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Finance and
Currency.
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considered that during November and December only one ocean- going cargo ship was unloaded and that the bulk of these imports was carried by small ships and junks.
107. There is little doubt that Hong Kong established and maintained a commercial lead over other ports on the China coast. Foreign firms showed an increasing eagerness to remove their head offices, particularly from Shanghai, to the Colony; a process which was accelerated by the new Chinese Company Laws.
108. The rehabilitation of the Colony's heavier industries, such as dockyards and iron foundries, which had suffered varying degrees of war damage, was still in its early stages at the end of the Military period, and continued to be hampered by the lack of raw materials. A slowly increasing amount of dockyard work, however, was being undertaken. Factories were similarly impeded by the difficulty of obtaining supplies, but the requisitioning of such stocks of raw materials as the Colony possessed permitted the re-start on a small scale of the following industries: soap, rattan-ware, tanneries, flour and rice mills, matches, paint, rubber and canvas shoes, nails and boat-building.
109. Revenue for the six months period up to the 28th Feb- ruary amounted to approximately $27 millions, and expenditure to $30 millions, leaving a deficit of $3 millions. Any such figures are, however, bound to be misleading in that the salaries of military personnel attached to Civil Affairs are not included, and that the effect of the semi-commercial transactions undertaken by the Administration in connection with purchases and sales of rice, coal, etc., is not fully reflected owing to the lack of information as to actual costs. Moreover, several major adjustments had not yet been passed when the present report was compiled. If the receipts and payments relating to the transactions of a commercial nature are excluded, and they were of considerable magnitude, the net figures become: Revenue, $7 millions; Expenditure, $15 millions; Deficit $8 millions.
110. The Revenue and Expenditure figures are however not really comparable, as the former does not represent six months collection. Indeed, except for a little entertainment tax, no revenue was collected until the 29th October, and it was not
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until the beginning of December that collections were on any- thing approaching a normal scale. Nevertheless a satisfactory level in revenue collection had been reached by the end of February. Entertainment Tax receipts amounted to nearly $700,000, or double the estimate for the whole of the year 1941/42. Rates totalled a little under $1 millions, but payments continued throughout March. Other comparatively large items of revenue were duties on liquor and tobacco: $1,848,000; Post Office receipts: $467,000 and stamp duties: $229,500.
111.
Apart from the commercial transactions referred to above, the only single expenditure items of any magnitude were the Rehabilitation and High Cost of Living Allowances which totalled about $3 millions. In the early months, considerable advances were made to numerous companies, particularly the dockyards, with the dual purpose of enabling them to resume their activities with the least possible delay, and to put Hong Kong dollar currency into circulation. There were indications that this policy achieved its aim. A number of recoveries were effected but a large amount remained outstanding pending settlement of somewhat complicated negotiations with the firms concerned.
112.
Directly the Hong Kong dollar was re-established, about the middle of September, Japanese military yen immediately went out of use except as gambling counters. At first Hong Kong currency notes available for issue were hardly equal to the demand, and some anxious moments were experienced before adequate stocks arrived.
113. The banks re-opened for domestic business on the 17th October, although prior to that date limited withdrawals had been permitted. From the 17th October there were no restrictions on new accounts but pre-war accounts remained frozen. Exchange dealings within the sterling area were resumed on the 12th November, and full exchange facilities were made available on the 4th December, subject to the usual control.
114. The resumption of foreign exchange business was important, as no supplies were coming forward from the United
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