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realises these factors and can be relied upon never to lose sight of them. It has been the policy of the Colony to keep the port as open and free as possible.
6. With regard to the question of Chinese produce I may say, in endorsing the Chamber's remarks, that this Government has been in frequent communication with the Imperial Justitute on the subject and that it has appointed the Chamber's Secretary to advise it, in the capacity of Commercial Correspondent of the Board of Trade.
7. The question of trade marks belonging to enemy firms has been the subject of correspondence. Any change of policy which commends itself to His Majesty's Government in the matter will no doubt be communicated to me.
8. The Chamber refer next to the exclusion of enemy subjects. the question with which, as regards German subjects at least, they appear to be principally concerned; and there is no doubt that their riews on the subject have the strong support of the large majority of European residents, and perhaps of some of the Chinese Community. The very strong feeling which undoubtedly exists on the subject is due partly to the abhorrence of German methods of warfare and partly to objection to German methods of trading. Concerning the latter point the opinion of the representative of the Chamber as expressed in the Legislative Council, voicing as it does that of the British Com- mercial Community, will no doubt receive your most careful consider- ation; and, if any practicable means can be devised for insisting on the local import trade being conducted on a cash basis, this Govern- ment is ready and willing to adopt it. But I cannot suggest any such means except by combination on the part of importers not to trade on the credit system. A subject not touched upon in moving the resolution in the Legislative Council but referred to at some length at the meeting of the Chamber of Commerce and at the public meeting, was the financing of exports from Europe on account of German merchants here by London Acceptance Honses. This matter has been the subject of correspondence and it has been pointed out that before a verdict can be pronounced upon the infraction by merchants of the conditions of the letters of lien, it is essential to learn whether or not the Financial Houses in England were cognisant of the irregularity. It has been ascertained that two British Banks in the Colony were so cognisant, and I have to remark that I know of no remedy for the irregularity if the principals in London and the Banks through whom their letters of lien are negotiated do not take the trouble to protect themselves.
The suggestion that enemy subjects, when re-admitted, should he under licence, in similar manner to British merchants in Russia, will no doubt also receive your consideration. I have no knowledge of the Russian system, but as at present advised I have little faith in effective control by a system of licensing.
9. Regarding the question of residence of friendly aliens two very useful measures, affecting persons of other than Chinese race, have been enacted during the war in the Registration of Persons Ordi- nance, 1916, and the Travellers Restriction Ordinance, 1915. 1 am strongly in favour of having the first of these measures permanently on the Statute Pook and of retaining Section 14 of the Travellers Restriction Ordinance, with penalties for infraction, and the powers of deportation in Section 13. Such power is very desirable in a great defended Port and Naval base like Hongkong.
10. The question of the better control of the trade of friendly aliens, more especially of the Chinese, is one of great difficulty. need only refer to the problem of the compulsory registration of
* See page 17.