Sir john James Cowperthwaite, KBE, CMG (1915-2006)
Michael Rhodes
1961-71, died 21 January, 2006. He was aged 90.
He was born 25 April, 1915, the son of John James Cowperthwaite, and
was educated at Merchiston Castle School; St Andrews University;
Christ's College, Cambridge.
Career: entered the Colonial Administrative Service, Hong Kong, 1941;
seconded to Sierra Leone, 1942-45; international adviser to Jardine
Fleming & Co., Ltd, Hong Kong, 1972-81.
He was appointed OBE 1960; CMG 1964; KBE 1968.
He married in 1941, Sheila Mary, daughter of Alexander Thomson, of
Aberdeen, by whom he had one son.
Source: Daily Telegraph 25 January, 2006
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charlene...@gmail.com
Sir John Cowperthwaite April 25, 1915 - January 21, 2006
Civil servant whose laissez-faire approach to business created Hong
Kong's dynamic economy from the 1960s onwards
ON Hong Kong's reversion to Chinese rule, its foreign reserves stood
at about $70 billion - half the amount held by China, yet accrued by
a population less than 1 per cent its size.
This treasure store, which Lord Patten of Barnes called "the biggest
dowry since Cleopatra", was largely the legacy of Sir John
Cowperthwaite, who between 1961 and 1971 ran Hong Kong's economy
along extreme laissez-faire lines. Between 1841, when Lord Palmerston
thundered that this "barren rock" would "never become a mart of
trade" and its return to China in 1997, Hong Kong grew at its most
frenetic pace under Cowperthwaite, resulting in a per-capita income
more than a third greater than that enjoyed by Britain.
John James Cowperthwaite was educated at Merchiston Castle School,
Edinburgh, then took a first in classics at St Andrews University. He
followed this with a double-first in classics at Christ's College,
Cambridge, before returning to St Andrews to study economics. He was
greatly influenced by the economist Professor Wilkie Nisbet, a staunch
free-trader.
Cowperthwaite entered the Colonial Administrative Service in Hong Kong
in 1941, but was posted to Sierra Leone before the Hong Kong's
capture by Japanese Forces on Christmas Day. He remained at the
district office in Freetown for three years, returning to Hong Kong in
1945 with a brief to set the economy back on its feet and restore the
Hong Kong dollar.
A cadet in the administrative service, he rose to become head of
department, then to deputy financial secretary. He became Financial
Secretary in 1961, a year after being appointed OBE.
In The Sunday Times in 1996 Peter Clarke wrote: "It was one of those
glorious accidents that a man unversed in the 20th century's fad for
socialism could apply his 18th-century ideas in a territory
unencumbered with democracy. Governors came and went, but Cowperthwaite
kept balancing budgets, lowering taxes and keeping markets open,
including the market in immigrants."
Cowperthwaite did away with all import and export duties, put a flat
tax on profits and set the ceiling on income tax at 15 per cent. The
personal allowance for each citizen was high enough to enable many to
pay no tax at all. He swept away many of the curious idiosyncrasies of
colonial administration, in 1970 abolishing a prostitution tax
expressed as a fee per dance with a "professional dance partner".
In 1963 Hong Kong had a severe drought. As water was bought from China,
it was proposed that the Government should help to fund lower water
rates. Cowperthwaite retorted: "I see no reason why someone who is
content with a cold shower should subsidise someone who is able to
luxuriate in a deep hot bath, or why someone who waters a few plants on
his windowsill should subsidise someone who waters his extensive
lawns."
He kept government out of business, and cronyism out of contracting. He
refused to coddle any particular industry, believing that the instinct
of the individual Chinese businessman would prove far more astute than
any policy decision made by the Hong Kong Government. He trod a thin
line betweeen positive non-intervention and simply doing nothing. His
main task was to keep legislation from impeding business, and to
simplify every process by which a private citizen could become a
limited company.
He kept no statistics, telling Milton Friedman in 1963: "If I let
them compute those statistics, they'll only use them for planning."
We do know that during his tenure there was a 50 per cent rise in real
wages, a two-thirds fall in the number of households in extreme poverty
and a rise in exports of 14 per cent.
It is impossible to assess how much of Hong Kong's growth over this
period was attributable to British governance and how much to the
entrepreneurship of its people - Cowperthwaite gave full credit to
the latter.
He could have been less parsimonious, however: the tiny amounts put
aside for health and education often remained unspent; in 1970-71,
health services were budgeted at just over £1 per head of population,
but less that two thirds of this was used. Some have argued that, had
Comperthwaite spent more on welfare, it might have soon paid greater
dividends. Certainly, Patten's last-gasp attempt to put together a
package for the impoverished elderly would not have been so little, so
late.
The growth of the Cowperthwaite regime was fuelled by a similarly
laissez-faire approach to immigration. Many new arrivals were housed in
shacks and squatter huts, built on hillsides and cemeteries. As Hong
Kong's population swelled, the willingness of its residents to put up
with the most intolerable conditions gave testament to their Confucian
patience and, after 1967, the barbarity of the Cultural Revolution on
the other side of the border. But as the economy grew, farmers
abandoned the countryside, waterways became polluted and corruption
became endemic.
Hong Kong's forbearance broke in 1966, when a proposed rise in
cross-harbour ferry prices sparked mass rioting which laid waste to the
"Golden Mile" of Nathan Road. They were repeated - with bombs and
a Maoist edge - the next year. Yet financial policy, or the lack of
it, remained unaltered.
Lucky as Hong Kong was to have Cowperthwaite's free-market
absolutism, the successive governorships of Sir Robert Black and Sir
David Trench that had allowed him free hand needed the ameliorating
rule that followed with Sir Murray (later Lord) Maclehose.
He engaged in a massive public housing programme which made the Hong
Kong Government the world's biggest landlord, fenced off much of the
remaining greenery as country parks and entirely dismantled the Royal
Hong Kong Police, most of whom had embraced the free market ideal a
little too enthusiastically.
Cowperthwaite was a keen member of the (then Royal) Hong Kong Jockey
Club, an institution whose gambling revenues continue to keep the
colony's taxes down and to fund its public hospitals. He was joint
owner of three race horses, and also enjoyed bowls and golf. After his
retirement in 1971 he began a second career in merchant banking. He was
appointed CMG in 1964 and KBE in 1968.
In 1998 the Hoover Institution published Friedman's summary of The
Hong Kong Experiment in the free economy, concluding that the
"incredible" per capita parity of Hong Kong with the US was due
largely to Cowperthwaite's legacy which, in letting people keep their
own money, had proved itself a model of monetary efficiency.
He is survived by Sheila, his wife of 65 years. Their only son, the
Hong Kong-based architect John James (Hamish) Cowperthwaite, was
murdered in the Philippines in May 2004.
Sir John Cowperthwaite, KBE, CMG, Financial Secretary of Hong Kong,
1961-71, was born on April 25, 1915. He died on January 21, 2006, aged
90.
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