Ghosts of Empire (57 page)

From the evidence of his memoirs, Grantham obviously enjoyed being a governor in what was perhaps the most authoritarian colony of the British Empire. His account of the powers and authority granted to the governor were straight from the pages of Somerset Maugham, who had written about Hong Kong in the 1920s. ‘In a crown colony the Governor is next to the Almighty. Everyone stands up when he enters a room,' Grantham remembered, with some nostalgia. He was ‘deferred to on all occasions'. Grantham's view of Hong Kong was wholly in accord with received opinion in Hong Kong ever since its beginning as a British colony in 1841: Hong Kong was exclusively concerned with trade and commerce; the Chinese were not interested in politics or democracy, and the British could provide them with the stable background, the law and order, necessary for them to make money. ‘Provided that the government maintains law and order, does not tax them too much and that they can get justice in
the courts, they [the Chinese inhabitants of Hong Kong] are content to leave the business of government to the professionals,' Grantham asserted. He was unsentimental about Hong Kong, the colony in which he had spent the first twelve years of his career, and where he would serve as governor for nine years. He believed that the Chinese had no loyalty to the place, any more than Europeans had ties there: the Chinese came ‘to Hong Kong to work until they retired home to China, just as the Europeans returned home to Europe'. In a striking metaphor, he compared Hong Kong to ‘a railway station, and its inhabitants to the passengers who pass in and out of the gates'. He believed with equal conviction that politicians in Britain were ‘quite ready to abandon constitutional reform for Hong Kong' on the grounds that the ‘matter did not interest the British electorate'.
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Of course, Grantham was right. A colonial governor exercised enormous power, in many cases literally a power of life and death. This was shown, to graphic effect, in the case of Dalton and Douthwaite, two British soldiers who were arrested in 1953 for the murder of a Chinese woman the previous December. The soldiers belonged to the 35th Infantry Brigade stationed in Hong Kong. Lance-Corporal George Robert Douthwaite, the older man, aged twenty-four, had fought in the Korean War, while Dalton was only nineteen. They were alleged to have pulled a woman, Ho Sze-mui, off her bike, to have beaten her with a pair of handcuffs in a seemingly unprovoked attack, and then to have left her body in a ditch on the side of a military road known as Route 7. In April 1953, just as Britain was preparing for the coronation of Queen Elizabeth II, the two men were convicted and sentenced to death by Mr Justice Gould, a New Zealand-born judge. The case went to the Court of Appeal, which dismissed the case of the two soldiers that June. There followed a further appeal to the Privy Council in early October, which was similarly unsuccessful. In the meantime, Dalton's mother wrote a personal letter to the Queen asking for her to intervene. Private Dalton had been a loving son and his parents lived as poor tenants on an estate where the soldier's father had worked as a dairyman. At this point the Colonial Office adopted a firmly neutral position; in a businesslike letter, British officials told the mother of the younger soldier in unequivocal language that the
‘prerogative of mercy in cases of this nature is delegated by Her Majesty to the Governor of Hong Kong and your petition has accordingly been sent to him for consideration'. It is doubtful that Her Majesty would even have seen the letter addressed to her. Peter Smithers, the Daltons' local MP, lobbied the government, but was firmly told by Oliver Lyttelton that it was not the Secretary of State's ‘duty to advise Her Majesty on the exercise of the prerogative of mercy in this case: it is for the Governor of Hong Kong to decide whether it should be exercised'. Lyttelton considered that it would be ‘improper for me to seek to influence him in coming to his decision'. The two soldiers spent the summer of 1953 in a humid cell in Hong Kong awaiting their deaths. Then, on 20 October, the Acting Governor, Robert Black, announced that he had commuted the sentence and had ordered that Douthwaite be imprisoned for twenty years and Dalton for twelve. The men had spent six months on death row and at every stage of their appeals the death sentence had been confirmed. It was only after this lengthy process that the Governor saved the soldiers in an act of clemency which no one had foreseen. The story had a final sad consequence. The elder soldier's mother, Priscilla Douthwaite, a widow, was found dead in a stream in May near her home. She was sixty-nine and had been traumatized by the news of her son's impending fate.
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The 1950s are generally remembered in the West as years of steady conservatism, but there was perhaps no other society in which an atmosphere of paternalism and authority was so prevalent as that of Hong Kong, where the role of the state had not evolved since the nineteenth century. Social provision was minimal and welfare support was organized by voluntary bodies or kaifong associations, which reflected the Chinese reputation for ‘assisting those in need through either the family or through Clan associations'.
