Keep Right On Sitting

The Crown Colony of Hong Kong was founded in 1841 as a base for Britain's opium trade with China. It outgrew its sinister origin, to become an outpost of British comfort, respectability and sound business methods. The British merchant princes who owned Hong Kong tended their beautiful, peaked island as carefully as a well-hedged Surrey garden, determinedly insulating it from the turbulent realities of Asia.

Long after the Communists captured China, Hong Kong's traders argued that their island's value as the East's greatest trading center immunized it against aggression. Hanging out the "business as usual sign, they continued to do a flourishing trade with Red China. In recent months the U.S. embargo on China-bound exports threatened to curtail their prosperity.

Last week TIME Correspondent Dwight Martin visited Hong Kong, to see how.the crown colony was faring. He cabled:

A BRIGHT winter sun shone down on the sparkling blue waters of Hong Kong's incomparable harbor. Commuters on the tidy little ferries that link Victoria Island with the mainland saw spread before them on the waterfront most of the great commercial names of the Orient--Jardine, Matheson & Co., Butterfield & Swire, the East Asiatic Co. Dominating the closely packed warehouses and office buildings rose the massive square tower and the bronze lions of the Hong Kong & Shanghai Banking Corp.

A Cheerful Patient. From high above on the Peak, the white fac,ades of California-style apartment houses and the frescoed mansions of wealthy traders looked down on the colony's business section. Hong Kong's polyglot population--Chinese, Britons, Americans, Eurasians and White Russians--swirled along the narrow, arcaded sidewalks, pausing at the intersections to thread their way through a steady stream of Citroens and Chevrolets, Buicks and Bentleys.

Hong Kong's shops and department stores were bursting with the goods of East & West. In a space of 20 yards on Queen's Road a shopper could have his choice of a Cantonese pressed duck, a London-made Burberry topcoat or a large Chinese Communist flag. The abaci of the money-changers clicked steadily. Passports to European countries were selling for as high as $8,000 apiece. On nearby Ice House Street the firm of Lo & Lo, Solicitors, reported a thriving business.

The colony's 9,500 British remained comfortable and undisturbed. Weekends the bay fluttered with the sails of the Royal Hong Kong Yacht Club's racers. Workaday officials calmly planned home leaves a year in advance.

The breath of Mayfair hung over the

Gripps, as the courtly dining room of the Hong Kong Hotel is called. In the Gripps, both British and Chinese scrupulously dressed for dinner. A few blocks away, the steep streets of the Chinese quarter rang with the click-clack of wooden clogs and the incessant rattle and shuffle of mah-jongg pieces.

Visitors to Hong Kong, expecting the tension of a beleaguered city, were surprised at how relaxed it was. Over tea in the dustily ornate Peninsula Hotel, a vacationing U.S. physician from Tokyo marveled: "I never saw a patient quite so cheerfully resigned to dying."

Oldtimers deprecated such a drastic diagnosis. In his penthouse suite atop the Hong Kong & Shanghai Banking Corp building, Chief Manager Sir Arthur Morse a dynamic, silvery-haired Irishman, said imperiously: "We've been sitting on top )f a volcano out here for more than 100 years already. And we damned well propose to keep right on sitting--until it really blows up. Look about you, look about you; do you see any signs of jitters?"

Things looked normal enough at the border railroad station of Lowu, where Hong Kong transships its imports to Communist China. Red-capped coolies unloaded copper wire from Europe, office supplies from the U.S., military truck tires from Japan, and natural rubber from Malaya. From the Chinese side of the border, past unsmiling Communist frontier guards, coolies carried the mainland food which the colony gets in return.

The U.S. embargo, however, had begun to take its toll. Traders whose godowns were crammed with U.S. goods when the embargo went into effect have no way of replenishing their stocks. Cut off from 25% of their former imports, the colony's businessmen worry about satisfying their demanding Red Chinese customers. If the customers grew angry, their armies could overrun Hong Kong in a few days.

This Fair Place. The British government of Hong Kong, for its part, spared no effort to conciliate the Communists. The influential pro-Communist dailies Ta Rung Pao and Wen Wei Pao print violent, Peking-inspired attacks on the U.S and the U.N. without interference. One of the few U.S. efforts at counter-propaganda, a 15-minute daily Voice of America broadcast, was recently dropped by the Hong Kong radio.

Chinese Communists characteristically ignored this latest gesture of appeasement. Last weekend, while British officials were lunching in the members' boxes at the Happy Valley race track, Red troops emplaced a new battery of 105-mm. howitzers on the Wanshan Islands 30 miles southwest of Hong Kong. The government of the neighboring Kwangtung Province announced a fresh set of security regulations intended to check the flow of mainland travelers into the colony. Within Hong Kong, Chinese exiles trembled for their last refuge. Said a bookkeeper from Shanghai: "Here is where we finally become Communists."

Only a few Hong Kong residents, undeceived by the appearance of normality admitted their concern. Said one Briton, looking down from his Peak apartment at one of loveliest views in the Orient: We all know that some day we shall lose this fair, imperial place. And sometimes I think it would be better to throw it in their bloody teeth now, rather than to give it up inch by inch. But I know we'll never do it."

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