64
2.
in them. He expressed surprise and some incredulity
at this information, but retired to consult hia
principals.
4. During the course of the interview Mr. Froland
divulged that Chinese shipping interests in Shanghai
are seriously concerned for the safety of their vessels,
at present on charter to Japanese companies, and
engaged mainly in the conveyance of scrap iron etc. from
America to Japan, while the charterers themselves are
becoming increasingly reluctant to enter into engage-
ments with vessels plying under the Chinese flag.
5. In the somewhat similar case of the Reonomic
Transport and Lighter Company Limited, (see Shanghai
despatch to Peking No. 385 of the 9th November, 1934 and
Peking reply No. 52 (11/3.0/1935) of the 4th February,
1935), registration of the Company's launch and lighters
was refused on the ground that, although incorporated
in Hongkong, their principal place of business was not
situated in the British Dominions. In the present case,
however, Vallem and Company Limited have their principal
place of business in Hongkong, and, it is probable
that they will now apply to the Colonial authorities for
the transfer of these Chinese-owned vessels to the
British register, and possible that the Hongkong Govern-
ment may not be in a position to refuse registration.
It would, however, in this event still be open to us to
prevent the vessels from plying in Chinese waters under
the British flag by dealing with them under the China Forts Amendment Regulations 1928 (King's Regulations No.1 of 1928).
16.