!
!
A
and takon delivery of the goods upon arrival.
takoa
10.
46
In Appendix
II will be found a number of specimen letters of lien, in almost all of which the China Housé plodges itself not only to meet the Bill at maturity, but to keep the proceeds of the
goode in trust and separate from all other transactions and
moneys belonging to other persons. In the case of the German
Pirms in Hongkong this trust has been broken in almost every
The goods were handed over to the Chinese Buyer on
4-8 months credit, and as they were paid for, the moneys; were
placed to general account and used for the oarrying on of the
business. Bills at maturity were met out of the general
funds of the House, Thiay would appear to amount to a very
grave breach of trust, as in return for the exceptional fi-
nancial facilities granted, the London Houses have no se-
I
curity whatever axoopt the general oradit of the House. discussed this serious question with the Managera of the two leading British Banks in Hongkong, and they both admitted privately that in these days of keen competition, a striot adherence to the better and spirit of letters of lien had been allowed to lapse and they were satisfied so long as the House pledged itself to pay the Bill at maturity. It will be remarked that the two British Banks' lettere in appendix II. do not stipulate that the proceeds should be kept separate from other transactions, At the same time, it would appear desirable that the British discount Houses in London should be apprised of the state of affairs, as the result has been that the very favorable facilities accorded to German merchants by British Houses with British money have been utilised by Germana, through a breach of trust, to give long oredite to Chinese Buyers and so compete on unequal terna with the sound British Houses who adhore to their pledged word. In addition, the Discount Houses have been placed in the position of ordinary oreditors,
This system of London Acceptances has been very little used by the British Houses, many of whom have been surprised at