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5. Page 9: On the question of exploitation by the metropoliton power, it should be noted that the size of Hong Kong's fiscal reserves has been purely a matter for Hong Kong to decide. Given that it ran (probably unplanned) budget surpluses, it was inevitable that the reserves would continue to amass, and given that there were no investment outlets locally, it was also inevitable that funds would be remitted abroad (mostly to London, until very recently (end of 1974) by virtue of membership of the overseas sterling area and participation in the ster- ling guarantee arrangements). It should also be noted, with regard to the assets of the Exchange Fund, that the requirement fully to back the domestic cur- rency issue with foreign currencies (again, mostly sterling until very recently) is in accordance with well-established colonial monetary arrangements which were subjected (in the Economic Journal and similar works) to considerable academic and Colonial Office analysis in the period- 1945-1955 (or thereabouts) and which, for the most part, were not found wanting, (in fact, Saudi Arabia and Singapore among other independent states; still adhere to the exchange fund/currency board principle).
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6. Page 11: In mentioning that 'the system works', the author might, in referring to the growth in electricity consumption and similar economic indica- tors, also have mentioned a few of the figures Mr Haddon-Cave quoted in the social field in his speech of 7 November to the Hong Kong Pharmaceutical Industry such as: 'the infant mortality rate', which is a sensitive index of the general level of health, fell from 99.6 per 1000 live births in 1950 to 17.4 in 1974'.
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7. Page 11: It is, I think, wage rates, rather than wages, that are the second highest, though in the region, rather than Asia.
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8. Page 12: The decline in the ratio of wages to profits (which is also borne out by the analysis in my minute of 14 August copied to Mr O'Keeffe), is- not unconnected with unemployment and under-employment (pages 11, 18 and 21). This is precisely the kind of area where more analysis might have been expected. For example, how can incomes safely be redistributed in such circumstances (see 15 and 26, below)?
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9. Page 13: To argue that the record of the 1960's was disgraceful in the context of budget surpluses is probably going rather far. The surpluses almost certainly arose largely from increased efficiency in the revenue collection pro- cess and from an under-estimation of sustainable growth rates which may well have been associated with the very budgetary philosophy that the author seems to be criticising. Given that full-employment was not achieved until about 1959, when the manufacturing sector had just about managed to take over from the doomed entrepôt trade, and given the continuing influx of refugees, which again accelerated around 1961, it is not necessarily surprising that the emphasis of financial management at the time should have been on economic growth.
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10.Page 14: On tuberculosis, I am in no position to dispute the author's assertion, but if Mr Haddon-Cave's speech of 7 November (see 6, above) is any- thing to go by, the reference is entirely out of context: 'much attention was paid during the 1950's to anti-tuberculosis measures and BCG vaccination was introduced for new-born infants in 1952 ... The last case of smallpox was repor- ted over 20 years ago and for the past 6 years no case of cholera has been reported... no poliomyelitis case was reported in 1974, yet the maximum number of cases ever recorded was 363 and this was vas recently as 1962. Two cases of diphtheria were notified in 1974; compared with 2087 cases-in 1959.
geneous case of malaria has been reported for the past 6 years'
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11.Page 14. The fact that the social work case-load contains relatively few unemployed persons is possibly an indication, if unemployment is indeed now that in the region of 8-15% (page 21) the worker does not stand alone (page 15) but
is protected by the Chinese family system.
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/12. Page 14: