Hong Kong

So spoke the chairman of the Chinese Communist Party at a time when all the winds seemed to be blowing his way.For eight years the People’s Republic of China had performed with the disciplined enthusiasm of a collegiate cheering section, expanding its industrial capacity at a prodigious rate and disseminating its political influence throughout Asia.Soviet Russia had given complete ideological support and technical assistance to its junior partner in world Communism.

Since then, the winds have shifted to a new quarter.The Great Leap Forward that began in 1958 has struck a dead calm.Backyard factories and foundries have failed to attain either the standards or quantity of production anticipated, but they succeeded for a time in clogging the country’s transportation system and in interfering with the distribution of food and other consumer goods.The same confused planning that turned the emphasis from large-scale industrial production to backyard factories also transformed the traditional small Chinese farm and the medium-sized collective farm into titanic agricultural communes.By a combination of mismanagement and adverse growing conditions, the communes have brought about the worst food shortage in China’s recent history.

In the summer of 1961, the prevailing winds from Moscow turned unseasonably icy as an ideological split developed between Russia and China.No one outside the Communist partnership could assess the full significance of the break, but it offered very little prospect of increased Soviet assistance to Communist China.

Every change in the political winds of mainland China creates an eddy in Hong Kong.In the eight years when Red China was swept along by the momentum of its revolutionary spirit, the colony was beset by a succession of incidents.British ships and planes became the target for Chinese Communist guns.Long after the mainland fell under the unchallenged domination of the Reds, the grim warfare between Communists and Nationalists continued in the streets of Hong Kong.

Whether by coincidence or direct cause, the second year of the Great Leap Forward brought an unexpected lull in the Communist harassment of the colony.Left-wing agitation in the schools and trade unions persisted, but colony officials noticed that Communist sympathizers, once so avid for violent strikes and street demonstrations, seemed to have lost their appetite for both. The assumption was that Peking had told them they could expect no further support from that source. At the same time, shooting incidents and border clashes virtually ceased.

There was no disposition in the colony to regard this undeclared armistice as a bid for reconciliation.The news that the Great Leap had made its first big stumble was already in circulation, and the colony administration, quite unofficially, reached its own conclusion; Communist China was temporarily too busy mopping up its own mess to indulge its normal passion for badgering Hong Kong.When China’s house had restored order, its Communist leadership would be right back at the colony’s throat.

Hong Kong’s colonial administration has never deluded itself with the belief that it could survive a massive assault by Red China.In population and the size of its armed forces, Hong Kong is outnumbered by approximately 200 to 1.Against Japan in 1941, Hong Kong’s resistance lasted less than three weeks; against Red China, it might last about half as long.

But there are certain restraining factors unreflected in the comparative strength of the opposing land forces.The most tangible of these are the ships of the British and United States navies, continually riding at anchor in Hong Kong harbor or cruising in the surrounding seas.Aircraft carriers, submarines, cruisers and destroyers equipped with planes and missiles tend to put the brakes on impulsive acts of aggression by an inferior naval power.

A Communist grab for Hong Kong would almost inevitably involve Red China in a major war.Great Britain has shown no disposition to surrender this profitable possession without a fight, and although the United States has made no specific pledge to defend the colony, it is not likely to let the Chinese Communists snatch it from her principal ally.

Red China’s instinctive belligerence may be tempered by the fate of its first outright aggression, which did not keep the United Nations out of Korea, but did a great deal to keep Red China out of the United Nations for years thereafter.

Aided in part by these considerations, Hong Kong has sat since 1949 on the doorstep of a country dedicated to its destruction.In the late 1940s, it was felt that a substantial cut in the colony’s trade with China would ruin the British enclave by purely peaceful methods.Most of the trade has been lost since then, but Hong Kong has perversely grown more prosperous than ever before.

The overriding reason why Hong Kong continues to thrive in the shadow of its hostile neighbor is economic.Ideologies apart, they need each other.

Despite the drop in their total trade, Hong Kong remains Red China’s chief non-Communist trading partner.In recent years it has become a lop-sided arrangement, with the Chinese Communists shipping ten times more goods to the colony than they purchase from her.Yet the imbalance appears to suit the purposes of both sides.

Hong Kong, which cannot produce enough food to sustain its population for more than a few months of the year, has imported an average of $200,000,000 worth of goods from Red China in each of the last three years, and food represents more than a third of the total.In the same years, Red China imported about $20,000,000 annually from the colony.Thus the Reds earned a favorable trade balance of $180,000,000 a year, giving them the foreign exchange they need as critically as Hong Kong needs food.

It may be wondered why the Chinese Communists, with three successive crop failures, are willing to export any of their food.But they must earn foreign exchange to pay for grain, flour, powdered milk and sugar to save themselves from starvation, and their food purchases in the world market during 1960 and 1961 ran up a bill of $360,000,000.

The whole pattern of mainland-colony trade has been reversed since 1950.In that year, their trade came to $406,000,000, or about a third of Hong Kong’s total world trade of $1,314,000,000.By 1960, the total colony-mainland trade had skidded to $228,000,000 and represented only one-seventh of the colony’s world trade volume of $1,716,000,000.

In 1950, Hong Kong exported $255,000,000 to Red China, but imported only $151,000,000 from her.The crown colony still serves as a major transshipment port for China’s trade with other countries, but her importance as an exporter and re-exporter from other countries to China was painfully diminished by United Nations and United States embargoes during the Korean war.

The pinch of those embargoes was so tight that it looked for a while as if Hong Kong, which had prospered on its Chinese export trade for 110 years, would wither from the loss of it.To the amazement of its economic obituary writers, the colony side-stepped its assigned grave by developing its own industries.Within a few years, Hong Kong became bigger as a manufacturer than it had ever been as a trader.

Red China’s benefits from the existing trade with Hong Kong go further than the earning of foreign exchange from a favorable trading balance.She also trades profitably in human misery.The Chinese refugees who fled to Hong Kong are the prime victims of this merciless squeeze.

No matter how intensely the refugees dislike the Communist regime on the mainland, they have not severed their ties with friends and relatives in China. They are the first to know of economic reverses and crop failure inside China because the news is brought to them by travelers crossing the colony border. It is a story repeated by almost every new refugee who escapes from the homeland to Macao or Hong Kong.

The effect on the Chinese in Hong Kong is irresistible; by every tradition of family loyalty they are compelled to help their starving kinsmen in China.In obedience to this obligation, the Hong Kong Chinese sent 13,000,000 two-pound packets of food and other household needs through the colony’s post office in 1961 to friends and relatives across the border.

The squeeze takes the form of customs duties which often exceed the value of the goods shipped.If the sender mails his parcel from a Hong Kong post office, the receiver in China pays the duty when it arrives.But the duty can be any amount the Red Chinese officials choose to assign, and many recipients refuse the parcels because they cannot pay for them.If a parcel agent handles the shipment, sending it through the Chinese post offices across the frontier or through his own agents inside China, the Hong Kong sender has to pay all the duties in colony currency before it starts on its way.

One Chinese resident who came to the colony in 1962 told The South China Morning Post, a Hong Kong English-language daily, that the Red Chinese government was taking in about $53,000 a day on these parcel duties, with the peak of the loot coming at Chinese New Year, when presents are shipped home in the greatest numbers.A vast percentage of the parcel-senders were poor people, and each parcel cost them anywhere from a day’s to a week’s wages, or more.

The external harmony which has prevailed between the colony and the mainland since 1959 offers a glaring contrast to the discord that preceded it. Ever since 1949, the Reds have been taking angry swipes at the colony, a game in which their worst enemies, the Chinese Nationalists, frequently joined.

In the year that the Reds gained control of the mainland, trade relations and communications between China and Hong Kong were broken off.The Kowloon-Canton Railway suspended transborder operations and Communist guerrilla forces lined up threateningly along the frontier.

While the Communists pressed the colony from the north, the Nationalists launched a blockade of all ports along the Chinese coast.Caught between the opposing forces, the colony banned political societies with outside allegiance and bolstered its own defenses.Additional lands and buildings were requisitioned for military use and 900 volunteer soldiers were added to its garrison.

