CO885-(25-26) — Page 278

PUBLIC RECORD OFFICE

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Reference :-

LC.Q.885/25

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

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should not be made to disabuse in their minds the impression they appear to be under that the Hong Kong Government is adverse to any activity or keenness in this direction, as is evidenced by the orders curtailing the usual powers of liquida- tora. In' this connexion it is interesting to note that British creditors' letters are now being received in which it appears they assume their debts will be paid off as the liquidation year closes.

It has been pointed out to the Committee that difficulties have been placed in the way of liquidators realizing other assets than trade goods, such as land, buildings, leases, and trade-marks, so that British creditors have to wait payment of their debts pending the realization of stocks to the best advantage.

In such cases the creditor is kept out of his money, and, so far as Hong Kong war on German trade resolves itself into the other is concerned, the so-called extreme, namely, the preservation of German trade," and it would consequently

call

themselves more honest to instruct the present liquidators to preservators.*

be

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It is not desired to make hard and fast rules, but, on the contrary, it is hoped that liquidators will be given power to sell all or any of the various forms of assets, tangible and intangible, which may be turned into money, at such times and for such sums as in the discretion of the liquidators seems best, and that celerity be made an object, though not the chief one. In fact, what is required is liquidation in the proper sense of the word, having due regard to local market conditions.

There is no doubt that the late German business community will neither settle down in Hong Kong after the War, unless it unhappily turns in their favour, with any feelings of gratitude for being again allowed to trade, nor with any object having a direct or indirect tendency to benefit the Colony. Their object will be to take what benefits they can, and, if possible, use it as the base from which transference of their business under easy conditions can be made to Canton and Whampoa. The great difficulties in starting a new firm or business is finding a new and suitable base and the length of time taken to become known under the new conditions. There is no reason my Committee can urge why any help should be given Germans in this direction, as recent events have proved that the mistaken kindness shown by the British Government and the British people was accepted by the Germans to cloak their real intention of underhand aggression.

It has been the past policy of the Government to prevent the sale of German assets of a capital nature, even when British creditors are being made to suffer by delay in payment of their debts. In addition, there are cases of Germans possessing land, buildings, furniture, and investments, but without debts, when the Government see no reason for liquidating.

The Committee desire to point out that this is mistaken kindness to the Germans themselves, on the ground that, if these Germans expect to return under easy conditions of living they will find out their mistake. They have been expelled from all the clubs and trade organizations, and British public opinion is s0 strongly against them that any attempt at rehabilitation will be strenuously opposed. Individuals naturally do not wish to be obliged to do this, and this Chamber believes the best policy would be to turn all German assets into ready money or investments in British Government stock, so as to provide a single and simple method of uniform settlement when the time comes.

Another point in the method of liquidation of the stronger German firms is that of Portuguese, and particularly Chinese, employees, who are being subsidized in the form of wages to remain in the employ of the liquidated firms, either marking time or helping only half-heartedly in the liquidation. Many of these men would be gladly taken on by the British firms who are trying to cope with the trade formerly done by German houses, but until the Chinese mind can be thoroughly disabused of the idea that the Government is in favour of helping the German firms to start again where they left off, it is impossible to expect British firms to increase their business. Chinese capital is being withheld from trade to the loss of the Colony, and the only way to stop this is to instruct the liquidators to dis- charge such of the employees, brokers, and other intermediaries as are not actually necessary, and to fix their remuneration accordingly, and that under no circum- stances should German capital be used to subsidize such men so that they can afford to wait until the Germans are disinterned.

The question of the advisability of the retention of the interned German prisoners in Hunghom hinges also on this subject of liquidation. To onlookers it

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is very creditable to the energy of the Britishers in this Colony, and the officials, who will naturally reap the reward of such patriotic energy, that the burden and expense of guardianship should have been so well and truly done as their share in the general self-sacrifice. No one questioned or grudged the steps taken in the early months, but the time has arrived when my Committee think representations should be made to the home Government that the retention of the three hundred odd prisoners in the centre of this small Colony is a source of great danger to the peace and contentment of the inhabitants. They are surrounded by a large neutral native population, who neither understand the quarrel nor see why they should not sympathize with them, help them to escape, or convey communication to the other Germans in Canton and elsewhere in China with a view to aiding sedition and revolution.

The large and successful hold the Germans had of the trade of the Colony naturally has its effect on the minds of the Chinese with whom they did business, and so long as the latter see with what care we take of the lives and health of the interned German business men, so long will they refrain from commencing new relations with the British houses. Germans in China have, of course, taken care to instil into the Chinese mind that, as soon as the War is over, they will be ready to do business again, and that it is no use for them to start new business relationships for the short period of the War. The Long local residence of His Excellency the Governor, and his knowledge of the Chinese character, will doubtless enable him to impress on the home Government that such ideas are not absurd, and that, to disabuse them and enable trade to be resumed, the only businesslike course to pursue is to ship the Germans away to Australia. Owing to the smallness of the Colony the present position of the camp is doubtless the most convenient, but if the analogy of a German concentration camp in, say, the Green Park, could be brought to the minds of the home officials as much less objectionable, no doubt they would appreciate the above argument. The British community do not want the Germans back in Hong Kong ready to start business again as soon as the War closes, with their business houses and workpeople all ready to hand, to make a fresh start. It is neither sound business nor mere justice to the Britishers in this Colony, and this Chamber therefore respectfully asks that the Germans be sent away and repatriated after the War, so as to make it difficult for them to resume business again in Hong Kong and China.

The Committee of this Chamber is aware that, for political reasons, the rules guiding the liquidation of German firms in Great Britain and her Colonies should as far as possible be similar, but conditions of life are very different here, and allowances should be made for these.

In conclusion, the Committee of this Chamber trusts that the views enunciated above will meet with such sympathetic treatment at the hands of His Excellency the Governor that he will either give instructions for their being carried out or that a copy of this letter be sent to the Secretary of State for the Colonies with such comments as he can use to support them.

I have, &c.,

The Honourable

The Colonial Secretary.

49333

No. 17.

A. R. LOWE,

Acting Secretary.

COLONIAL OFFICE to FOREIGN OFFICE, BOARD OF TRADE, HOME OFFICE, AND INDIA OFFICE.

[Answered by 53684, 53694, 53784, and 53371.]

Downing Street, 9th November, 1915.

SIR,

I AM directed by Mr. Secretary Bonar Law to [acknowledge the receipt of vour letter of the 25th of October,* and] [acknowledge the receipt of your letter of the 2nd of November, t and] to request you to inform [Secretary Sir E. Grey] [the Board of Trade] [Secretary Sir J. Simon] [Mr. Secretary Chamberlain] that he has been giving further consideration to the question of the policy to be followed in the liquidation of German firms in Hong Kong and the Straits Settlements.

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* 49143.

† 50554.