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\author{David Golombek}
\title{An Industrial History of Hong Kong}
\date{\today}
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Hong Kong is a product of the industrial world; without technology, it
could never have existed, and there would be no need for it to exist.
Hong Kong's prosperity depends upon shipping, banking, and trade, and
its existence depends on land reclamation, food shipments, and many
other technologies.  These have been constants from Hong Kong's birth,
and will likely remain constants till its death.  Hong Kong is the
portal to the Orient, and as such will remain the jumping off point
for many new ventures, a last stop of Western business before entering
foreign markets.

Hong Kong has been inhabited for at least the last 500 years, but due
to the extensive construction on most of the island, it's impossible
to determine exactly when people first lived on the island.  However,
until the nineteenth century, this inhabitancy was limited to small
numbers of Chinese fishermen because Hong Kong is extremely
mountainous and contains very little arable land.  Hong Kong remained
empty while foreign activities in the Orient were spearheaded by the
Portuguese in 1513.  The Portuguese were the first to successfully
trade with China, a difficult combination of getting there and bribing
the right officials.  In 1557, the Portuguese were granted rights to
establish permanent buildings on Macau, a peninsula 40 miles west of
Hong Kong.  When the Spanish, Dutch, and British later started their
China trade, they too used Macau as a port and storage center, and it
grew into a large city.  Macau, however, was a poor harbor, and its
heavy Portuguese influences made other countries skeptical about
investing heavily in it.

On January 21, 1841 the Opium War was ended with the Convention of
Chuenpi.  Among other reparations, this treaty ceded Hong Kong to
Great Britain in perpetuity, due to the efforts of Captain Charles
Elliot of the Royal Navy.  He chose Hong Kong for its sheltered
harbor and lack of native inhabitants, which was why China was willing
to give it up.  However, British Foreign Secretary Palmerston disliked
Elliot's deal and replaced him with Sir Henry Pottinger.  Pottinger
negotiated the Treaty of Nanking in August of 1842, which essentially
reached the same terms as the Convention of Chuenpi, still ceding Hong
Kong and including a bit more money.  Thus, Hong Kong is usually
listed as being ceded in the Treaty of Nanking, because it officially
overrided the Convention.

In a manner very indicative of the rest of Hong Kong's future, these
initial negotiations were heavily influenced by a trading firm.  James
Matheson, of the firm Jardine, Matheson, and Co., was present at the
signing of the initial Convention, surveyed Hong Kong, and realized
that it would make a much better harbor than Macau ever would.  He
contacted his partner, William Jardine, whom had great political
clout, whom in turn contacted Palmerston.  Palmerston was initially
very much displeased with Elliot's choice of Hong Kong as trading
port, but after Jardine's influence on it's behalf, instructed
Pottinger to keep the island as part of the new treaty.  This heavy
and open manipulation of Royal policy by the trading houses was not at
all unusual, and regarded as normal by the ``liberal'' (laissez-faire)
government of the time.

As soon as Hong Kong was ceded in the Convention of Chuenpi, British
trading firms realized how important its natural harbor could be.
Trading in the Orient was restricted to certain times of year by the
powerful typhoons that hit during the spring, sinking any ship not
protected by large breakwaters or wonderful harbors.  Hong Kong
qualified as a wonderful harbor, having a large mountain in the path
of most incoming typhoons, and a deep-water harbor of 17 square miles,
protected from the open ocean by a series of smaller islands.
Jardine, Matheson, and Co. created the first Western building on Hong
Kong, a ``Godown'', or storage building, in February 1841, a mere
month after the Convention was signed.  In June of that year, the
first formal land sale was held, placing 50 land plots up for bidding.
This initial bidding was limited to English and Parsee bidders, but
many native Chinese started squating in unclaimed regions and in a
tremendous fleet of junks that immediately moored (in a permanent
manner) off the coast.  Despite this quick land sale, it wasn't until
1844 that most of the British trading firms moved their headquarters
from Macau to Hong Kong.

The trading companies mentioned above deserve additional mention
because of the strong influences they continued to have on Hong Kong
throughout its history and into the present.  Initially formed in
the image of the British East India Company, most of these trading
companies, also known as trading houses or Hongs, initially focused on
the opium trade with China.  They would buy opium in India or
Bangladesh, transport it to China, sell it on the Black Market (which
was so open as to more properly be called a Grey Market) for silver,
use the silver to buy tea, silk, and spices in China and transport
them back to England, where they'd be sold at a hefty profit.  Despite
the near universal distaste for the opium trade, it was deemed
necessary because China would only sell its goods for silver, and
the volume of silver needed would have drained England's supply
quickly.  The trading houses made a great deal of money on every stage
of this circle, and the whole venture was fantastically profitable.
Most of the Hongs were family businesses, started by a few
entrepreneurial members and continued by later generations.  The Hong
of Jardine, Matheson, and Co. is still one of the largest companies in
Hong Kong, and still controlled by the same family (despite being a
publicly traded company).

The first land sale only had 50 lots open, and many of these were
virtually useless.  There were originally supposed to be over 200 lots
offered, covering a large portion of the Central Waterfront district,
but due to poor time management (and possibly a desire to raise land
prices), most of these weren't offered until a later date.  Several of
the large Hongs dominated the first offering because of it's open
bidding.  Later land auctions were handled in a more subdued nature,
with private bidding and trading, including military and church
efforts to get desirable land that had already been sold.  Land
occupied by Chinese was left unauctioned and left as residential
districts.