Great Britain sought to relieve the existing tension by recognizing Red China on February 6, 1950, but there was no exchange of diplomatic representatives.Swelling tides of Chinese refugees continued to pour across the frontier and the colony instituted its first immigration controls in May, 1950.

The initial breach in Hong Kong’s policy of cautious neutrality came on June 5, 1950, when two Nationalist warships, enforcing their own blockade against the Reds, attacked the 800-ton British merchant vessel Cheung HingThis dreadnought, steaming along with a cargo of fertilizer from Amoy, was raked with Nationalist shells which killed six of her passengers and wounded six others.

Early in August, 1950, the Reds produced their own series of incidents. Communist gunboats fired on three British ships just outside Hong Kong territorial waters and an armed Red junk bombarded the American freighter Steel RoverThe day after the Rover incident, a Communist shore battery on Ling Ting Island, a few miles outside the southern limit of Hong Kong waters, directed its cannon and machine guns against the British freighter Hangsang, wounding two British officers. Communist forts in the same area fired on the Norwegian freighter Pleasantville on August 6, but no hits were scored.

The shootings were collectively interpreted as a Red warning to keep all Allied shipping away from her installations on Ling Ting and the nearby Lema and Ladrone islands. On August 17, the British destroyer Concord replied to the warning by exchanging a half-hour of shellfire with the Communist forts.

None of these incidents was as disruptive as the Communist agitation inside the colony.Here the core of the trouble arose from the Hong Kong Federation of Trade Unions, or FTU, an openly pro-Red group with more than sixty member unions whose power was concentrated in shipyards, textile mills and public utilities.The FTU succeeded in fomenting a streetcar strike in 1949.With zealous devotion to the party line, the FTU unions shoved themselves into every labor dispute they could penetrate.They also displayed a touching concern for the unhappy living conditions of the refugees, undeterred by the fact that most of the refugees obviously preferred them to conditions in Communist China.

A flash fire in a refugee settlement on November 21, 1951, drove 10,000 persons from their shacks and enabled Red China to rush in with the offer to send a relief mission.The Communist angels of mercy were to be met at the Hong Kong terminus of the Kowloon-Canton Railway by a banner-waving group of left-wing welcomers.They failed to show up, and a riot broke out in which there was one fatality and thirty injuries before police brought it under control.

The left-wing unions trumpeted their public concern for the refugees by a number of street demonstrations which police barely managed to keep from exploding into new riots.Wearying of the skirmishes, Police Commissioner Duncan MacIntosh tried a new tack.With the consent of Governor Alexander Grantham, he offered to satisfy the strident Communist demands to improve the refugees’ lot by paying full transportation costs and expenses of ten Hong Kong dollars to every person who wanted to return to any part of Red China.The only acceptance came from an old man who wanted to be buried with his ancestors in Northern China.

The sea-lane incidents resumed on September 25, 1952, when a Communist gunboat halted the Macao ferry with a burst of warning shots, searched the ship and removed a Chinese passenger.In the same year, there were two other Communist and three Nationalist attacks on British ships.

A Communist warship came upon a Royal Naval launch in the Pearl River estuary on September 10, 1953, riddled it with shells and killed six men, wounding five others. A stiff British protest was delivered to Peking without bringing either an apology or compensation. The Nationalists kept up their end of the harassment in that month with one of their warships firing on the British destroyer St.Bride’s Bay off the China coast.

Each of these incidents stirred the British government to send protests to Peking or Taipeh, but they usually elicited only transient interest outside the countries directly involved.

The Chinese Communists’ capture of two American newsmen and an American merchant-marine captain on March 21, 1953, brought the United States government into the long succession of Hong Kong incidents.The reaction was quick and angry, for the Reds had subjected the United States to an unceasing campaign of vilification and had already imprisoned more than thirty American civilians in China. The Dixon-Applegate case came as a kind of climactic tail-twister.

Richard Applegate, National Broadcasting Company correspondent in Hong Kong, and Donald Dixon, International News Service correspondent in Korea, were sailing five miles west of Lantau Island on Applegate’s 42-foot sailboat, the Kert, when they were stopped by a Chinese gunboat manned by Chinese soldiers.The newsmen, accompanied by merchant marine Captain Benjamin Krasner, his Chinese fiancée and two Chinese sailors, were in international waters, bound for Macao on a pleasure cruise.Protests that they were violating no law had no effect on the Reds, who accused them of straying into Chinese waters.

The Kert and its six passengers were towed to the Communist base at Lap Sap Mei, transferred to Canton and held prisoners until September 15, 1954. The United States protested vehemently to Peking, and Great Britain joined in demands that the group be set free. Harry J. Anslinger, United States Commissioner of Narcotics, had a private revelation which he duly reported to the United Nations: The Kert had been captured by Chinese narcotics smugglers, led by Lu Wang-tse, a notorious woman pirate! Nothing more was heard of the lady known as Lu—Applegate said after his release that he could not imagine how the preposterous tale had originated, but the Red Chinese let many months pass before they admitted the capture.

When the three Americans were finally released, they had suffered physically from a skimpy diet of practically inedible food.Captain Krasner’s fiancée, and one of the crewmen, a British subject living in Hong Kong, were subsequently allowed to leave China, but the other Chinese crewman remained a prisoner.

The international repercussions of the Dixon-Applegate affair were intensified by a fresh provocation which called ships and planes of the United States, Britain and France into emergency action.This was the callous and apparently senseless shooting down of a British-owned Cathay Pacific Airways C-54 Skymaster on July 23, 1954, with the loss of ten lives, by three Red Chinese LA-9 Lavochkin piston-engined fighter planes.

The Skymaster, carrying twelve passengers and a crew of six, took off from the Bangkok airport at 8:28 P.M., heading northeast in bright moonlight over Thailand and Indochina for the 1,071-mile flight to Hong Kong.The passenger load was light, so most people occupied window seats.The sun rose soon after the plane flew out over the South China Sea.Cape Bastion, the southeastern tip of Hainan Island, a Communist possession about the size of Denmark, became visible 50 miles away.Below, a brisk southwest wind whipped the sea into whitecaps.

Co-Pilot Cedric Carlton suggested a time-saving route nearer to Hainan, but Captain Phillip Blown decided to hold his present course, keeping far away from Hainan to avoid another of the Red charges that their twelve-mile limit was being violated by non-Communist flyers. At 8:45 A.M., Carlton looked out a starboard window and shouted to Captain Blown that two cream-colored fighter planes with Red Chinese markings were coming up fast from the rear on his side.Captain Blown put the plane on automatic pilot, took a quick look back through the port window and saw a third fighter zeroing in on his side of the tail.

“Without any warning, they opened up with machine-gun and cannon fire,” Captain Blown later wrote in his report. “The noise and the shambles from their guns was terrific. It was obviously a premeditated attack.”

The hail of bullets from short range immediately set fire to the Skymaster’s left outboard engine, and the No.4 engine on the far right.Flames burst from the auxiliary and main fuel tanks beside the No.4 engine at almost the same moment.

Captain Blown, flying at 9,000 feet, instantly went into a dive.He turned sharply left and right as he descended, trying to shake the pursuing fighters, and headed for the sea at 300 miles an hour.He was fighting to get out of the line of fire long enough to dump his gas and check the flames that were eating away a broad section of the skin on his right wing.

The guns of the LA-9s kept up their clatter on his tail and bullets tore through the plane cabin, splintering the interior and killing several passengers.Bullets whizzed past the two pilots and smashed the boost pressure and fuel-flow gauges.At 5,000 feet, the rudder controls snapped; at 3,000, the right aileron control was shot off.The No.4 engine was feathered, but its extinguisher failed to stifle the raging flames.

The Skymaster began to stall groggily toward the right, but Captain Blown checked it by throttling back his two left-wing engines and pouring full power on No.3, the only operative engine on the right side.The ship’s speed dropped to 160 miles an hour, and the right wing began to dip.

With the small degree of control remaining, Captain Blown plunged the Skymaster through the shoulder of a 15-foot wave as the right wing and No.4 engine snapped off, then slammed into the middle of the next wave.The solid impact of the water caved in the cockpit windows.The tail broke off, up-ended in unison with the fuselage and headed for the sea bottom.Less than two minutes elapsed between the attack and the ditching.

