Singapore: The Boom That Went Bust

The tiny island of Singapore, strategically situated midway between India and China, has long been a commercial center of Southeast Asia. It processes and exports rubber, tin, pepper and copra from Malaya and Borneo, imports machinery from Australia, Britain and the U.S. Its trade has made it a leading banking, warehousing and insurance city in Asia. When Singapore joined with neighboring Malaya, nearby Sarawak and North Borneo in 1963 to form the rich Federation of Malaysia its 1.8 million people prepared expectantly for a boom in business.

The boom began all right—but...