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The term "world markets" is used advisedly as there are likely to be local markets of a limited nature in the neighbourhood of most Colonies which can most suitably and economically be met by local production as a natural expression of the economic life of the community.

9. Now while the above truly applies to the British Empire as a whole and while the portion relating to Colonies is indeed consonant with the conditions obtaining in practically all the Colonies of the Empire, it does not in particular apply to Hong Kong. It is not Hong Kong's main function to export produce, and with 25% of the working population engaged in industry its manufactures cannot be said to be negligible. For the rest, Hong Kong has practically no raw materials or agri- cultural production for export, and its main activities are devoted to importing and exporting goods originating from outside its borders; and the shipping, financial. professional, and technical services relating to that commerce. (Hong Kong's position in the British Empire may therefore be regarded as unique. Inasmuch as it is unique we are unanimously of the opinion that in all matters of Imperial Policy the Colony should be given careful individual consideration. Inasmuch as it is by necessity, and for the general welfare of the trade of the Empire passing through its portals, a Free Trade entrepot, and can therefore afford but little Empire Pre- ference, we consider that the rest of the Empire should whenever at all possible accord it such treatment as will enable it to prosper and continue to afford its splendid facilities at the cheapest possible rate.

10. That there is a tendency not to accord Hong Kong such treatment has been brought before us in evidence relating to specific industries. There has for instance recently been a strong endeavour on the part of certain portions of the Em- pire for the imposition of restrictions on the Empire marketing of rubber shoes. the Empire content of which is high and could be higher if so desired. We have heard that rope manufactured in the Colony by a Company which commenced operation in the last century has been virtually excluded from one Empire market. fundamentally because it can sell its goods at a cheaper (but profit bearing) cost than that of goods emanating from other parts of the Empire. It is not gainsaid that good reasons may be produced to justify such action but when we take it that the broad line of policy is Imperial co-operation we feel that in respect of her services to Empire Trade and the small measure of preference she is able to afford to other parts of the Empire, some latitude should be allowed Hong Kong, especially during this time of great depression. It is plain to us that, if the reasonable pro- sperity of the Colony cannot be maintained, the burden of taxation must become heavier, with a resultant increase in the charges on the trade of the port.

We believe that the Empire will gain more by the maintenance of Hong Kong as one of the cheapest ports in the world than by adopting a policy calculated to suppress a reasonable development of her small industries.

11. At the Imperial Economic Conference at Ottawa in 1932 were present delegates representing Canada, The United Kingdom, Australia, New Zealand, The Irish Free State, India, The Union of South Africa, Newfoundland and Southern Rhodesia. In the United Kingdom delegation was included the Secretary of State for the Colonies and a Colonial Officer Adviser.

12. In the course of his initial speech at the Conference Mr. Stanley Baldwin said:

What then should be the first aim of this Conference? It should be to clear out the channels of trade among ourselves. For that purpose we need not measure too closely or too exactly the relative value of preferences given and received. If we all approach the problem with a view to seeing how much each can contribute to the common stock without detriment to our own national interests, we shall not need to concern ourselves with the relative advantages obtained by each, since we shall know that an increase in the purchasing power of any members of the Empire must show itself in the increased Imperial trade, and the prosperity of each will add to the prosperity of all ".

"The present universal depression makes the extension and improvement of Imperial trade a matter of urgent importance to all parts of the Empire. The