Thirty seconds after hitting the water, the fuselage sank out of sight.Two of the Red fighters executed a U-turn around the wreckage before heading back to their base at Sanya, on the southern end of Hainan Island.Few of the victims had time to put on life jackets.When the cabin went down, only those washed clear of it had a chance to survive.

The eight survivors clambered or were dragged aboard the twenty-man inflated rubber raft.Captain Blown spread a weather awning over the raft and warned all passengers to keep out of sight under it in case of another attack.

Steve Wong, the Chinese radio operator, had died in the wreck.Captain Blown remembered seeing him talk into the mike all during the dive toward the sea and sending a final message, “Losing altitude, engine on fire.”The message was heard at Kai Tak Airport in Hong Kong and rescue operations started immediately.

Two hours later, rescue planes began to circle over the raft—Hornets, a Sunderland, Valetta, York and a French B-24, but none could land on the water.A pair of U.S.Air Force SA-16 Grumman Albatrosses were dispatched from Sangley Point in the Philippines.One of the big amphibians landed in sheltered water on the lee side of Tinhosa Island and taxied out to the raft in a perilously rough sea.

The rescuers were guided to the spot by smoke flares dropped by the French B-24.Dozens of Chinese junks wallowed and rocked on the waves at some distance from the raft, making no attempt to interfere as American fighter planes flew cover over the raft.The survivors had been on the raft for seven hours before being rescued.

Besides the three fatalities among the crew—Stewardess Rose Chen, Steve Wong and Flight Engineer G.W.Cattanach—there were seven passenger deaths, including a tea merchant, a Hong Kong University student, an American exporter and his two sons, and the owner of a Hong Kong curio shop.Captain Blown, who continued as a Cathay Pacific Airways pilot for many years, received a Queen’s Commendation for his cool-headed efforts to save the Skymaster and the lives of those aboard.

Humphrey Trevelyan, British Chargé d’Affaires at Peking, delivered his government’s strongly worded protest, and the Red Chinese ultimately paid $1,027,600 indemnity for the loss of the plane.No explanation of the shooting was given, except for undocumented guesses that the Communists may have been trying to kill or kidnap some person on the plane or to scare off all ships approaching her territorial limits.

The shooting prompted John Foster Dulles, American Secretary of State, to issue a hot denunciation of the “further barbarity” of the Chinese Reds. The U. S. Navy Department dispatched two aircraft carriers, the Hornet and the Philippine Sea, to join in the rescue.Their planes raced to the rescue scene, ready to start shooting if there were any Red Chinese interference.It was one of the angriest moments between the U.S.and Red China since the Korean war.It passed without further raising of American tempers, but reinforced the already intense American antipathy for Mao’s Communist state.

Less than one year later, the destruction of a second airliner in the South China Sea thrust Hong Kong into the Communist-Nationalist crossfire.A Lockheed Constellation of Air-India International took off from Kai Tak Airport, bound for the first Afro-Asian Conference at Bandoeng carrying eight Red Chinese delegates. The conference was intended to assure the uncommitted nations that Communist China had put aside its warlike ways to become an exemplar of peaceful coexistence.

There was an appalling roar as the Constellation approached Sarawak; a bomb burst in the baggage compartment, setting the aircraft afire.Pilot Captain D.K.Jatar, showing incredible skill and nerve, managed to guide the shattered plane to a jolting belly-landing at 150 miles an hour.But the impact with the sea tore the Constellation apart and it sank in moments, leaving a circle of flames on the surface.Before the radio went dead, the ship had issued an international distress call.

Eleven passengers and five crewmen, including Captain Jatar, died in the crash and explosion. Three surviving crew members drifted in a life raft for nine hours until they were picked up by the British frigate DampierAll the Chinese delegates were among those killed, and Peking charged sabotage.The accusation proved to be well-based; the bomb had been planted by a Nationalist saboteur, employed as a cleaner by the British maintenance company at Kai Tak Airport.Hong Kong police offered a $17,500 reward for his arrest, but he escaped to Taiwan on another airplane.

The Hong Kong government issued a warrant for the bomber’s arrest, but the Nationalist authorities replied that they had no legal basis for his extradition to the colony.There the matter rested, with the abiding hatred between Peking and Taipeh continuing as before.

Each of the sea and air incidents threatened the security of the colony to some degree, but none rocked its internal structure with the earthquake power of the Double Ten riots of October, 1956.No other crisis since World War II has presented such a frontal challenge to its ability to preserve law and order. Three days of savage guerrilla warfare raged through thickly congested streets, and when the fight was over, the British administration had had the fright of its life.

Statistics convey none of the heat of these bloody battles, but they measure a few of their dimensions: 59 people killed, 500 injured, nearly $1,000,000 in property damage, 6,000 arrests, 1,241 prison sentences and four executions for murder.Nearly 3,000 police and several army battalions were engaged in subduing the rioters.From east to west, the riots extended across eleven miles of Upper Kowloon and the New Territories, and were marked by fifty-four skirmishes between mobs and the uniformed forces.

If the genesis of the riots were to be narrowed down to a single proximate cause, it would have to be something as trivial as an argument over a few paper flags pasted on a concrete wall.Physically, that was where they started, but their true origin goes back at least three centuries.

The riots took their name from the common designation of a patriotic holiday on October 10, the tenth day of the tenth month, marking the anniversary of the establishment of the Chinese Republic in 1911.In Hong Kong, it is preceded by the October 1 celebration of the birthday of Red China.Each holiday gave Nationalist or Communist sympathizers an opportunity to explode strings of firecrackers, hold rallies and fly their national flags.On both days, police were out in full force to prevent riots between the opposing Chinese groups, and they managed to keep the lid down fairly well until 1956.

The October 1 holiday in 1956 passed without undue commotion and October 10 began with no indication of Communist violence.Nationalist flags were displayed by refugees all over the colony, particularly in the heavily populated resettlement estates of Upper Kowloon.The refugees were predominantly pro-Nationalist, having been driven from their homeland by the Reds. After years of exile and grinding poverty, many of them were steeped in bitterness and yearning for revenge against the Communists.

The Triad gangs, whose members played a key part in the Double Ten riots, had been established in China three centuries ago as a patriotic society dedicated to the overthrow of the foreign Manchus who dethroned the native Ming Dynasty.Their professed ideals slowly rotted away and they devolved into a band of thugs, living on protection rackets, shake-downs of street peddlers and petty criminals, enforced by fear and strong-arm brutality.Since World War I, crime has become their primary business and their patriotism survives only as a front.

On October 10, 1956, pro-Nationalist residents of the Shek Kip Mei Resettlement Estate began to take down the paper flags they had pasted on the concrete walls of the housing blocks.Housing officials had objected that the pasted flags were difficult to remove after the Double Ten holiday was over, and the tenants, who could still fly flags from poles or ropes, accepted the cleanup job unprotestingly.

At Li Cheng Uk, a resettlement estate about a quarter of a mile to the northwest of Shek Kip Mei, housing officials themselves removed Nationalist flags and symbols stuck on the walls.It was early in the morning of the Double Tenth, when an unfriendly crowd of about 400 gathered quickly and demanded that the flags be restored.Police were called, but the crowd swelled to more than 2,000 by early afternoon and its demands became more extravagant.Impatient for action, some of the crowd attacked two resettlement officials, beating them severely.Police units, hurrying to help the injured men, were met with a barrage of flying bottles.They replied with tear gas and the mob, turning its anger on the police, showered them with rocks. A resettlement office was set afire but police reinforcements succeeded in dispersing the mob. By midafternoon, with two persons arrested and four injured, peace appeared to have been restored.

Right after the dinner hour, a newly formed mob at Li Cheng Uk renewed the rock-throwing attacks on police.Nationalist flags were unfurled and a shouting mass of rioters charged into police lines.Four riot units of 240 men were called out and the strengthened force threw a cordon around six blocks while a sporadic exchange of rocks and tear gas continued.The area enclosed by the cordon became relatively quiet, but new disorders broke out along its southern edge.Police vehicles were attacked, and members of Triads were sighted in the center of the commotion.

