3
18
of cash in hand, 15 of deposits with foreign bankers, 5.5 of
loans and advances to customers, and only .6 in shares against
sight liabilities of only 12.2. (its paid up capital is
22.8). But these earning assets of 21 lakhs earned in 1934
1.86 lakhs, or nearly 9%; the deposits with foreign bank ers
cannot have earned more than 3% at most, and the balance of 61
lakhs therefore purports to have earned 1.86-.45 or 1.41
lakhs or 23%. Which is absurd. The conclusion to which I came
was that the 20 lakhs of cash is also an earning asset, through
being employed in exchange speculation, and I am informed by
Hopkins (the No.2 of the Chartered Bank) that this is certainly
the true explanation.
·
I should add one thing more that the accounts of
another subsidiary, the Wing On Life Assurance Company show
amoung assets of 33 lakhs 10 of properties and 19.7 of
"cash deposited with parent company and subsidiaries."
I do not suggest that these practices are peculiar
to Chinese institutions, or that Wing On is by any means the
worst of them: it is more likely to be the best.
I have not yet studied the accounts of the other
local Selfridge, the Sincere Company, but Hopkins tells me
privately that they are oversold to the amount of 7 lakhs, and
absolutely refused the other day to close this account when
they could have got out without appreciable loss.
It is a run on such bodies as these that is most feared
here, but for the moment it looks as if the effect on their
depositors of the failure of the Bank of Canton is passing off.
The question of regulating (a) banking generally
(b) the use of the term "savings bank" has been under consideration
here at various times, and I enclose a copy of the minute by the
then A.G. which dissuaded the Hong Kong Government from taking
action about (a) in 1930. Since then the Chinese Goverment