chinese movie actresses. Miss Aileen Woods, a colony resident for nearly forty years, is widely known for her Down Memory Lane program over Radio Hong Kong, which she conducted from 1947 to 1954. A Japanese prisoner in Hong Kong during the war, she subsisted on a semistarvation diet of rice, fish and boiled sweet-potato leaves; her weight fell to 81 pounds and many of her fellow prisoners died. Miss Woods, now seventy-five years old and in excellent health, was honored by a personal visit from Princess Alexandra of Kent during the Princess’s tour of Hong Kong in November, 1961. She was awarded the Coronation Medal in 1953, and the Member of the British Empire in 1958. She still does occasional programs for Radio Hong Kong, a government agency, and is regarded as the unofficial dean of the colony’s working women, having begun her career as a world-touring featured dancer in the Ziegfeld Follies and other shows more than fifty years ago.

In private business and professional activities, as in government staff positions, about one-third of the colony’s career women are Chinese, and both groups of women have achieved much greater prestige and success than any previous generation of the colony’s women. Among the Tanka fishing people of Hong Kong, women own most of the fishing junks. On Po Toi, a small island southeast of Hong Kong Island, a Chinese woman, who died in 1957, held the rank of village elder; as such, she was the arbiter of all local disputes, having an authority rarely given to women. Many women in the colony hope that the lady from Po Toi will become a trend-setter instead of a legend.

What are the prospects for Hong Kong industry and trade? Among the many persons who have weighed these prospects are three of the most influential men in the commercial life of the colony: Hugh Barton, chairman and managing director of Jardine, Matheson & Co.; Sir Michael Turner, chairman, general manager and a director of the Hongkong & Shanghai Banking Corp.; and John L. Marden, chairman of Wheelock, Marden & Co. A listing of their combined directorships would fill two closely printed pages, and it would be only a mild exaggeration to say that they and the companies they head are in everything of a business nature in the colony. Each man also holds an important position in the colony government; Sir Michael as an unofficial member of the Executive Council, Mr. Barton as an unofficial member of the Legislative Council, and Mr. Marden with unofficial membership in the Urban Council.

Mr. Barton heads one of the oldest and most respected business houses in Hong Kong, with financial or operational control of companies in such diverse lines as real estate, shipping, wharves, warehousing, insurance, utilities, textiles, transport, engineering, airlines and trading. Jardine’s, as it is commonly called, was deeply engaged in the opium trade during the colony’s early years, but has long since turned to other interests.

One of its recent investments, the Jardine Dyeing & Finishing Co., was established two years ago and now produces two million yards of high-quality cloth per month.

Barton believes that if the United States drops the 8½-cents-a-pound cotton export differential, most of the cloth produced in Hong Kong will not be able to compete in the world market. Of the 500 million yards of cloth produced annually by Hong Kong, a relatively small amount is exported to the United States.

However, Barton feels, removal of the 8½-cent differential would cripple the local industry’s efforts to produce its cloth cheaply enough to compete in the markets of Southeast Asia and elsewhere.

“Many people urge the textile industry to accept tight controls of its exports, or they want our textile producers to diversify by going into new industries,” he says. “But the imposition of such controls doesn’t fit the character of Hong Kong, which has prospered because it is a free port with a minimum of controls.

“Of course it is easy to advise diversification, but what about the Shanghai textile industrialists who spent a lifetime becoming experts in the business? The Hong Kong textile industry is built on that knowledge, and it can’t be reconverted to some other industry overnight,” Barton states.

He feels that some degree of diversification is certainly desirable, but that Hong Kong cannot afford to drop its textile industry.

“There is a fresh Indonesian market for low-grade textiles produced here,” he says. “And there are many good markets for Hong Kong’s made-up cloth.”

He points out that local industry in many lines was hit by a 1961 substantial rise in shipping costs and port charges. In turn, the shipping industry has taken a loss from the invasion of the dry-cargo field by the super-tankers originally built to ship oil. Freighters, tramp steamers, and ocean liners have all experienced a drop-off in profits because of this invasion, he declares. Many new nations, partly influenced by national pride and prestige, have launched their own shipping lines, further crowding and depressing the profit margins of existing lines.

