I hold that two principles are important; first that there should be a steady expansion of public services, not an irregular one related to revenue a… - John James Cowperthwaite

I largely agree with those that hold that Government should not in general interfere with the course of the economy merely on the strength of its own commercial judgment. If we cannot rely on the judgment of individual businessmen, taking their own risks, we have no future anyway.

I am also, I must confess, a little sceptical of the theory that we have a right, if we could, to pass on our capital burden to future generations. I remarked last year in this context that our predecessors had not passed any significant part of their burden on to us.

Economists of the modern school will no doubt protest that I have said nothing of the use of budget deficits or surpluses for the control of the economy in general. I doubt if such techniques would ever be appropriate in Hong Kong's exposed economic position; and I think they are certainly not appropriate at present, when in strict orthodoxy they would suggest the need to plan for a very substantial surplus "to take the heat out of the economy". Although we have in fact run substantial surpluses in recent years we have not done so with deflationary effect because we have not removed them from the economy but have left them inside the Colony's banking system to continue to work for the economy. $500 million or 55% of reserves are so held at present.