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that date, nor what may be the value of the additional assets which the change of policy indicated in my telegram may make available. Nor have I any means of estimating how far the admission of claims against head offices and other branches of the liquidated firms to rank pari passu with claims against the liquidated branches would result in a deficiency of assets in any given case. I thought it best, therefore, to indicate to you my desire that, subject to the reservation men- tioned in my telegram in regard to neutral claims, as large a class of non-enemy creditors as possible should be admitted to share in the assets, and to leave it to you to decide whether all the claims referred to should be admitted to rank pari passu or whether claims connected with the branch should be given priority. Should you decide to extend the class of debts to be admitted in accordance with the suggestion made in my telegram, you may think it desirable to issue an advertisement inviting fresh claims. This would no doubt involve the issue of further advertisements in the United Kingdom, and I will, on hearing from you the date by which claims are to be sent in, and the kind of claims which it may be decided to admit, issue advertise- ments in the Press in this country.

[9] [10] With regard to the Law Officers' recommendation (b) above, I understand the Law Officers only to have intended the postponement of neutral claims to take place where such claims are primarily enforceable against the enemy firm in enemy territory, and not in the case of debts incurred directly by, or on behalf of, the branch in liquidation; and I have so interpreted the recommenda- tion. I have also assumed that by neutral creditors they mean firms whose head offices are in neutral territory. In this connexion I would observe that it appears from Mr. Bowring's despatch No. 904, of the 29th December last,* that in the case of Hansing & Company there is a certain amount owing to enemy firms in neutral territory. No payment of these debts should, of course, be made in the liquidation.

[10] [11] As to the Law Officers' recommendation (c) above mentioned, the Law Officers, in recommending this course for West Africa, suggested that the liquidators, after satisfaction of the preferential claims against the various branches of a firm having branches in more than one West African Colony (meaning by the expression "preferential claims" all claims to which it might be decided to give preference over the ordinary unsecured non-enemy creditors of each firm), should arrange either to pool the surplus funds, so far as required to pay the other debts, or to keep one another informed of the payments made, and to be made, to creditors, and the amounts of the assets available to meet debts. If the latter procedure were adopted, which is, I gather, the course favoured by the Law Officers, there would be a kind of paper pool. If the assets of any one branch of a firm were insufficient to allow of payment in full of the claims presented against it, it would be settled between the various liquidators concerned what dividend the total available assets of the various branches of the firm would give when distributed among all the non- preferred creditors ranking against the firm. Creditors who had originally claimed against a branch, the assets of which were of themselves insufficient to pay such a dividend, would then be directed to apply to the liquidator of a more prosperous branch of the same firm elsewhere.

[11] [12] I have no means of judging how far any kind of pooling of the assets on these lines may be necessary in the East African Protectorates, nor whether any arrangement of the kind suggested by the Law Officers would be practicable there, I therefore thought it best to suggest that you should endeavour to arrange some convenient system in communication with the Resident at Zanzibar. I understand that the only enemy firm in Uganda is Hansing & Company, which appears to be solvent both in that Protectorate and in the East Africa Protectorate and Zanzibar, and it does not, therefore, seem likely that it will be necessary to extend any pooling arrangement to Uganda. I have; however, directed the Governor of Uganda to communicate to you the actual financial position of the Uganda branch of the firm. As to Nyasaland, none of the enemy firms established there appear to have branches in any other British East African Protectorate.

[12] [13] I shall be glad to receive by an early mail a report of your decision in regard to the points raised in this despatch. You are at liberty to pass any legislation required to carry out your decision, without prior reference to me.

I have, &c.,

A. BONAR LAW.

3522

No. 132.

UGANDA.

THE SECRETARY OF STATE to THE GOVERNOR. (No. 50.)

SIR,

Downing Street, 24th February, 1916. WITH reference to your telegram No. 38, of the 24th March,* regarding the liquidation of enemy firms, I have the honour to transmit to you the accompanying copy of the report of a Committee appointed by me to consider the question of the liquidation of enemy firms in the British Colonies and Protectorates.

2. His Majesty's Government have decided to carry out the recommendations of this report, and, although I am aware from your telegram that Hansing & Company were the only enemy firm carrying on business in the Protectorate at the date of your telegram, and that this firm were then already closing down, 1 send you this report in order that if there are any assets of the firm in the Pro- tectorate still unrealized these may be liquidated in accordance with the recom- mendations of the report.

3. I have hitherto been referring only to the trading establishment of Hansing & Company. As to the firm's cotton ginnery, it would be desirable that this should now be sold either to the British Cotton Growing Association, if they will give a reasonable price for it, or, if not, to some other buyer, provided that the Associa tion's lease does not make this impossible. You will understand, however, that I am anxious that the work of the Association in Uganda shall not be hampered in any way, and if it is not possible to effect the sale of the ginnery without incon- venience to them it may be necessary to leave it unsold. You should communicate with me further on this point.

4.

If Messrs. Hansing possessed any trade-marks in the Colony which have not been sold, these may be sold with the goodwill of the business. I will address you further shortly on the subject of the course to be pursued in regard to trade- marks in which a British subject has a joint interest with a liquidated enemy firm. It is possible that any mark in which Messrs. Hansing were interested was the subject of a joint interest of this kind, and I am expecting to receive advice from the Board of Trade on the subject shortly.

5. In distributing any available assets of the firm it will not be desirable for you to confine the liquidation to the payment of debts directly incurred by the Uganda branch of the firm. Should any creditor of the head office in Germany, or of any branch of the firm elsewhere, present his claim against the assets in the Protectorate, this may be admitted subject to satisfactory proof of the claim being adduced. A claimant domiciled in neutral territory whose debt would normally not have been paid in the Protectorate should not, however, be allowed to rank against the assets till he has exhausted his: remedies against the firm in enemy territory.

6. I have suggested to the Governor of the East Africa Protectorate and the Resident of Zanzibar that, if any enemy firm having branches more than one

of the British East African Protectorates shows a deficit of assets in one and a surplus in another Protectorate, arrangements should be made for pooling the assets so as to enable the deficiency to be made good as far as possible. It seems unlikely that such a course will be necessary in the case of Hansing & Company, but mention the point to you in case the Governor of the East Africa Protectorate or the Resident of Zanzibar should address you on the subject. In any case it will be desirable for you to inform the Governor of the East Africa Protectorate and the Resident of Zanzibar of the estimated assets and liabilities of Hansing & Company in the Protectorate.

7. Should you think it desirable to issue any advertisement calling for claims against Hansing & Company in order to make it plain that claims against the head office or other branches of the firm will be received in the Protectorate, you will, perhaps, also think it desirable to furnish me with such particulars as will enable me to issue a similar notice in this country.

* No. 101.

+ No. 2.

* No. 125.

PUBLIC RECORD OFFICE

C.O.

Reference :-

885/25

| PUBLIC RECORD OFFICE, LONDON

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

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