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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 Mr. Ainscough's 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
the risks con-
China represents a large annual turn-over:
nected with carrying it on are considerable, but these risks
would be very materially increased if German firms were to
succeed, 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
prepared to incur greater financial risks. It is notorious
that after times of unrest German claims for commercial losses
have been out of all proportion to British claims.
At the time of the financial crisis last year H. M.
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.
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