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Drug abuse continued to be an endemic problem in Hong Kong in the 1950s, and the colony's government sought to counter the problem by getting the Acting Secretary for Chinese Affairs, the Honourable P. C. M. Sedgwick, to give an evening broadcast on the subject in November 1959, in which he urged the public to ‘co-operate in the official campaign against the terrible social evil of drug addiction'. He cited the alarming statistic that ‘over 50,000 persons committed to prison during the past five
and a half years have been found to be drug addicts'. He went on to suggest that the number of addicts could be as high as ‘three to five times that figure'; a figure of ‘between 150,000 and 200,000' in an estimated total population of 2.8 million was intolerably high. This method of public admonishment was crude, and officials deliberately contrasted Hong Kong unfavourably with the law-abiding conditions in Britain, where in 1959 it was claimed there existed ‘only a few hundred drug addicts in a total population of 50 million'. In the United Kingdom, as Sedgwick explained, the drug addict was ‘looked down upon'; even ‘in the criminal classes this is so', he boasted.
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Paternalism had governed Hong Kong for more than a hundred years and little had changed in the years immediately after the war, which witnessed remarkable economic expansion in the colony, accompanied by considerable immigration. When Hong Kong surrendered to the Japanese on Christmas Day 1941, its population was estimated at 1.6 million. In less than three years under Japanese rule that population had sunk below 600,000; the future of the colony seemed bleak, and yet, by a process of growth in which the government had little direct involvement, it would develop in the 1950s and 1960s to become one of the great commercial centres of the world. The communist takeover of mainland China in 1949, by ensuring that Hong Kong's great rival, Shanghai, was no longer open to foreign capital, gave the colony an unexpected boost. Yet, even during the struggle which raged within China from 1945 until 1949, financiers, merchants and industrialists had started the flight to Hong Kong from the chaos and uncertainty of Shanghai.
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Immigration was such that by 1960 the population of the colony had reached nearly 3 million people. The industrial sector grew at impressive rates; Hong Kong now became famous for its textiles, for its banking and for the uncanny ability of its manufacturers to mimic luxury goods from outwardly more sophisticated cities like Milan, Paris or London. It was during the 1950s and 1960s that the image of Hong Kong in Europe and Japan became indelibly associated with the manufacture of ‘cheap shirts and plastic flowers'.
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The dynamic days of Hong Kong's economic expansion have been attributed by many to the activity, or rather the non-activity, of one civil
servant, the Financial Secretary of the colony from 1961 to 1971, John Cowperthwaite, who died in 2006 at the age of ninety. He became unwittingly a minor cult figure among the new conservative right in America for the uncompromising nature of his laissez-faire views. He was a rather rigid disciple of his fellow Scot Adam Smith, and developed a doctrine of ‘positive non-intervention' in which the state's role would be minimal, consisting only of keeping taxes low, maintaining open markets and abolishing restrictions on the movement of capital. Cowperthwaite had never taken a degree in Economics, but was yet another Oxbridge Classics graduate, so common in the administration of Hong Kong. He had graduated from Christ's College, Cambridge with a double first in 1939, before going to Edinburgh University to learn some Economics. A statement of his doctrines came in his maiden budget speech in 1961, which, in itself, was one of the clearest expositions of the gospel of the free market in practical affairs: ‘In the long run, the aggregate of decisions of individual businessmen, exercising individual judgement in a free economy, even if often mistaken, is less likely to do harm than the centralized decisions of a government, and certainly the harm is likely to be counteracted faster.'
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Cowperthwaite was passionate about Hong Kong, and declared himself to be a ‘Hong Kong chauvinist'. He has been described by the American right-wing commentator P. J. O'Rourke as a ‘master of simplicities' and was clear and direct in his manner, although there always lurked a hint of mischief in his style, which has been characterized as ‘polished and amusing'.
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Personal taxes he kept at a maximum of 15 per cent. His rigid determination always to balance the budget and never to borrow money would have impressed Gladstone. Red tape and bureaucracy were reduced, it was said, to such an extent that a new company could be registered with a one-page form. Cowperthwaite, by background and inclination, was the ultimate conservative bureaucrat, giving–with a slight air of superiority –a controlled display of measured efficiency. He was naturally sceptical about all human ability to improve society as a whole and, during his administration, Adam Smith's invisible hand was a far better guide to policy than the more direct approaches favoured by most states in the twentieth century.