Rioting became general and violent by 10:30 P.M. and police set up roadblocks on main routes into the area. The mobs altered their tactics, splitting into small fighting squads that pounded a segment of the police lines with a swift, sharp attack, then scattered and ran before police could bring up reserves. Within a few minutes, the attack squads would re-form on another block and hit police lines again. As the evening advanced, the riot zone kept expanding into other parts of Kowloon. Police units were alerted on Hong Kong Island to forestall possible riots there.

Police were only one of the mob targets.A fire engine returning from a minor blaze near the Kowloon resettlement estates was bombarded with bricks, bottles and chunks of concrete.The engine driver, struck on the head by a flying object, lost control of the truck and it plunged erratically into a crowd, killing three and injuring five.Ambulances were stoned as they arrived to pick up the casualties.An Auxiliary Fire Service vehicle was dumped over and set on fire. Hordes of rioters swarmed into the area, more police were summoned and a four-hour battle ensued.

The looting phase of the riots began with an attack on a bakery in the heart of the disturbed area.After smashing the bakery windows and setting it afire, rioters turned their rock-and-stone batteries on firemen called to put out the flames.Two floors of the building were destroyed before the firemen could extinguish the blaze.Meanwhile, rioters went berserk on the streets, looting and burning shops until the massed strength of police laboriously regained control of the neighborhood.

Another battle was fought in the crowded streets of Mongkok.Rocks were dropped on the police from balconies while Triad gangs embarked on the looting of shops.Marauding gangs roamed the Kowloon streets down to Austin Road, the northern edge of the tourist and luxury shopping section, before police hammered them into submission.

General restoration of order in Kowloon was still far off.October 11 was only a half-hour old when police learned that a mob infiltrated by Triad gangsters was preparing to set fire to a pro-Communist private school.Police sent to investigate were pelted with rocks and forced to withdraw with five men injured.A riot unit used tear gas to pen the rioters inside the resettlement buildings while other police went to the school.They found looters and arsonists busily at work and arrested eleven men.

About 3:45 A.M., hoodlums became active near Kai Tak Airport, a mile and a half east of Tai Hang Tung, wrecking a traffic pagoda.

Sunrise on October 11 brought a lull, but at 10 A.M., there was renewed rioting at Li Cheng Uk.Triad thugs peddled Nationalist flags by threatening to beat up anyone who refused to buy. Looting and mob barricades again confronted police who had been hard-hit by injuries.

One mob launched a full-scale attack on the Sham Shui Po police station, but were repelled by gunfire and scattered into the side streets when an armored car pursued them.Mobs of ever-increasing size were fast-moving and elusive, and tear gas did little more than drive them to another location where they attacked again.They lighted bonfires in the streets and then heaved rocks at the firemen called to extinguish them.

The Kowloon rioters displayed no signs of a unified battle plan, nor any concerted push toward a strategic objective.But their actions revealed a consistent pattern of criminality after the looting and extortion began, confirming the police belief that Triads were in control.Police decided to shoot to kill, but realized that even this last-ditch measure would be useless unless they deployed their units to surround the rioters and take them prisoner.Shortly after noon of October 11—and very late by many people’s judgment—three battalions of the Hong Kong army garrison were thrown into the fight.

With army battalions in action, the mob spirit began to die down throughout Kowloon by evening.A curfew was imposed, cross-harbor ferry service suspended, and the main impetus of the Kowloon riots came to an end.

Rigid enforcement of the curfew slowly cleared the streets of bystanders, but failed to drive the active rioters to cover.Looting and stoning of police persisted in Mongkok until after midnight, when riot guns and tear gas finally halted it.Strong-arm gangs armed with rocks, hammers, and iron bars prowled through eastern Kowloon, extorting money from shopkeepers, looting factories and battling police.Three rioters were killed and more than 400 arrested before the plundering was checked.

Looting and arson continued for the third day, October 12, at many places in Kowloon.The mass riots of the first two days were replaced by a merciless street war between bands of gangsters and the uniformed services of the colony.Three looters were shot to death in a raid on a provision shop in Mongkok.Firemen, ambulance crews and practically every man in a uniform was stoned or beaten if he ventured into a riot area.

On the afternoon of the 12th, police began dragnet raids on the hideouts of rioters and looters, taking 1,170 prisoners.The next day, raids at Li Cheng Uk by police and military units took 1,000 prisoners, and 700 others were rounded up at Tai Hang Tung.

On the morning of October 14, the curfew was lifted in Kowloon and most of the army units were relieved.But a night curfew continued for three more nights in northwestern Kowloon.

The day after the Kowloon riots erupted, a related but different kind of rioting broke out in Tsuen Wan, a New Territories factory town five and one-half miles west of Li Cheng Uk.In this area of textile and enamelware factories, most of the workers lived in company dormitories; physically close, but divided into intensely hostile pro- and anti-Communist unions.

Tsuen Wan had experienced some friction over the refusal of factory owners to display Nationalist flags on plant buildings during the Double Ten holiday, although pro-Nationalist workers could display the flags in their dormitories.No open protest was made until the afternoon of the next day, when a mob gathered outside a cotton mill and insisted that Nationalist flags be shown. The company acceded, and even granted the crowd leaders a small amount of money.

But the right-wing unions were in no mood for peaceful solutions that same evening when they launched a series of raids on Communist union offices; they looted and burned the offices and beat some leftist workers so savagely that five of them died.Sixty other leftist union members were collared by a mob and dragged off to a Nationalist rally where they were kicked and punched until many were unconscious.Meanwhile, another group of right-wing unionists continued to raid Communist union offices, assaulting any members they could find.Army troops were called to restore order, and their heavy vehicles crashed through mob barricades to remove the injured and clamp a strict curfew on Tsuen Wan.

One mile south of the town, mobs were still on a rampage, attacking a canning factory and setting it on fire.Four other factories on the outskirts of Tsuen Wan were besieged by mobs carrying Nationalist flags.Their demands were identical; either the plant would put out Nationalist flags and pay protection to the mob, or the place would be burned down.Management officials hastened to comply.

Several large textile mills were also favored with mob visits and a peremptory demand that they fire all pro-Red workers.Four miles west of Tsuen Wan, a Nationalist union group combined forces with a Triad gang, looted a textile factory, set fire to an automobile, stole a factory truck and withdrew after having their demands satisfied by management.Five houses and shops identified with Communist interests were invaded and wrecked.

The Tsuen Wan curfew was extended to surrounding areas and remained in force until October 16 while police and the army locked horns with the Nationalist rioters. Left-wingers were not an immediate problem, most of them having fled to the hills for their lives. But the rightist demonstrators were tough; they were disciplined fighters, ably led and guided by whistle-blast commands. Eight persons were killed, 109 seriously injured and 684 arrested before the rioters capitulated.

Long after the restoration of law and order, fear continued to keep workers away from their jobs.Full production did not resume at factories and mills in the Tsuen Wan area until early in November.

When the last of the Double Ten disorders ended, the hard-pressed colony government had a chance to assess events.Most of the property damaged by mobs belonged to Communists or their sympathizers, but Nationalist vengeance was by no means the only reason for its destruction; the longer the riots continued, the more inescapable became the conclusion that they were directed by criminals bent on manipulating patriotic emotions to enrich themselves.

The Double Ten riots did more than weaken the prestige of the Triads, whose leaders were either arrested or deported; it helped to illustrate the futility of waging a street war in Hong Kong over the Nationalist-Communist issue.Partisanship toward either side still burns strongly among the older Chinese, but it is a dwindling flame.Younger people, and many Chinese intellectuals within the colony, seem indifferent or hostile to both camps.Practically no one wants to return to Red China, and Taiwan had shown little inclination to welcome Chinese immigrants from Hong Kong until the border rush of May, 1962.

The turmoil occasioned by the Double Ten riots was succeeded by a period of comparative calm between Red China and the colony. But it ended in 1958, when the Chinese Communists clamped tight restrictions on inshore fishing by boats from Hong Kong. The Reds, perennially belligerent over the suspected invasion of their territorial limits, demanded that any boats fishing in their waters must have a Communist registration in addition to their colony registry. The registration also involved a Communist share of the fisherman’s catch, and Hong Kong boats resented the gouge. The apparent solution was to keep their craft out of Communist waters.

