CO885-(25-26) — Page 536

500

PUBLIC

ר

|

Reference :—

wm'mmmimC.O.885/25

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

I TIBu"་་ ་་་པ་པས་ས་་་ ་་པ་

100

5. The Chamber lay stress, and rightly so, upon the importance of the Colony's greatest industry, shipbuilding, and they refer also to sugar refining and cement and rope manufacture. These industries, and others, such as cigar and cigarette manufacture and tin smelting, now rapidly growing, depend alike on (a) cheap labour, (b) free imports of raw materials, and (c) cheap freights. The Hong Kong Government realizes these factors, and can be relied upon never to lose sight of them. It has been the policy of the Colony to keep the port as open and free as possible.

6. With regard to the question of Chinese produce, I may say, in endorsing the Chamber's remarks, that this Government has been in frequent communication with the Imperial Institute on the subject, and that it has appointed the Chamber's Secretary to advise it, in the capacity of commercial correspondent of the Board of Trade.

7. The question of trade-marks belonging to enemy firms has been the subject of correspondence. Any change of policy which commends itself to His Majesty's Government in the matter will no doubt be communicated to me.

8. The Chamber refer next to the exclusion of enemy subjects, the question with which, as regards German subjects at least, they appear to be principally concerned; and there is no doubt that their views on the subject have the strong support of the large majority of European residents, and perhaps of some of the Chinese community. The very strong feeling which undoubtedly exists on the subject is due partly to the abhorrence of German methods of warfare, and partly to objection to German methods of trading. Concerning the latter point, the opinion of the representative of the Chamber, as expressed in the Legislative Council, voicing, as it does, that of the British commercial community, will no doubt receive your most careful consideration; and if any practicable means can be devised for insisting on the local import trade being conducted on a cash basis But I cannot suggest any such this Government is ready and willing to adopt it. means except by combination on the part of importers not to trade on the credit system.

A subject not touched upon in moving the resolution in the Legislative Council, but referred to at some length at the meeting of the Chamber of Commerce and at the public meeting, was the financing of exports from Europe on account of German merchants here by London acceptance houses. This matter has been the subject of correspondence, and it has been pointed out that before a verdict can be pronounced upon the infraction by merchants of the conditions of the letters of lien, it is essential to learn whether or not the financial houses in England were cognisant of the irregularity. It has been ascertained that two British banks in the Colony were so cognisant, and I have to remark that I know of no remedy for the irregularity if the principals in London and the banks through whom their letters of lien are negotiated do not take the trouble to protect themselves.

The suggestion that enemy subjects, when readmitted, should be under licence, in similar manner to British merchants in Russia, will no doubt also receive your consideration. I have no knowledge of the Russian system, but as at present advised I have little faith in effective control by a system of licensing.

9. Regarding the question of residence of friendly aliens, two very useful measures, affecting persons of other than Chinese race, have been enacted during the War in the Registration of Persons Ordinance, 1916, and the Travellers Restriction Ordinance, 1915. I am strongly in favour of having the first of these measures permanently on the Statute Book, and of retaining Section 14 of the Travellers Restriction Ordinance, with penalties for infraction, and the powers of deportation in Section 13. Such power is very desirable in a great defended port and naval base like Hong Kong.

10. The question of the better control of the trade of friendly aliens, more especially of the Chinese, is one of great difficulty. I need only refer to the problem of the compulsory registration of Chinese partnerships, a problem which hitherto has proved insoluble, though for years past some of the best legal brains in the Colony have been engaged upon it. A general system of licensing, necessarily involving the inspection of books and transactions, seems impracticable, as it would tend to deter Chinese from establishing themselves, and even from continuing here, in trade.

11. The suggestion that alien and Chinese corporations trading as Hong Kong registered companies should be specially controlled is in conflict with

101

Article XXVI. (9) of the Royal Instructions. It was put forward by the Chamber at the time when the Companies Ordinance, 1911, was in course of preparation, and it was very fully considered. This Government was not then, and it is not now, satisfied that abuses are more prevalent in one class of local company than in another. The existing law makes it compulsory for a Hong Kong registered company to keep a book in the English language containing a daily summary of receipts and payments. The books of a company are, generally speaking, open only to the directors and secretary and to the auditor; and it would seem not unreasonable, in a Colony where the very large majority of merchants are of Chinese race, that the auditor should suit himself to the convenience of the company by making himself acquainted with Chinese bookkeeping rather than that the company should alter its system of books for the convenience of the auditor. I may express the hope that one of the first fruits of the school for instruction in Chinese, recently inaugurated by the Chamber, will be an auditor of British race fully conversant with Chinese methods of accounting.

12. I find it difficult to believe the suggestion of the Chamber that the present system of ascertaining the qualification of an auditor of Chinese com- panies is derided by the Chinese; as Chinese candidates for the post authorized auditor are examined by an exceptionally strong committee of the leading Chinese merchants of the Colony.

13. I attach a copy of a minute by the Attorney-General regarding the Chamber's remarks under the heading "Insurance."

14. Measures of control of shipping which is at present enemy may be necessary after the War, and this subject is no doubt engaging the attention of His Majesty's Government. But, in the opinion of this Government, exclusion would not be in the best interests of Hong Kong.

15. I am thoroughly in accord with the Chamber's view that competition can best be met by practical knowledge and organization. In this connexion I am strongly in favour of the appointment of a Commercial Attaché for South China. 16. I have no remarks to make on, nor does the Chamber specifically refer to, the questions contained in enclosure 2 to the despatch under reference. These questions hardly touch this Colony.

17. If the Chamber of Commerce have no objection to their letter of the 8th of January being made public, I wish to publish this despatch, which has been endorsed by the members of the Executive Council without exception, and I shall be obliged if you will inform me by telegraph whether I may do so.

(Confidential.)

Enclosure 1 in No. 30.

I have, &c.,

F. H. MAY,

Governor, &c.

SIR,

Hong Kong, 8th January, 1917. I AM directed to acknowledge your letter of 20th November last, covering copy of a despatch received from the Secretary of State for the Colonies regarding the commercial and industrial policy to be adopted throughout the Empire after the War, and asking for a statement of this Chamber's views thereon.

The subject is so wide, and the interest of different parts of the Empire so varied that, in this, their reply, my Committee can only venture to deal with the subject on broad lines, and with the interests of this Colony principally in their minds.

In the first place it seems desirable to state that, in giving consideration to any policy relating to the progress of commerce and industry after the War, due regard must also be given to the maintenance as far as practicable of trade and industry already established in this Far Eastern field as the result of many years' effort; that is, as far as is compatible with the prosecution of the War, steps should not be taken to weaken the Empire's present hold on Eastern commerce, finance, and industry, and for this reason it is essential, in the interests of the Empire, to maintain to, and from, and in, the East a due proportion of shipping to maintain supplies between the different points of the Empire and the East; also such supply of material as may be required for British industries; and to reserve on the spot the necessary number of men of experience in Eastern trade and peoples.