4.
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unfortunate distinction between protection and juris-
diction which is the cause of most of our embarrassment
over this question.
8. In the course of his despatch the Governor's
Deputy remarks that "the chief drawback to the Imbassador's
proposals, which renders them, as they stand, unacceptable
to this Government, lies in the exclusion from the
definition of "British subjects" of those Straits-born
Chinese who are British subjects in fact and in all but
name."
I am not clear as to what the latter part of the
sentence means, but Your Excellency is well aware from
recent cases with similar concerns incorporated in Hong-
kong that Chinese directors who claim to be patriotic
British subjects in a colony become pure Chinese in China.
In the management of their companies they are often close-
ly associated with Chinese official interests and they
disregard all the requirements of our local company legis-
lation. When they go into liquidation we are unable to
exercise our extraterritorial jurisdiction because their
interests are inextricably mixed up with the affairs of
other Chinese institutions and we are compelled to
acquiesce in all sorts of irregular arrangements imposed
by the Chinese government.
Again,
9. A recent example of this was provided by the
National Commercial and Savings Bank Limited whose
liquidation was more or less supervised by the Chinese
authorities with our tacit and reluctant consent.
the Bank of Canton, which is still supposed to be a
Hongkong China company directed and controlled from the
Colony, has just been reorganized with a board of directora
of whom Mr. T. V. Soong is the chairman. The local manager
tells me that there are at present twenty-two directors,
about one third of them resident in Hongkong and two thirds
/in
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