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both belligerents.
The first question which arises here is
whether allowing the Chinese government banks to do as suggested
would amount to giving direct aid. The second question is
whether if it did amount to direct aid, it would be aid given
by the government of Hongkong as such, for there is nothing in
the law of neutrality within certain limits and under certain
conditions to prevent private neutral persons, companies or
organisations from giving aid to the belligerents.
If the existing law of Hongkong as it now stands permits
of this operation, it might be possible to argue that the
government are not doing anything themselves directly to lend
assistance to China. In such an event the Japanese complaint,
if any, would have to be that the government of Hongkong had not
prevented the operation. Assuming, however, that the Chinese
banks are government organisations and that Hongkong law has
expressly to be amended to permit of the operations of the bank
being conducted from Hongkong, then I think it will come very
near to a case in which a neutral government gives actual and
direct assistance to a belligerent.
It is hardly possible to carry the matter further without
more details.
(Intd.) G.G.F.
30th August 1937.