CI·d "C"
1 Gov Genf
18.1.37
SPANES TO LIBRAR
Fwds
draft Bill for
consideration
2
The aim of the present draft Bill is to
obtain stricter legislative control of the larger
"Europe style" Savings Banks in Hong Kong. The
"banking crisis" of 1935 lead to a closer examination
of the position of such banks by Mr. Young of the
Treasury, and a Government Committee which, it is now
reported, was unanimously of the opinion that
Ton
legislation is necessary, particularly in the protection
of the poor, class of people who entrust their savings
poor
to banks.
the H.K.
Mr. Young divided/banks which were
Le I a 5367//35 particularly liable to disaster into two classes.
1) Branches of foreign banks which had no hope
or intention of getting enough legitimate business to
justify their existence but could only earn their
keep by exchange speculation.
2) Chinese trading institutions which received
money on deposit in the first place usually from
relations and friends of the shopkeeper and then from a
growing circle of small Chinese depositors. There
were, generally speaking, no sound and liquid investment
in which these shops could invest their money, and if
there were they would not return anything like the
rate of interest which the Chinese depositor expected.
As a result excess deposits were invested in land, and
property and company shares, and the investments became
more and more frozen. Frequently part of the
deposits were not invested at all but were used for
speculation on the exchange market.
Banks such as these were particularly
liable to disaster not only from their comparative
lack