The Reds made the problem more complex by invading Hong Kong waters on numerous patrol swoops to seize Hong Kong junks.The first of these came in October, 1958, when Red patrol boats grabbed several junks near Po Toi Island, on the southern edge of colony waters.In December, a Communist gunboat fired on junks in colony waters, killing two fishermen and injuring several others.A month later, a Chinese gunboat crossed into colony waters and captured two fishing boats with six persons aboard.In May, 1959, an armed Communist tug pushed nine miles into Hong Kong waters to round up a pair of large fishing junks.

In self-defense, many Hong Kong fishermen abandoned inshore fishing, and ventured much farther out to sea.Without intending to, the Reds helped to stimulate the mechanization of the colony’s fishing fleet and improve its efficiency.

The colonial administration at Hong Kong carefully avoids comment on the Nationalist-Communist issue.It can, of course, initiate no foreign policy of its own, but must keep precisely to the line set down by the British government.It is expected to get along as best it can with both Red China and Taiwan, and leave the high-level thundering to London.

While the colony’s officials are well aware that the United States and other Western powers are using Hong Kong as an observation post on Red China, and that both Red China and Taiwan have their corps of spies in the colony, they take no official cognizance of such activities until they become too conspicuous. Unfortunately, they often do. Toward the end of 1961, the colony had 21 Nationalist spies in custody, including a former leader of guerrilla forces in Southeast Asia.

Even more embarrassing are the cases in which one of the colony’s officials turns out to be a foreign spy.On October 2, 1961, the colony government arrested John Chao-ko Tsang, an Assistant Superintendent of Police and one of its most promising career men, and deported him to Red China on November 30.The case created a sensation, for Tsang had the highest post of any colony official ever involved in an espionage case.

With its customary delicacy in matters affecting Red China, the government announced only that Tsang was being deported as an alien.Fourteen other “aliens” were rounded up for questioning in the case, and four of them were sent across the border at Lo Wu with John Tsang.Tsang was later rumored to be in charge of public security for the Reds at Canton.

Tsang’s arrest was pure luck.A Chinese detective returning from Macao on another case noticed a man dressed as a common laborer take a bundle of $100 banknotes from one pocket and put it into another.The detective questioned him about the large amount of money, but found his answers pretty thin.He was accordingly hauled to a police station, questioned further and searched.A letter found on him was eventually traced to John Tsang.Unofficially, the letter was said to contain instructions from a Communist espionage cell in Macao.

The former Assistant Superintendent was thirty-eight years old, and so intelligent and popular that he looked to be headed for a top place in the department. Born in China, he had come to Hong Kong before the Reds ruled the mainland, joined the police in 1948 and rose rapidly from the ranks. He had gone to Cambridge University in 1960 for advanced studies, married while there, and returned to the colony in mid-1961. He was then one of the highest-ranking Chinese officers in the department.

The nature of Tsang’s work gave him an expert’s knowledge of the colony’s defenses and internal security, information of obvious value to the Reds.His associates in the police force still doubt that he came to Hong Kong as a spy, believing that he turned Communist after he became established in the colony.His wife and mother remained in Hong Kong after his deportation.

The Tsang case was also an embarrassment to Hong Kong Chinese who aspired to high office in the colony.It bolstered the anti-Chinese bias of old-school colonialists, giving them an opportunity to say, “See!When you give those Chinese a good job, they sell you out.”

The stream of political abuse which Peking had directed at Hong Kong for a decade was superseded in 1960 by a stream of fresh water flowing at the rate of 5 billion gallons a year.On November 15, 1960, the two governments signed an agreement under which Red China was to tap its newly built Sham Chun reservoir, two miles north of the colony border, to provide an auxiliary supply for Hong Kong.The colony put up its own pumping station and laid ten miles of steel pipeline, four feet in diameter, to convey the water to its own large reservoir at Tai Lam, near Castle Peak.The water began flowing in December, 1960, and the arrangements for receiving and paying for it have proceeded smoothly since then.

No one has assessed the symbolic or political significance of the deal, which meets only a small fraction of the colony’s water needs, but it disconcerts many American tourists.

“Do you mean to tell me I’ve been drinking Communist water?”they ask.Most of the food they ate in Hong Kong probably came from Red China, but water is different.Some of them eye it suspiciously, as if they expected it to have a reddish hue or to contain traces of poison.The water is purified and filtered in Hong Kong, however, and thus far it has maintained a crystal-clear neutrality.

The life-or-death issue between Red China and Hong Kong is one that may not be decided until June 30, 1997, the termination date of the New Territories lease.If it is not renewed, more than 90 percent of the colony’s land will revert to China, leaving Great Britain with Hong Kong Island, most of the Kowloon Peninsula and Stonecutters Island.

If China refuses to renew, as she has a clear legal right to do under the terms of the 99-year lease, she will get much more than the land itself.With it will come the colony’s only modern airport, practically all its productive farmland, its chief industrial centers at Tsuen Wan and Kwun Tong, by far the greater part of its reservoirs and water-supply system, from one-third to one-half its population and all its mineral resources except a few quarries and clay pits.

“It would be folly to try to foresee what will happen in thirty-five years,” said one of the colony’s principal officials in 1962.“In this age of fission and fusion, it’s impossible to see even five years ahead.”

On one point, there is little doubt among the colony’s officials: without the New Territories, Hong Kong would be untenable.

Outside of the colony, the 1997 deadline looms like doom; inside, it is just another of those far-off worries, like an epidemic or a catastrophic typhoon. Everyone knows it is coming; meanwhile, they go on making money, putting up new factories and hotels and planning gigantic public works.

Some of the colony’s leading businessmen expect the Chinese Communists, or any other power ruling the mainland in 1997, to drive a tough bargain for the New Territories and then renew the lease for another 99 years.

Red China, which holds all the cards, hasn’t tipped its hand.

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CHAPTER FOUR
Industrial Growth and Growing Pains

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.

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CHAPTER FIVE
High Land, Low Water

Hong Kong has always had more land and water than it could use, because most of the land is a hilly waste and most of the water is salty.

From the first years of the colony until today, the persisting shortage of usable land and fresh water has confronted every governor with a problem that he could neither solve nor ignore.They have all wrestled with it, none more vigorously than the governors of the last fifteen years, and the problem has become more costly, complex and acute than ever.

In any community, land and water problems are related to each other; in the peculiar circumstances of Hong Kong’s climate, geography and population, they intersect at more points than Laocoön and the serpents.

Consider the governor’s alternatives: If he stores the entire run-off of the summer rainy season in the reservoirs it will barely meet the minimum needs of the urban millions on Kowloon and Hong Kong Island, and it will cause the withering of the crops of farmers in the New Territories during the winter dry season. If he cuts the city supply, how can he meet the ever-increasing needs of the new industrial centers, like Tsuen Wan and Kwun Tong, that the government is building on land reclaimed from the sea?

The if’s are endless: If he stops the reclamation program to reduce the demand for more water, real estate costs will climb so fast that local industries will price themselves out of the export market.If he builds all the reservoirs the colony needs, who will pay for them?If he doesn’t, how can the fast-growing population of the colony survive?If the reservoirs displace more farmers, who will raise the food?

The present disposition of the colony government is to provide as much additional land and water as it can, and let the if’s fall where they may.To that end, it has spent about $60 million on reclamation and $55 million to increase its water supply since World War II.Over the next decade, its further expenditures in these two areas may reach $300 million.Many projects have not yet been authorized, but much of the preliminary surveying has been done.With the need for them becoming more imperative as the colony’s population continues to increase, it is not so much a question of if as of when.

Allocation of several hundred million dollars to correct deficiencies of the topography is none too large for the job that must be done.When one has noted that Hong Kong has a sheltered deep-water harbor (probably the bed of an old river that flowed from west to east), that one-seventh of its land is arable, and that its mines and quarries yield a modest amount of iron ore, building stone, kaolin clay, graphite, lead, wolfram and a few other minerals, one has exhausted the list of its terrestrial assets. Its liabilities are unlimited.

