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1967 this requirement was revoked and instead the Foreign Secretary is obliged to receive no more than a copy of the Annual Report, a glossy public relations compilation for general consumption, and the Minutes of the Executive and Legisla- tive Councils. Little of the darker side of life in Hong Kong appears in these publi- cations.
More significantly, the Colony has be- come increasingly free of financial con- trol. In 1948 Hong Kong was released from Treasury surveillance and given a large measure of autonomy over its own finances, although the Secretary of State retained control over the Estimates and supplementary provisions. In 1958 this control too was relaxed so that the Colony became virtually independent of Whitehall surveillance over its internal expenditure. Nonetheless, as both a de- pendent territory and a member of the sterling area Hong Kong was required to keep its official reserves and the greater part of the reserves of the banking sys- tem in the form of sterling. About 99 per cent of the Colony's reserves were there- fore held in London. But the devaluation of the pound in 1967 made it clear that the old relationship with the pound was no longer appropriate to Hong Kong's stronger economic position. In July 1972 the exchange value of the Hong Kong dollar was fixed in terms of the US dollar and not sterling. When the Basle Agree- ment expired in September 1973 the pri- vate Hong Kong banks decided to make a quick break out of sterling and sold heavily, perhaps as much as £200 million altogether (Financial Times, 4 February 1974). The British Government was furi- ous at what the Sunday Times (16 March 1973) called a "startling and unexpected threat to the pound," but there was little it could do about a fait accompli. The current arrangement between London and Hong Kong allowed the proportion of the official reserves held in sterling to drop to 70 per cent in April 1974 and the proportion has been further reduced since then. In November 1974 the Hong Kong dollar was floated. In trade matters too the Hong Kong Government has de- veloped an independent touch, having its own representatives to deal with GATT,
UNCTAD, the EEC, and major trading part- ners. Some of these developments are de- sirable and necessary. But the net result of this loosening of ties with Britain, based partly on Foreign Office indiffer- ence and partly on Hong Kong's sub- stantial position in world trade, is that to a very high degree the Hong Kong Gov- ernment now acts as a sovereign city state-and a powerful one at that. As the Far Eastern Economic Review (24 Janu- ary 1975) cynically but accurately re- marked: "Governments all over the world are under pressure. In Hong Kong, a colonial regime is in the enviable posi- tion of enjoying the fruits of autonomy, free from the challenge of elections or of a parliamentary opposition." The result is that far too many civil servants at all grades are afflicted with arrogance and complacency-a belief that "the system works" and that, with slight adjustments, all is for the best in the best of all pos- sible worlds.
a class regime
These attitudes are reinforced and re- newed by the dominant role which big business plays in the government of the Colony. Only the wealthy can afford to serve on the Executive and Legislative Councils. There is no payment for ser- vice and, although the legislature meets only on one afternoon a fortnight, and the Executive Council once a week, the committee work can be time consuming. Most Unofficial Members of the Coun- cils are bankers, merchants or industrial- ists. There are one or two professional people but no-one from the Hong Kong working class. In 1975 there were two people who served on both Councils and another four members of the Executive Council who were past members of the Legislative Council. Here indeed is a tightly knit group of politically moti- vated men. Just how tightly knit there is not space enough to detail here, but one or two examples must serve.
The often repeated saying that "Hong Kong is run by the Jockey Club, the Hongkong and Shanghai Bank, Jardines, and the Governor-in that order" still
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