operation as cheap as possible and a transfer of the burden to the shoulders of the general community particularly in regard to luxury taxation.
As an instance, the Harbour dues and buoy rents might be reduced, the fees in connection with marine surveys made lighter, and the various forms of taxation in any way connected with the harbour and shipping might receive favourable consideration.
A
As regards (a) what circumstances have been responsible for the growth of prosperity in the past? These circumstances, as I view them, I propose to deal with numerically.
1. The whole prosperity of this Colony is based on its harbour: without it there would be no Colony. Ships of any size can lie in the harbour and ships up to 30 feet draft can discharge their cargo at the wharves at will. The number of ships that can use the harbour at any one time is for practical purposes unlimited.
The approaches to the harbour are without difficulty, and it has therefore attracted to itself the world's shipping as a convenient port of call, and terminus for all important shipping lines trading to the Far East.
2. By reason of the harbour, basic industries have developed into flourishing concerns, by basic industries I mean Godowns, Wharves, Lighterage, Towing, Ship- building and Repairing, Insurance of all kinds and Banking, bringing in their train employment on a large scale and vast accumulated wealth.
3.-The geographical position of Hong Kong is such that it has naturally become the pivotal centre for a vast carrying trade, not only with China and Japan but with all the countries bordering on the Pacific and certain parts of the Indian Ocean.
4.-The Godowns and the Dockyards provide ample facilities for all the requirements of the Far Eastern
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Trade, coupled with cheap and efficient native labour which it is difficult to excel elsewhere, making the position economically attractive as compared with any other port.
5.-The Free Port System available to the Flags of all nations, has probably had more to do with the building up of the prosperity of the Port than anything else. This system received great support in Great Britain in the 18th and 19th centuries, and was entirely instrumental at Singapore in drawing from the Dutch so much of the trade which formerly went to the ports of Java and the Dutch Settlements in the Malay Peninsula.
Hongkong was ceded to Great Britain by China in 1841 and the cession was confirmed by the Treaty of Nanking in 1842.
On the 2nd February, 1842, a Proclamation was issued by Captain Charles Elliot which stated inter alia "The Plenipotentiary seizes the earliest occasion to "declare that Her Majesty's Government has sought for "no privilege in China exclusively for the advantage of "British ships and merchants, and he is only performing "his duty in offering the protection of the British Flag "to the Subjects, Citizens and Ships of Foreign powers "that may resort to Her Majesty's Possession".
On the 7th June, 1841, a further Proclamation was issued by Captain Charles Elliot stating:-"that it was "thereby declared to the merchants and traders of "Canton and all parts of the Empire that they and their "ships have free permission to resort to and trade at the "port of Hongkong whereby they will receive full "protection from the High Officers of the British Nation "and that Hongkong being on the shores of the Chinese "Empire neither will there be any charges on imports "and exports to the British Government".
On the 16th February, 1842, Sir Henry Pottinger, His Majesty's Plenipotentiary, Minister Extraordinary,
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