CO129-549-14 Commission of Enquiry into trade of Colony 17-7-1934 - 18-1-1935 — Page 22

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and Chief Superintendent of the Trade of British subjects in China, issued a Proclamation stating:- "that pending the receipt of the Queen's Gracious and "Royal Pleasure, the Harbour of Hongkong and its "Dependencies shall be considered a 'Free Port', and "that no manner of Customs, Port Duties, or any other "charges, shall be levied in the said Ports, on any ships "or vessels of whatever Nation or sailing under what- "ever Flag, that may enter those ports or on their "cargoes."

For nearly a hundred years the prosperity of this Colony has been built up upon the basis of the above Proclamations and I see no good reason for varying this Policy.

The revenue of this Colony, in addition to the balance received on the self Balancing Departments (Post Office, Wireless Services, Water Supply and Kowloon-Canton Railway), is devisable as follows:- 3.9% is obtained from Customs and Marine (Import Duties, Harbour Dues) 24.5% Excise, (Liquors) 14.2%, Opium 8.2%, Assessed Taxes (Rates) 21.4%, Licences. Stamps and other internal revenue 19.9% Fees etc. 7.2%, Rent and interest and Miscellaneous 16.4%, Land Sales (premia on leases) 4.3%. Since the Ottawa Agreements, at the request of the Right Honourable the Secretary of State for the Colonies, a 20% protective duty has been levied in favour of British motor cars which is payable on registration and a small advantage in favour of Empire brandy and tobacco.

A very interesting survey of the Public Finance of this Colony appears in a valuable report recently issued by the Colonial Office entitled "An Economic Survey of the Colonial Empire 1932", and members of the Com- mission are particularly referred to pages 132 to 141 of this Survey.

For all practical purposes it may be stated that such tariffs as there are, are revenue tariffs which are internationally recognised as not being contrary to "Free Port" principles.

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Protective tariffs are used so as to enable a country to be highly industrialised, or for the purpose of correcting the balance of trade, and as such are contrary to "Free Port" principles.

Singapore was from the time of the first settlement a "Free Port", but has recently adopted a limited protective system, whether wisely or not remains to be seen. I shall however deal with Singapore as a "Free Port" later on in this Memorandum.

I can see the advantage of protective tariffs in a Colony such as Ceylon, or even in Malaya, as the circumstances are to-day, because in both cases they have a big hinterland, large natural resources and an intensive population to cater for. The position of Hongkong is vastly different: she has nothing of real permanent value, save her harbour and the basic industries already referred to in connection therewith.

Hongkong is not a producer of any primary com- modities such as iron, tin, coal, copper, silver, cotton, wool, silk, tea, rubber, oil, etc. If she were then it would be an advantage to adopt a protective tariff system, whereby industries can be built up for the purpose of using her primary commodities to advantage. It must not be forgotten that the apparent prosperity in England to-day is probably the discovery of the Home Market whereas in Hongkong the Home Market is negligible when compared with the vast trade she ́ handles exterior to her boundaries.

The Right Honourable Sir Joseph Chamberlain, then Secretary of State for the Colonies, when writing on the 29th November, 1895 to His Excellency Sir W. Robinson, K.C.M.G., then Governor of Hongkong, said:- "I am aware that the trade of the Colony under your "Government is of a special character" and the Right Honourable Sir Philip Cunliffe-Lister the present Secre- tary of State for the Colonies made a similar statement in the House of Commons this year.

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