enterprise has used the free market in capital in its own inimitable fashion. First, the Colony has been a bolt hole for British capital in time of crisis, as the Bank Rate Tribunal of 1957 revealed. Ten years later the flight of capital to Hong Kong was a major factor in the 1967 devaluation of the pound. Second, it has been a major profit centre for the British owned banks and companies like Jardine and Matheson, Swire (Holdings), Wheelock and Marden, Dodwell, and Gilman. Through a complex network of holdings in banking, shipping, textiles, public utilities, insurance, and currency and property speculation a handsome re- turn has been received in the City of London. "In effect, Hong Kong has functioned like an off shore island of the UK, where taxation is less than half of what it is in the metropolis, tax evasion is simple, wages are rock bottom, growth double, treble and even quadruple what the motherland can show and there are no such problems as exchange controls and such like. In addition, the Colony was in the centre of what was the fastest growing economic area in the world for the best part of a decade, Southeast Asia" (Hong Kong: A Case to Answer). A number of British (and American) companies have made Hong Kong a centre for their marketing and distribu- tion arrangements in the area.
Economics apart, the Colony still has other uses. In certain scenarios it could be a bargaining counter in negotiations with Japan, the USSR, and the USA, as well as China. Immediately, it provides Britain with the best possible intelligence and listening post for China watchers, an activity that ranks as one of Hong Kong's minor industries. It also enables the UK Government to do favours for the United States such as allowing its servicemen to use it for "rest and recreation " dur- ing the Vietnam War, or providing har- bour facilities for the Pacific Fleet. But as a British military base its significance today is practically nil, beyond enabling the Army to promise new recruits the op- portunity to see "the Far East."
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