Three broken lines of perpendicular hills cut across the colony from northeast to southwest, with irregular spurs branching off haphazardly; two dozen peaks poke up from 1,000 to 3,140 feet.Eighty percent of the surface is either too steep for roads or buildings, too barren to grow anything but wiry grass or scrub, too swampy to walk through or so hacked up by erosion that it is worthless and an eyesore.The rest, except for farmland, is either in forest or packed with people in numbers ranging from 1,800 to 2,800 an acre.Rivers tumble from the high hills in all directions, but they are short and unreliable, mostly summer torrents and winter trickles.

Hong Kong’s weather is impartially disrespectful toward annual averages, periodic tables and the population.Rainfall averages about 85 inches a year, with the rainy season extending from April through September.There have been long summer droughts and ruinous winter floods.On July 19, 1926, it rained nearly 4 inches in one hour and 21 inches in 24 hours.

Prevailing winds blow from the east in every month but June, and the colony’s fishing settlements have been located to protect them from it.The protection avails nothing against typhoons, which usually form in the Caroline Islands, curve northwards over the Philippines and hit Hong Kong from all angles, principally during the June to October season, though there is no month which has not had at least one of them.Four out of five bypass the colony, but the fifth may inflict devastation on ships, boats and shoreline villages.It never snows and freezing temperatures are extremely rare, yet the high, year-round humidity can put a raw edge on cool wintry days and make summer clothing stickily uncomfortable.Except for flat farmland in the northwestern New Territories, topsoil is thin, highly acid and leaches badly during the rainy season.

This chronicle of drawbacks only tends to revive the question every British administrator since 1841 must have asked himself: Why did we ever settle this hump-backed wasteland?They have answered the question by a dogged and unremitting effort to make it a habitable place.

The first English traders had scarcely settled along the north shore of Hong Kong Island when it became evident that there was a shortage of suitable land.The slopes of Mt.Gough and Victoria Peak rose steeply behind Queen’s Road, the only street along the shore.Holders of waterfront lots on the road extended them toward the harbor pretty much at random, giving them more level land but creating a jagged shoreline unprotected by any seawall.Several governors sought to build a straight and solid seawall, but the lot-holders balked at paying its cost.

Two poorly constructed seawalls, erected in piecemeal fashion, were wrecked by typhoons before the government was able to push through a unified seawall and reclamation scheme.By 1904, a massive seawall stretched along the island front for two miles, and Queen’s Road stood two blocks inland from the harbor.Most of the colony’s principal office buildings have been built on this reclaimed land.

Once the value of reclamation had been proved, the whole northern shore of the island was gradually faced with a seawall.Much of the Wanchai district rose from the sea in the 1920s and its new-found land was soon covered with tenements or bars and cabarets catering to the sailors’ trade.Swamps became solid ground and promontories were swallowed up by the seven-mile-long reclamation.

Starting in 1867, a succession of seawall and land-fill projects altered the size and shape of the Kowloon Peninsula.

By the time of the Japanese invasion, a total of 1,425 acres, or more than two square miles, had been reclaimed.The gain was twofold, for it not only added level land, it absorbed all the fill from sites where obstructing hills had been cut down to make existing ground usable.

The foundation of the colony’s tourist industry and air cargo business rests on land reclaimed from Kowloon Bay and converted into an international airport.Its name and its origin go back to 1918, when two real estate promoters, Sir Kai Ho Kai and Au Tak, organized the Kai Tak Land Development Co.to create building sites by filling in the northern end of Kowloon Bay.Homesites and an 800-foot-long airstrip were in use on the land by 1924, with Fowler’s Flying School the first aviation tenant.Government took it over in 1930, improving and enlarging it in preparation for the first international flight, an Imperial Airways’ weekly service to Penang started March 24, 1936, linking with the main route between England and Australia.Four other international airlines, including Pan American and Air France, joined the formation before the Japanese seized the field in 1941.The Japanese extended its area and built two concrete runways, but its buildings were bombed into rubble before the war ended.

Restored to full operations in 1947, Kai Tak handled the strangest one-way traffic boom in its history.In one month of 1949, 41,000 passengers were flown in from China to escape the advancing Communist armies.Mainland service ended a year later, and traffic declined to one-third of its former volume.The field itself, penned in by rocky peaks, had reached the limits of its development, and the largest four-engined ships were rapidly outgrowing it. For jets, it would be a cow pasture at the bottom of a canyon.

The Department of Civil Aviation, after concluding that nothing further could be done to expand the existing field, began casting around for alternate sites.Fourteen of them, including Stonecutters Island and Stanley Bay, were ruled out for excessive cost, inaccessibility, or risky topography before the experts decided to put the airport right next to the old one, on a strip of land that didn’t then exist.

The government put up the money and the job of building a promontory 7,800 feet long and 800 feet wide that would point directly into Kowloon Bay began in 1956.A few hills would have to be knocked down to clear the approaches, but disposal of the dirt would be simple, since 20 million cubic yards of fill were needed to build the promontory.The new airport runway was to have a length of 8,350 feet, extending the full length of the reclaimed strip and well beyond its landward end.

Three thousand laborers, most of them hauling dirt by hand, worked nearly three years to lay down the man-made peninsula.Although it was near the old airport, it overcame the earlier field’s approach limitations by being pointed straight at the 1,500-foot-wide harbor entrance of Lei Yue Mun, and at the opposite end, having the Kowloon hills truncated to permit another clear shot at the runway, depending on which direction best fitted weather conditions.

The new runway went into use in 1958, with the completion of the terminal coming several years later.Temporary terminal buildings bulged with incoming tourists, but they were moved through these buildings fairly well.Most colony residents are hardly aware of the arrival and departure of the huge jets, though they shake the earth with their thunder as they pass over Kowloon.Kai Tak has become a full 24-hour airport.Its 200-foot-wide runway is stressed to take a maximum plane weight of 400,000 pounds, well above the limit of the heaviest airliners.From the air it looks like a super-highway lost at sea.

Opening of the new Kai Tak Airport brought the colony an additional gain by freeing 70 acres of the old field for industrial development.

Less than half a mile from the seaward end of Kai Tak, the first new town in the government’s history is being built—Kwun Tong, an industrial, commercial and residential area along the northeastern shore of Kowloon Bay.A ten-year project of large extent, it required the removal of a whole range of hills.The spoil was then hauled to the bay and dumped behind a protecting seawall 2,477 feet long.The leveled hills and the land reclaimed from the sea will provide a 514-acre site, close to a square mile, for an industrial center whose population is expected to reach 300,000 within a few years.

Digging and filling began in 1955 and have proceeded with such speed that today, in order to get a panoramic view of the project, one has to go to a hill three quarters of a mile back from the seawall.Block after block of multi-storied factories stretch along the sea front, approximately eighty of them, several blocks deep in the industrial zone between the seawall and Kwun Tong Road, which cuts directly across the town.On the landward side of Kwun Tong Road, the commercial and recreational zones are beginning to take shape; behind them, the long files of resettlement estates housing 60,000 persons and various government-aided housing for another 15,000.Privately built houses are also being developed.

Kwun Tong has all the noisy, dusty confusion of any construction job in progress, but there are already 15,000 people working in its completed factories, making cotton yarn, furniture, garments, and other products. Most of the factories are humming and a few betray signs of hasty organization. One plant spent two years tinkering with stop-gap orders for simple novelties while its management tried to find some profitable use for a million dollars’ worth of fine machinery standing idle under its roof.

Kwun Tong will never be a beauty spot because its main function is industrial.Nearly half its total area will be reserved for homes and commercial use, however.Proceeds from land sales are expected to repay the government for its $17 million investment in Kwun Tong.

Tsuen Wan, a second industrial town about eight miles northwest of Kwun Tong in the New Territories, has reclaimed around 70 acres from the sea.Gin Drinkers’ Bay, an adjoining inlet used for ship-breaking, is being filled in to provide 400 more acres of industrial sites.No one knows the origin of its name but it no longer matters; this glass will soon be filled with earth.When completed, Tsuen Wan will be a town of about 175,000 people.