Milton Friedman, the Nobel Prize-winning champion of free-market capitalism, remembered with affection a visit which he and his wife made to Hong Kong in 1963. While enjoying his stay in Hong Kong's finest hotel, the Peninsula, and while his wife Rose indulged her tastes in what she described as ‘a shopper's paradise', Friedman got a chance to meet Cowperthwaite. During this memorable encounter between the most famous theoretical advocate of laissez-faire in the twentieth century and the doctrine's most successful practical exponent, Cowperthwaite explained that he had resisted requests from civil servants to provide economic statistics because ‘he was convinced that once the data was published there would be pressure to use them for government intervention in the economy'.
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Famously, in what seems to be an apocryphal story, Cowperthwaite greeted and then immediately sent back on the next plane a delegation of civil servants who had arrived in Hong Kong from London to find out why employment statistics had not been collected in the colony.
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The partisans of free-market economics were not slow to point out the contrast between the entrepreneurial, business-friendly Hong Kong and the socialist state that many of them believed Britain had become in the decades after 1945. Milton Friedman observed that ‘by following a policy opposite to that of its mother country' Hong Kong had thrived, ‘while the mother country did not'.
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Cowperthwaite's obituarist in the Hong Kong
Standard
pointed out that while ‘Britain was moving to a socialist and welfare state', the colony ‘had the fortune to have Cowperthwaite'.
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It is true that Hong Kong's growth during Cowperthwaite's tenure was spectacular, and that he often decried the influence of governments on society and the economy, yet the irony was that, for all his distrust of bureaucracy, he was the archetypal bureaucrat of the British Empire: he was Scottish by birth–the high number of Scots in the imperial administration was well known–he was educated at a public school, in his case Merchiston Castle in Edinburgh, and he had studied Classics–the imperial subject par excellence –with considerable success at Cambridge.

Hong Kong, as Cowperthwaite's supporters never fail to observe, grew at an average of 13.8 per cent in every year of his tenure as the colony's financial secretary, and its foreign currency reserves quadrupled. When he died in 2006,
his successor (and the last to hold the post of financial secretary), Donald Tsang, later the Special Administrative Region's second chief executive after Hong Kong's return to Chinese rule, paid a fulsome tribute to Cowperthwaite: ‘We shall always remember Sir John for the pioneering and dominant role he played in the birth of the legend of Hong Kong as the freest market economy.'
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The picture, however, was not one of unalloyed sunlight and harmony. Milton Friedman described Cowperthwaite as a ‘benevolent dictator', yet, owing to the lack of infrastructure, new immigrants to Hong Kong were housed in shacks and squatter huts, built on hillsides and in cemeteries.
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Even more alarmingly, Cowperthwaite's period of office saw a banking crisis in 1965 and the most destabilizing political riots in the colony's history in 1967, both of which undermined international confidence in Hong Kong.
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The British possession of Hong Kong had always been an embarrassment to the Chinese. Indeed, many people had believed that the Chinese, first under Chiang Kai-shek, in the years immediately after the Second World War, and then under Mao Zedong, after 1949, were poised simply to overrun the colony and take it over by force. That this never happened was surprising and, all through the first two decades after 1945, British officials in Hong Kong and in London remained aware of this potential threat. It is likely that the pressure of internal politics prevented China from expanding its borders, as it underwent a period of intensive industrialization in 1953–7, accompanied by a shift to more widely practised socialism, as well as the introduction of its first Five-Year Plan.
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In addition to the Chinese military threat, there was also the growing realization that the lease of the New Territories, which comprised the vast majority of the land area of the colony, was due to expire; Hong Kong Island and Kowloon would remain legally British, but in practical terms their continued retention would be impossible. Contrary to a commonly held view in the UK in the 1980s, even ordinary Hong Kong residents grew increasingly aware during the 1960s of the significance of 1997 and the need to prepare for it. Robert Black, Grantham's successor as governor, observed in 1964 in a letter to the Colonial Office that ‘people, of course, are by no means unaware of the significance of the date 1997', and referred to an article in the
Sunday Times
colour supplement about ‘the future of Hong Kong in relation to the end of the New Territories' lease'.
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