6
REVIEW
connected with this festival and-while the rate of withdrawal from the Canton Trust was abnormally heavy-there was not what could be called a run at that stage and it seemed possible that the bank had weathered the storm. The day after Chinese New Year the Ming Tak was again in the news with a rather dram- atized bankruptcy petition to the courts. The run on the Canton Trust was resumed next day and in a few days had grown to serious proportions. Before the run the bank had ample liquid resources by normal standards, and it also received massive support from another bank, but despite this it failed to open its doors on the morning of 8th February and asked that the government should take over its affairs. The Commissioner of Banking assumed control
at once.
In the meantime the events connected with these two banks began to affect public confidence in certain other locally incorporated banks-some small, some of considerable size. After the failure of the Canton Trust to open its doors the movement reached panic proportions in spite of public announcements by the Hongkong and Shanghai Banking Corporation and the Chartered Bank guaranteeing the banks on which pressure was most serious. With- drawals in cash, particularly by smaller depositors, caused serious depletion of reserve stocks of unissued bank notes, which were in any event at low ebb because of the seasonal demands of Chinese New Year. To meet this situation, the Emergency (Bank Control) Regulations, promulgated on 9th February, made Sterling legal tender in Hong Kong and arrangements were made to purchase £20 million of currency notes from the Bank of England and fly them to the Colony. Under the same regulations it was ordered that cash withdrawals at all banks be limited to $100 a day for each depositor. In a broadcast the Governor, Sir David Trench, said: 'Because so many people have gone to the banks to ask for their money in notes just after Chinese New Year, when a lot of money is always withdrawn anyway, there is some danger we may run out of the actual notes needed. I emphasize again: The general position is that it is not money in its proper sense that may perhaps run short-we have ample financial resources here-but the paper notes which represent money.'
The first consignment of Sterling notes arrived in the Colony on 11th February. By this time confidence was beginning to revive