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The Hong Kong and Shanghai Banking Corporation,
Hong Kong.
12th November 1946
My dear Follows,
In the memorandum on the subject of debtor- creditor legislation which I sent you with my letter of November 9, I omitted one material point which, although it was referred to in previous correspondence, must now be stressed with all earnestness, and I feel strongly that it should receiv the most careful consideration before any legislation is introduced.
The total amount of money paid to the Japanese liquidators in purported discharge of pre-war debts amounted to no more than one-fifth of the total obligations owing to the Bank in the Colony. The bulk of that fraction amounting to at least eighty per cent thereof represented debts due by a group of about sixty debtors, particulars of whom have already been given to you, and who, according to all evidence available, volunteered to pay the Japanese in greatly depreciated military currency and thereby obtained the release of their s ecurities. The long history of some of these debts and the circumstances under which they had been contracted and were eventually "paid" to the Japanese constitute significant evidence of the motives which actuated these debtors in their action.
•
All the benefit from the proposed legislation will be presented to this small class of debtors whose deserts
The great in the eyes of the public are more than dubious majority of the debtors representing four-fifths of the total include not only British and Allied nationals, but a large proportion of Chinese whose loyalty to the Colony and honesty and strict sense of their obligations forbade their aiding the Japanese or "paying" their debts to them and who, resisting all temptation to easy liquidation of their debts, allowed the depreciating military yen to become worthless in their hands.
It would not be surprising therefore, if the intended legislation were to meet with bitter and just resentment and vigorous opposition on the part of the great majority of Allied and Chinese debtors who will becalled upon to pay their debts in full while the doubtful minority is rewarded by a substantial concession by a benevolent Government at the expense of private funds.
Yours very sincerely,
(Signed) A. MORSE
The Hon. Mr. C.G.S. Follows C.M.G.
Colonial Secretariat,
Hong Kong.
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CO 537/1374
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