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PUBLIC RECORD OFFICE

سياسيا

C.O.

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PUBLIC RECORD OFFICE, LONDON

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and assets not so involved, and of my approval of the proposal to leave to the Executive the decision as to what assets should or should not be included in the liquidations. In my telegram of 13th. June,* I further informed you that I approved of the proposal mentioned in paragraph 24 (a) of the Attorney-General's memorandum.

3. With regard to the point mentioned in paragraph 24 (b) of the memo- randum, as already indicated, I approve of the arrangement provided for in Section 6 (i) (f) of the draft Ordinance, allowing the Governor to direct a discharge out of the assets of any liquidated firms of debts due to enemy subjects. Taking the classes of debts referred to in paragraph 12 of the memorandum, I see no objec- tion to payments of classes (a), (b), and (c) being allowed as a general rule. Class (d) should not, I think, be paid in any circumstances. tions with regard to debts due to enemy employees of liquidated firms were given As to class (e), direc- in my telegram of the 16th May.t As to debts due to interned prisoners on personal accounts in partnerships, I think that any cases of this kind which may arise should be decided on their merits. Any payment of the kind which may be sanctioned should, however, only be made through the Governor-General of Australia to the Commandant of the internment camp concerned.

4. The questions raised in paragraph 24 (c) of the memorandum were fully dealt with in my telegram of the 9th May. I have only to add here that, although I am prepared, as stated in my telegram, to allow the liquidation to continue until the 31st March, 1917, it will obviously be desirable to bring it to a conclusion at an earlier date if possible.

5. With regard to paragraph 24 (d) of the memorandum, the question of the extent of the application of the Ordinance was to some extent dealt with in my tele- gram of the 9th May, in which I indicated to you that I desired a distinction to be drawn between property substantially involved in the business of commercial firms and property not so involved. I explained that the object of the distinction was to avoid interference with the assets of individual planters. In further explanation I would add that a planter appears to be in a different position from that of a commercial house; his political influence is likely to be smaller, and his commercial connexion with Germany much less close. Further, such influence as he may have will probably not be so enduring as that of a commercial house, which con- tinues its existence and maintains its German nationality independently of the partners from time to time composing it, while a German planter may sell his estate or it may descend to children born on British soil, who might probably tend to lose German sympathy as well as German nationality.

6. As indicated in my telegram, however, I am prepared to leave this matter to your discretion. Should you find it impossible to carry out the distinction above suggested, or should the maintenance or lease of the estates of enemy planters during the War prove impracticable, you are at liberty to include them in the scheme of liquidation.

7. As stated in my telegram of 13th June,* I approve of the liquidation of Mr. Humbert's hotel business.

8. With regard to the direction contained in my telegram of 13th June* as to the amendment of Section 35 (a) of the draft Ordinance, difficulties have arisen elsewhere owing to the presence in the local legislation of a clause of this kind and the existence of a firm which it was desired to liquidate and which contained a neutral partner. Diplomatic representations were made by the Government of the State to which the neutral partner belonged, and it was found impossible to persist in the claim that the decision of the Executive as to the character of the neutral partner should be regarded as final. I observe from paragraph 17 of the Attorney-General's memorandum that he believes Mr. Siegmund Freudenberg, a natural-born subject, to be the only partner in an enemy firm in the Colony who is not an enemy subject, but I none the less thought it desirable to direct the amend- ment of this clause, especially as it seems likely that a clause on the lines that I directed to be substituted will sufficiently meet the case. of Ordinance 28 of 1914 of Hong Kong contains a provision of the latter kind.

I might add that Section 3 9, With regard to Section 19 of the draft Ordinance, I assume that the words "which is burdened, etc." apply only to property of the liquidated firm and not to contracts. The draft appears to be a little ambiguous on this point, but although

No. 40.

* No. 46.

+ No. 41.

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it is very desirable that the liquidation should not be burdened with the carrying on of current contracts, I did not think it necessary to make any reference to this in my telegram.

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:

No. 49.

I have, &c.,

A. BONAR LAW.

STRAITS SETTLEMENTS.

THE SECRETARY OF STATE to THE GOVERNOR.

(Sent 6.45 p.m., 16th June, 1916.)

TELEGRAM.

YOUR telegram 7th September.* Proposal to sell to Sturzenegger buildings property of Schmidt, Küstermann & Company, Penang, in liquidation, has been made, provided reasonable price given and Government of the Straits Settlements satisfied that he is not buying to preserve enemy partners' interests so as to enable them to recommence trading in the Colony after the War.

Alternatively, and to secure latter object, liquidator might convey buildings to you in trust; (1) to hold during the War on behalf of three partners; (2) to sell by public auction or private contract within twelve months of end of War, and to pay rent accrued and proceeds of sale to partners in appropriate shares. If this should be adopted you could let buildings at fair rent to Sturzenegger as yearly tenant, and sale at end of the War could be made conditional on exclusion of German interests if His Majesty's Government consider exclusion of Germans from British territory desirable. It is assumed that value of buildings not imme- diately required in addition to other assets in order to liquidate liabilities.

Telegraph your views.

Sale of buildings by public auction should be postponed pending decision.- BONAR LAW.

30328

No. 50.

HONG KONG.

THE GOVERNOR to THE SECRETARY OF STATE.

(Paraphrase.)

(Received 6.30 p.m., 26th June, 1916.)

TELEGRAM.

WITH reference to your telegram of 1st May,t under the clause in the Bill introducing disclaimer, liability under the lease or contract will be converted into a liability to pay damages; and this clause will have the effect that, if assets are insufficient to pay damages in full, the creditor will be able after the War to sue the liquidated firm. May I have an early reply by telegraph if this is not in accordance with your wishes, as the Bill has already passed first reading? Please modify accordingly paragraph 15 of my despatch of 2nd June.‡-MAY.

G

* 41324.

+ No. 87.

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