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on either the physical or mental energies of the Colony's inhabitants. The conditions of life generally are hygienic and the mode of living sanitary.
B
Having dealt with the circumstances leading to the growth of prosperity in the Colony in the past, I turn now to the possible causes of the present depression, and what steps (if any) can be taken to either remedy or improve them. I propose also to deal with these numerically.
1. The world-wide depression, in the post-war period, which started in 1922 and 1923, but experienced a let-up owing to currency inflation, unsound lending, and the total disregard of the laws of supply and demand, finally overtook almost all countries in 1929 and has continued ever since. Hongkong, for a period did not feel the full blast of the depression owing to the fall in commodity prices being accompanied by the price of silver, but eventually succumbed with the rest, and in my opinion will only recover when the countries on which Hongkong depends for her trade recover. Hongkong in the past has felt the depression and experienced the recovery later than those countries on which she is dependent for her trade.
2. The Colony has in the last few years experienced a period of excessive speculation in goods, land and shares. There has been a glut of money as a result of the depression and lack of confidence which it has been difficult to find investment for; money has been loaned with very small and sometimes no margin on a basis of inflated prices.
Select a number of local companies in which the public of Hongkong are accustomed to invest their moneys, for instance, the Hongkong Land Investment & Agency Company Limited, the Hongkong & Shanghai Hotels Limited, the Green Island Cement Company Limited and a number of other similar concerns and
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calculate the loss of capital that has been sustained by shareholders in the past three years. It will then be realised the enormous loss of cover, and the huge de- preciation of capital assets.
Exchange has not moved in the direction expected by Chinese dealers and consequently goods purchased have not been taken up. The general result has been heavy losses in every direction, general hoarding of currency, and a freezing up all round. There is no remedy for those who cannot meet their obligations, but to go under, and those who can, to cut their losses and begin again.
3. For years the trade with China was carried on on a 5% ad valorum basis provided for in the Treaty of Tientsin and the commercial regulations agreed to from time to time. At Washington in 1922, and again at the abortive tariff conference of 1925/26, China was promised tariff autonomy, which was granted her in 1928 by various treaties. Since when she has continually raised her tariffs both external, internal, official and un- official till they have not only become uneconomic but are killing trade. The Government, both Central and Provincial, seem bent on raising money irrespective of what the economic effect may be. Nothing short of a central form of Government, effectively operating throughout China will ever remedy this position.
4. The vagaries of silver, and the instability of currency exchange throughout the world in the post-war period have rendered trading most difficult, and whilst unbalanced budgets and adverse balances of trade, are the rule rather than the exception, and whilst the War Debt Settlement remains outstanding and political con- siderations rather than the laws of supply and demand prevail, there is little hope in this direction.
5. Trade conditions in those parts where Chinese usually emigrate have been responsible for a great falling off in overseas remittances, and are an important factor in the decreased prosperity in the Colony.
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