Specialized reclamation projects have been pushed ahead at many other spots.At North Point, on Hong Kong Island, 12,000 people live in tall apartments built on recently reclaimed land.The new City Hall opened in 1962 on reclaimed waterfront land in the Central District.Five blocks of the central waterfront, just west of the reclaimed land on which the Star Ferry’s Hong Kong Island terminal sits, are being extended several hundred feet into the harbor for more building sites.

The principal land-fill operations have been restricted to the island and Kowloon Bay, except for Tseun Wan.The limitation has been human, rather than geographic; most urban workers can’t afford to travel to outlying locations and they don’t want to anyway. They plainly prefer the excitement, gossip and sociability of the crowded cities.

Nevertheless, central reclamation possibilities are running out, unless the government proposes to pave its entire harbor.As a more likely alternative, it sent engineers out in 1957 to study reclamation sites in the bays and shallow inlets of the New Territories.Five have been tentatively chosen that could be developed to create 3,000 more acres of land.The cost would come to more than $83 million, so there’s no eagerness to tackle the project at once.

The never-ending task of providing more land for the colony’s growing population would be meaningless without the assurance of an adequate water supply.At this stage in the colony’s development, even when the work of increasing the water supply is proceeding on a scale no previous generation would have attempted, the builders and planners are not deluding themselves.They know that when they have completed the last unit of the reservoir system under construction, the needs of the colony will probably have outstripped its capacity.There were times in the past when some optimistic governor, presiding at the opening of a new dam or reservoir, fancied that the problem had been met.The next drought was sufficient to knock his hopeful predictions into a cocked hat.

Hong Kong has never been inclined to waste water.On the rare occasions when its people had a full supply, as in certain periods of 1958 and 1959, its maximum average consumption ran to about 88 million gallons a day for nearly 3,000,000 people.New York City, with just under 8,000,000 people, consumes about 1 billion 200 million gallons a day.Because of an unparalleled water-supply system, Americans are the world’s champion water-wasters. An American will use 100 gallons a day, compared with 27 gallons per person in Hong Kong, and about 50 gallons per person in Great Britain.

There are compelling reasons why Hong Kong residents will not waste water.The colony, unlike New York City, cannot draw from a watershed covering several states.Except for a relatively small amount piped in from Red China since 1960, it has had to rely on surface water collected entirely from its 398¼ square miles of land area, which is about one-fourth larger than New York City.And it has to get the water while the getting is good; during the annual five-month dry season, the surface run-off averages only 600,000 gallons a day.

The colony may have been mistaken from the start about its potential water resources; even before it was established, sailing ships stopped regularly at Hong Kong Island to draw clear, sparkling water from its hillside springs.After the island was settled the springs soon fell short of needs, and five wells were sunk to tap new sources of supply.Their levels, too, sank as rapidly as the population rose.Governor Hercules Robinson expressed his concern over the dwindling supplies by offering $5,000 in 1859 to anyone who could design a reservoir system adequate for 85,000 residents.S.B.Rawling, civilian clerk-of-works for the Army Royal Engineers, took the prize with a plan to build a 2-million-gallon reservoir at Pok Fu Lam, on the slopes of Victoria Peak, and carry the water through a ten-inch pipe to tanks above Victoria City.

Completed in four years, Pok Fu Lam proved to be short of the need even then, for the population had risen to 125,000.Striving to catch up, the colony installed a much larger reservoir above Pok Fu Lam, linked it to a pair of supplementary reservoirs, and discovered that the demand was still in advance of supply. Before the end of the century, new reservoirs had been added at Tai Tam and Wong Nai Chung, and the water finally reached the eastern sections of the city. Filtration through sand beds was also incorporated into the system.

None of these efforts satisfied the popular needs for long.Completion of Tai Tam Tuk Reservoir in 1917 near the southeastern end of the island raised the storage capacity to 1 billion, 419 gallons and everyone thought the problem was solved at last.A series of punishing droughts killed that bright hope, and the building of the Aberdeen Reservoirs rounded out all the parts of the island that could be drained for storage.Two reservoirs on the Kowloon Peninsula were tied to the island with underwater pipelines, but this was done only after a spring drought in 1929 had dried up five of the island’s six reservoirs, making it necessary to bring in water by ship from as far away as Shanghai.

The rain-gathering potential of the New Territories had been exploited by the 1930s with the construction of the Shek Li Pui and the Jubilee Reservoirs.When the Japanese arrived, they found 13 reservoirs with a storage capacity of 6 billion gallons.They let the mains deteriorate during their occupation of the colony, applying their own brand of water-rationing by cutting off all supply to entire sections of the colony whenever they chose to.

Following World War II, the government tried deep boring to reach underground water resources, but this turned out to be scarcely worth the effort.After years of surveying and study, engineers laid out the Tai Lam Chung Reservoir System, at the central western end of the New Territories.This called for construction of a two-section dam 2,300 feet long and 200 feet high.This gigantic main dam, built entirely of concrete, created a reservoir of 4 billion, 500 million gallons. Twenty-three miles of “catchwaters,” or concrete channels to trap run-off from the rains, funneled the surface water from 11,000 acres into the reservoir. It took eight years to construct, being completed in 1960 at a cost of almost $25 million.

None of these large dams served the needs of the hundreds of small villages in the New Territories, which still relied on wells and streams or threw up earth dams in hilly areas to form their own miniature reservoirs.After World War II the colony government and the Kadoorie Agricultural Aid Association, a private philanthropic body, furnished grants of cement to replace these crude and leaky installations with concrete dams and concrete-lined wells, plus pipes to carry the water into the villages.

Rice crops in the New Territories were dependent on their own irrigation systems, traditionally constructed of earth channels and dams. They were laid out with evident shrewdness to cover the greatest possible area, but the dams and channels had to be nursed along constantly to prevent leaking and to keep them from becoming choked with weeds.The government and the Kadoorie Association also furnished materials to replace these systems with concrete dams and channels.Nearly 600 dams and more than 220,000 feet of channels have been improved in this way since World War II.

When the Tai Lam Chung Reservoir was under construction, a very delicate balance of catchwaters and irrigation channels had to be worked out so that the reservoir collected all the excess summer rain not required for irrigation, but did not draw off the sparse winter rains which farmers had to have.The farmers’ initial assumption when they saw the huge catchwater channels passing the farms on their way to the reservoir was that they were being robbed of water; it took considerable diplomacy and convincing proof to allay their suspicions.

Farmers who learned that their villages were about to be inundated by the big reservoir were even less happy.They rejected the government’s proposal to move them to another rural area and insisted on moving, if move they must, to the developing industrial town of Tsuen Wan.They received the full market price for their farm property and were resettled in new houses at Tsuen Wan, with shop space they could rent to replace their farming income.A few holdouts threatened to stay in their old homes until the reservoir floated them to glory, but belatedly reversed themselves and walked out on dry land.

The Tai Lam Chung relocation was hardly concluded when the government found itself involved in an even knottier problem.Continuing demands for more water forced the construction of still another dam—Shek Pik, on Lantau Island.This was a remote part of the colony, much larger than Hong Kong Island, but completely without roads until 1957.A few government people visited the island regularly, but its isolated villages, with their square stone towers or “cannon houses,” were more likely to regard all visitors as pirates until proved otherwise.Armed and alert, they holed up in the towers to defend themselves against marauders who still stage occasional raids in sparsely settled areas.

Two villages in southwestern Lantau, Shek Pik and Fan Pui, would have to be removed to make way for the new dam.Their people, having no knowledge of modern technology and no need for a dam, viewed the project with fear and hostility.The dam was not, in fact, being built for them; its collected water was to be carried by pipeline to Hong Kong Island, Kowloon and Peng Chau. Fan Pui, the smaller village, had to be treated with diplomacy and compensated before its 62 people consented to move to another rural area on the island. Inhabitants of Shek Pik elected to move to Tsuen Wan, settling in new five-story blocks. The oldest inhabitant, an eighty-six-year-old woman, made the transfer with full official ceremony, her sedan chair borne by four policemen. The ancestral tablets and household gods also made the trip on the shoulder-poles of respectful bearers. Anything less than this diplomatic ritual would have made the entire relocation impossible.