Despite the political nature of it's birth, Hong Kong was essentially
enabled by the technology of the time.  The shipbuilding techniques of
the era had enabled shipping of large quantities from China back to
Europe, as well of the shipment of food and housing materials to Hong
Kong from China and elsewhere.  Large sections of land needed to be
cleared to enable the building of reasonable shelters, and this extra
dirt was combined with extensive dredging to create deep-water wharves
along the harbor and extend the island.  Without the discovery of the
cause and treatment of Malaria during the building of the Panama
Canal, Hong Kong would probably have been abandoned when large
outbreaks of Malaria started in Happy Valley.

Initially, Hong Kong was fully supported by British funds.  The
influence of the trading companies in Parliament had ensured that Hong
Kong would be a tax free port and that land taxes would be very low.
The lack of production on the island itself, and the limited sales to
native residents meant that most cargo simply sat in the harbor or
godowns of Hong Kong, never contributing to the Hong Kong coffers.
Governor John Davis tried to raise property taxes in 1845, but the
trader's influence in Parliament had this repealed.  It wasn't until
1855 that Hong Kong became self-sufficient, with the exception of
military support, and this was more due to decreases in spending and
greatly increased trading than any increased taxation.  Taxes have
remained among the lowest and simplest in the world, keeping Hong Kong
a very popular place to do business.

Because of this free trade policy and the lack of required record
keeping for trading companies, it's quite hard to accurately track the
growth of trade passing through Hong Kong.  Additionally, Hong Kong
has traditionally been the center of a great deal of illegal trade,
which has been estimated to exceed legal trade at various points in
time (especially when the China trade was restricted).  Although
initial trade was initially largely English, American and other
European companies quickly bought land in Hong Kong and began to
conducted trading operations based out of it.  The population of Hong
Kong is similarly very hard to track, at least until the latter half
of this century.  The British put little effort into tracking the
Chinese population of Hong Kong, despite the fact that it made up
roughly 90 percent of the population.  This ratio has remained true
ever since, rising up to 98 percent in recent years.

The Chinese have played an extremely important role in Hong Kong's
growth, both in terms of mainland politics and island marketing.
Chinese farmers initially flocked to Hong Kong to do manual labor for
the British traders.  Several ambitious Chinese became Compradores for
British firms, acting as go-betweens for the firm and other Chinese
merchants (primarily on the mainland).  Many grew very rich in these
positions, and several founded Chinese trading companies that served
the Hong Kong community and dealt with the British traders.  By 1880,
almost 90 percent of Hong Kong revenue was contributed by Chinese
firms (this partially influenced by the taxation scheme).  Most
middleman type contracts were controlled by Chinese firms, which were
willing to take lower margins, which they made up for in lower
overhead and greater frugality.  Relations between the Chinese of Hong
Kong and the foreigners has remained on good terms throughout many
troubles with mainland China, with people placing a higher value on
stability of trade then on national allegiance.

In 1860 Kowloon was ceded to Great Britain, again in perpetuity,
roughly tripling the size of Hong Kong, opening the far side of the
natural harbor to docks and depots, which were quickly constructed.
On October 20, 1898 the Convention of Peking was signed, in which
Great Britain agreed to return Hong Kong island and Kowloon to Britain
after a 99 year period starting at that date, in return for the lease
of the New Territories for that time.  The addition of the New
Territories increased the land area of Hong Kong 17 times, including
the first arable land to be part of the territory.  The island has
remained the financial center of Hong Kong, while Kowloon became the
shipping center, and the New Territories were relegated to food
production and manufacturing centers when they later opened up in Hong
Kong.

The Hong Kong banking system started quickly with the opening of The
Oriental Banking Corporation in 1845.  Many others were to follow, the
largest being the Hongkong and Shanghai Banking Company, which was
formed by by a conglomeration of trading houses and Chinese backers in
1864 and has grown to be own of the largest banks in the world.  The
Chinese have a long tradition of moneylending and banking, and were
quick to form many banks of their own, some backed by the Chinese
government and others by wealthy Compradores and traders.  Trading has
remained an important facet of Hong Kong, with banks based there
holding more than 5 trillion dollars in assets, ranking 9th in the
world.

The nature of the trade passing through Hong Kong has changed greatly
over the years.  Only the destinations remain the same --- Hong Kong
has always been a gateway to the Orient, and in particular Shanghai,
which has become another of the largest ports in the world.  One of
the first changes to hit Hong Kong was the switch from Great Ships to
Steamers and Steamships, beginning in 1865.  This, along with the
opening of the Suez Canal in 1869 decreased the time for a trip from
England to Hong Kong from almost four months to about a month.  Then
began a large scale restructuring of the materials transported through
Hong Kong.  Starting in 1890, opium went through varied states of
legality of trade, ranging from completely legal to completely illegal
and searched for by the Royal Navy.  By 1913, the opium trade was
nearly dead, finally killed by tough Chinese laws.  However, as
opium died out, other manufactured goods were shipped in increasing
quantities.  Eventually the full range of goods on the market, from
books to heavy machinery were shipped through Hong Kong.

Hong Kong has become one of the largest marketplaces in the world,
growing from a near barren rock to a packed metropolis of 5.5
million inhabitants in 150 years.  The entire history of Hong Kong is
filled with exciting dramas, but the early years of its history
emphasize the role technology has played in its life.  Dependent upon
shipments of food and land reclamation for its existence, and
shipping, banking, and trade for its livelihood, Hong Kong is truly a
child of industry.  It's life is inseperable from these
technologies, and the early years of Hong Kong show how these ties
were wrought.


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\begin{thebibliography}{99}

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\bibitem{treaty} Wesley-Smit, Peter.  Unequal Treaty 1989-1997.
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\end{thebibliography}
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