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house ( may add or in the alternative renewed). My Committee are informed that in many cases the period of credit has been extended to 12 months and sometimes even longer. As the same German firms carry on business at the principal Treaty ports in China, it is probable that the same financial system prevails there.
The Report further states that the opinion amongst British Merchants in Hongkong is that the Germans received financial facilities from British Banks and Discount Houses which could not have been obtained by themselves-this statement is given with all reserve as being the opinion of the majority of the Liquidators of the German Firms in Hongkong who were appointed by the Hongkong Government.
My Committee have good reason to believe that owing to the complications arising out of the war, a large amount of bills accepted by financial houses against goods supposed to be protected by letters of lien, but which have been delivered on credit by German firms, have not been retired, and that by the kindly intervention of the British Government, a portion, at any rate, of those bills are being held by the Government "in cold storage" until the end of the
war.
My Committee would be glad to know if their belief is well founded; if so it would seem to indicate official approval of a system of finance which as described in the Report, can hardly be looked upon as sound or legitimate.
It would also be interesting to know whether the Hongkong Government contemplates taking any action to mark disapproval of the breaches of trust which have officially been disclosed in the Report.
My Committee are expressing the opinion of the great majority of British Merchants in the Far East when they state that this system of giving extended credit to Chinese, which has been fostered by German firms in Hongkong and China is unsound, and that it has been an important factor in enabling German firms to transfer a large portion of the British trade with China from British to German hands. British trade with China represents a large annual turn-over: the risks connected with carrying it on are considerable, but these risks would be very materially increased if German firms were to succeedl, in conjunction with London Financing Houses and Banks, in transferring the whole trade to a basis of extended credit; if the credit system is encouraged in the future it can hardly fail to transfer a considerable further portion of British trade from British to German firms, and my Committee are of opinion that this is undesirable from a national point of view. Experience of German methods in China has created the impression that German firms have from time to time opportunities of recouping outstanding commercial debts which are not open to British subjects, and which perhaps may explain why they are pre- pared to incur greater financial risks. It is notorious that after times of imrest German claims for commercial losses have been out of all proportion to British claims.
At the time of the financial crisis last year His Majesty's Government came to the assistance of the British Financial Houses, and agreed to carry over pre- Moratorium bills at interest until the end of the War and for a year thereafter. If it is the case that amongst these bills there are bills payable by Germanı houses in Hongkong and China, who have delivered the goods, against which they were drawn, to Chinese on credit, it is clear that in assisting the British Financial Houses, His Majesty's Government are indirectly giving assistance to German enemy firms, who, not only shew no gratitude for this kindly interven- tion, but openly declare their hostility to our country and have actively carried on an insidious propaganda against British interests in China.
دو
While it may perhaps in the general interests of British finance be in- expedient to upset the "cold storage arrangement, my Committee would respectfully suggest that His Majesty's Government should take advantage