Preliminary work on the Shek Pik Dam became a trail-blazing venture into unexplored territory.A ten-mile paved road had to be built along the edge of the sea from the sheltered harbor at Silver Mine Bay to the future dam site.Test borings at the foot of Shek Pik Valley where the dam was to cross disclosed that the ground was a porous mixture of gravel, boulders, and rotten granite down to 137 feet below the surface.Since the ground stood only 15 feet above sea level, seawater would be able to seep into the reservoir and the fresh water in the reservoir would escape beneath the dam, undermining it.

If a regular concrete dam were to be built on such ground, its foundations would have to go down at least 137 feet, a frightfully expensive procedure.Engineers produced a reasonable alternative by using the recently developed technique called grouting.In this process, a mixture of water, cement, and clay is pumped into porous ground under high pressure, sealing off the foundation without requiring excavation to bed rock.A series of tests established that this process was feasible for Shek Pik, and preparations to build an earth dam were made in 1958.

The dam was to be 2,300 feet long, with a maximum height of 180 feet.It would back up 5 billion, 400 million gallons; a third of the colony’s total water storage.A ten-mile tunnel was to carry the water from the treatment works near the dam to Silver Mine Bay.From there it would be pumped under the sea in twin 30-inch-diameter pipelines to reach Hong Kong Island, eight miles east of Lantau.Fifteen miles of catchwaters were to drain about twelve square miles of land, aided by the fact that rainfall on Lantau Island is generally ten percent heavier than on Hong Kong Island and is more evenly distributed throughout the year.

One of the tunnels was delayed for a time by a peculiarly Chinese problem; its “fung shui” was regarded as injurious to a resident dragon.The fung shui, a very important consideration among local people, meant that any proposed change in the local landscape had to be undertaken with great care.It would never do to nip off the top of a hill that was shaped like a dragon, for that might blind the mythical beast and put a hex on the countryside.The thing to do was to hire a fung shui expert from a nearby village; for a suitable fee, he would propitiate the dragon and the work of dam-building could proceed.

In a more practical way, the engineers had to install concrete channels and pipelines to make certain that sufficient quantities of water were diverted to irrigate farms near the catchment area.Hillsides above the big catchwaters had to be faced with chunam, a mixture of straw, lime, clay and cement which keeps the hillside soil from washing into the catchwaters and clogging them.

By early 1962, the southwestern portion of Lantau was criss-crossed by deep catchwaters and the earth dam was rising at the foot of the valley, with its core of impermeable clay being made ready for a covering of ordinary clay and dirt. Up in the mountains at the head of the valley, Buddhist monks and nuns continued their quiet, contemplative existence in the Po Lin Monastery, almost untouched by the dam project. Even when a few more guests stayed overnight at the Po Lin hostel, the pattern of prayer and work did not change.

Construction of the dam, pipelines, tunnels, and catchwaters became an international venture, with French, English, American, and Hong Kong contractors sharing the work under supervision of government engineers.The entire $40 million job is to be completed late in 1963.

There were no claims that the completion of Shek Pik would give the colony all the water it required.The new dam on Lantau and the water pumped in from China would be helpful, but far short of indicated needs.

Two factors balanced each other in planning further exploitation of the colony’s water resources.More reservoirs of the type already in use would displace more farmland than Hong Kong could afford to lose.But the introduction of grouting, the foundation technique successfully employed at Shek Pik, made it possible to consider reservoir sites which would have seemed ridiculously unsuitable a few years earlier.And these sites, it appeared, could be developed without invading farm areas.

In the late 1950s, engineers of the Public Works Department and two consulting firms directed their search for more water toward the thinly settled scrub country of the eastern New Territories.This part of the colony consists of two peninsulas with the irregular outline of an ink-blot, separated by the broad, ten-mile-long Tolo Channel.Both peninsulas are chopped into by dozens of deep bays, coves and inlets bordered by high, rocky hills.Hundreds of inshore fishermen ply the surrounding waters, but most of the region is too barren and mountainous for farming.

Survey engineers made two recommendations which startled laymen: (1) Build a 6,600-foot-long dam across the entrance of Plover Cove, a four-square-mile inlet from Tolo Channel, and cut it off from the sea.(2) Build a similar but much shorter dam to seal off Hebe Haven, an inlet about one-fourth as large as Plover Cove.When the dams were finished all that would be necessary would be to pump the seawater out of the inlets and let the rains fill them with fresh water.The two reservoirs would be enough to double the storage capacity of the colony’s water-supply system.

These basic recommendations in further discussions evolved into an integrated scheme of tremendous size and complexity, covering the entire eastern half of the New Territories.It included a series of service reservoirs and pumping stations along a main pipeline extending from the Red China border to Kowloon.These would be linked to Plover Cove and Hebe Haven by another system of tunnels.Virtually all the surface rains in the eastern end of the New Territories would be fed through catchwaters into the two main reservoirs.Since Hebe Haven might collect more summer rain than it could hold, the excess water could be conveyed by tunnel to Plover Cove, with its much larger capacity.Even the water brought by pipeline from Red China would be fed into the integrated system.Three balancing reservoirs, to maintain a controlled and even flow of water, and two large new filtration plants, to purify the water before it made the last stage of its journey to urban consumers, were to become part of the system.

Many of the connecting pipelines were to be designed to convey water in either direction, making the utmost use of storage capacity.By these refinements of the original recommendations, the capacity of the integrated scheme would be raised to 100 million gallons a day when it came into full use.

The first stage of the gigantic new system had made remarkable progress by the early part of 1962.The Lion Rock Tunnel had already been begun by cutting through the side of a mountain to connect the filtration plant at Sha Tin with a pair of service reservoirs in Kowloon.The tunnel, 32 feet in diameter, will carry three pipelines, each four feet in diameter, and a two-lane, 24-foot-wide auto road three-fourths of a mile through Lion Rock Mountain.Excavation work on the Lion Rock Reservoirs, with a total capacity of 41 million gallons, had almost been completed.At the other end of the tunnel, at the Sha Tin filtration plant and pumping station, a hillside site as extensive as four football fields had been excavated and the spoil was being used to fill a shallow inlet.Construction of ten miles of tunnels and the 10-foot-high Lower Shing Mun Dam were well advanced.

Meanwhile, engineers were probing the soil structure at the entrance of Plover Cove.Working from barges in 35 feet of water, they bored down through 35 feet of soft clay, reaching to almost twice that depth before they found impermeable clay and rock to form the foundation for their earth-fill dam.When complete, the dam will extend 35 feet above the water and 70 feet below it, with grouting to provide a watertight foundation.The main section of the dam will cross the cove’s wide entrance.Two shorter sections will close off side entrances to the cove.

The first stage of this integrated scheme will be rounded out in 1964.Both Hebe Haven and Plover Cove should be ready by 1970, though any completion dates beyond 1964 are likely to be elastic.At each stage, improvements are introduced and existing goals altered.

In addition to these broad-scale developments, the colony has taken immediate measures to conserve the present supply of fresh water by making it possible to use salt water for such purposes as flushing and fire-fighting.Since 1958, salt-water mains have been installed in four densely populated sections of Kowloon and two on Hong Kong Island.Fluoridation of the entire water supply began in March, 1961.

The possibility of distillation of seawater for producing a fresh-water supply has been examined by engineers, but thus far the outlook is discouraging; the cost remains far too high.There is even a faint, faraway hope that some day atomic energy may be employed to distill an unlimited supply of fresh water from the ocean at low cost.

If every phase of Hong Kong’s integrated scheme is in operation by 1970, its water shortage may be over.Similarly, if all the reclamation projects now under consideration are brought to fulfillment in the next decade, there may be enough land to meet all ordinary requirements.

The determination of these requirements, however, will derive from the Department of Public Works only secondarily.The primary determinant will come from the Registry of Marriages.

Any recent visitor to the Central Marriage Registry would appreciate the difficulties in predicting the population of Hong Kong even five years hence; there the walls of two long corridors are so thickly papered with overlapping notices of marriage that not much more than the names and occupations of the prospective couples remain visible.

Neither land nor water is likely to become a surplus commodity in tomorrow’s Hong Kong.

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CHAPTER SIX
A New Day for Farms and Fisheries