TNAG-0003-FCO40-39-Commission-of-Enquiry-into-the-Kowloon-disturbances-addition-1968 — Page 153

PART VI CONCLUSIONS

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trading conditions tended to induce a temporary hesitancy amongst investors, and to encourage a more pessimistic view of Hong Kong's future economic prosperity.

487. A persisting anxiety about certain aspects of the banking system and the effect of publicity given to sensational rumour was demonstrated again in April 1965 and in November 1965 when runs on other banks were only averted by swift Government action and strong support from the major banks.

Real Estate Recession

488. The view was expressed that much of the widespread public feeling of insecurity originated in the recession which was experienced in early 1965 in the real estate market and its many ancillary activities. Since land development had previously enjoyed the reputation of being one of the most profitable investments in Hong Kong and had attracted large sums of money from overseas Chinese, it seems that the sudden drying up of this avenue for investment, which was evident for all to see in the large numbers of empty flats, may have led to a feeling that Hong Kong's economy was more insecure than is actually the case. Furthermore, a number of workers who had been attracted from other industries to the con- struction business during the boom years may have suffered some loss of wages on re-employment elsewhere.

Dependence on Foreign Trade

489. There was some evidence to show that many people are conscious of the degree to which Hong Kong's prosperity is dependent on manufacture for export and that an important element in the dread of rising prices is the fear that Hong Kong's exports will be priced out of their markets.

490. Another aspect of this awareness of the critical importance of foreign trade is a growing appreciation of the threat to Hong Kong's prosperity through the imposition by a number of countries of quotas or restraint agreements on the more important exports. An instance of this was the considerable alarm caused by the U.K. Government's decision in October 1965 not to permit carry-over into 1966 of unused quotas under the 1963-65 cotton agreement. It would appear that the sense of dismay caused in Hong Kong at this news was greater and more widespread than on similar occasions in the past.

491. We believe that these factors contributed to a growing feeling amongst large sections of the public of worry and insecurity about the future and to the large measure of support given to the opposition to price increases by petition and demonstration. Those who had already achieved a reasonable standard of living would naturally tend to worry about rising prices eroding the standard they had achieved and about the safety of their savings. Those who were struggling to achieve a better standard of living-the majority in Hong Kong-would tend to