“Industrial production and tourism are our two lungs,” Barton says of Hong Kong’s economy. “We not only have to maintain our present employment levels; we must also find jobs for thousands and thousands of young people in the next few years.”

He cites one of the major discoveries of the 1961 census—that 40.8 percent of the total population of Hong Kong is under fifteen years of age—as evidence of the coming demand for new jobs.

Accustomed to economic upheavals, Jardine’s has adapted itself to changed conditions by investing in growth industries, and by developing new industrial sites at Tsuen Wan, Kwun Tong and West Point. It is selling some of its land holdings to finance a six-year modernization of the wharf operations of the Hongkong and Kowloon Wharf & Godown Co. Its new international ship terminal in Kowloon, costing $7 to $8 million, will include a pier 1,200 feet long, and will have car parks, shopping areas and a bowling alley.

Sir Michael Turner, head of the Hongkong & Shanghai Bank, emphasizes that local industries, confronted with restrictions in their export markets, must seek new markets for their output.

“Our land and labor costs are rising,” Sir Michael says. “But we must be able to compete with Japan, Formosa, and ultimately, Red China. Red China can ignore costs and flood our markets, as they did previously in shoes and textiles.”

Sir Michael has a limited faith in the doctrine that the colony’s market problems can be solved by diversification of its industries.

“Even diversification means that we’ll encounter resistance in the new lines we enter.” He believes that the colony’s industries must maintain quality and raise it where possible, rather than lowering standards to compete with inferior products.

He says that Hong Kong has attracted investment capital from all over Southeast Asia because of its exceptional political stability, and because local industry was not disrupted by union work-stoppages. He cites the traditional Chinese dislike of regulation and regimentation as a factor inhibiting the expansion of union power.

“The shortage of land and water is still our greatest limitation,” Sir Michael says. “Land development is very costly, and although the builder of an apartment house may recover his costs in one year, that is not possible in the construction of factories.”

He notes that the colony has a serious problem of “under-employment,” rather than unemployment. He adds that the colony’s predominantly young population would necessitate a sharp increase in government spending for schools and hospitals. Like Mr. Barton, he recognizes that thousands of additional jobs must be ready for young people when they begin moving into the employment market.

He regards the preservation of Imperial Preference as vital to the colony in meeting Japanese competition, but he believes that Hong Kong will not be injured by the European Common Market if the colony’s economic needs are recognized in the agreement.

Although the Hongkong & Shanghai Bank is commonly viewed as the incarnation of everything British, its founders included an American, two Parsees, two Germans and an Ottoman Jew. For many years it has been a leader in employing and training Portuguese office workers, accepting them on individual merit instead of drawing a rigidly British line. The bank celebrates its centennial in 1964.

John L. Marden is the chief executive of a company which dates from 1933 under its present title, but has corporate origins going back to the opening of the China trade. The Wheelock Marden companies have interests in shipping, shipbuilding, textiles, finance, aviation, land, insurance, merchandising and many other lines.

Among Hong Kong’s industrial assets, Mr. Marden lists its freedom from controls, its political stability, its low income tax on individuals and corporations and its resistance to inflation.

It is his conviction that Hong Kong industry should concentrate on quality products, and those which require a high labor content. He cites transistor radios of the less complicated type as an example of the colony’s high-labor products.

“I think we should emphasize that there is something more at stake than profits,” Marden says. “The colony is seeking to create 300,000 new jobs for the young people who will be coming on the job market soon; if we can do this without appealing for outside aid, then we’ve made a contribution to the economy of the entire free world.”

In the past, he believes, colony industries just took orders as they came. Now, in his opinion, the industries must develop their own marketing facilities to discover what products are needed, and then work to meet these needs. He feels that there must be greater diversification if Hong Kong is to hold its place in the industrial world.

These three men, like practically every leader in its industrial and political community, are acutely conscious of the many hazards that Hong Kong faces.

And not one of them acts or speaks as though he were not solidly confident that Hong Kong will overcome its handicaps and external dangers and go on to greater prosperity.