1941-02-26 — Page 8

THE CHINA MAIL, FEBRUARY 26, 1941:

COLONY URGED TO FINANCIAL CAUTION Chairman's Review At Hong Kong Bank Meeting

Free China's

Internal Problems

AN ADMIRABLE WARNING AGAINST FACILE POLITICAL SPECULATION AND A BASIS FOR SOUND. A GNOSTICISM TOUCH- ING THE PRESENT, AND CONSEQUENTLY THE FUTURE, OF THE POLITICS OF THE FAR EAST, WAS THE DESCRIPTION APPLIED TO THE CHAIRMAN'S SPEECH AT THE ANNUAL MEETING OF SHARE- HOLDERS OF THE HONG KONG AND SHANGHAI BANKING COR- PORATION. LIMITED, HELD AT NOON TO-DAY.

The Hon. Mr. J. J. Paterson presided, and he gave the customary broad review of finan- cial, economic and political conditions in the spheres of the Bank's operations.

THE BANK'S CHAIRMAN urged economy as a watchword for the Hong Kong Government and said that future commitments should be scrutinised with great care.

On the situation in Free China, the Chairman mentioned the existence of danger spots, although "confident that with the foreign assistance which is now being made available, these internal affairs will be tackled in a manner which will avoid any serious setback to China's powers of resistance.

The Chairman Sud. Ladies & Gunbemen, i regret to have to re- Coad the death Since our last An- nual Meeting of Mr. A. C. Hynes,

war and the fall of France of course meant the withdrawal of the British members of our staff at Lyons; otherwise our branch who was Chief Manager from 1927 offices have not been affected. Here to 1939, and of Mr E. J. Davies in Hong Kong. in Shanghai and less than two weeks ago Mr. in Singapore, where our three Davies was well known to many main offices are situated. results of out here and hi, death while have been satisfactory in spite of still dont Man ger i Landon abnormal conditions, and in other Grupes it real lus to the Bank. countries our branches have

LOTTUORES

In

of

Japanese Account

Japanese Drive

the

tral Bank of China to cover their] Railway" Company, north of estimated shures of both the Yellow River, are apparently Customs and Salt Loans. These operating with a fair amount of quotas are based on the propor- | regularity. However, the Railway Lion which unoccupied China bondholders are also unlikely 10 might be regarded as liable if receive consideration until poli- quotas were also provided by the tical conditions become normal, occupied parts of China. It must be remembered that such sumy are estimated by working out the amount of Chinese dollars due,

In addition to the Japanese- at the former official sterling rate Controlled railway companies in of 1/2. 1/4, to meet scheduled an East and North Chinn, you are of payments. Actually the sums de-, posited in the Central Bank of course aware that a whole net- work of Japanese-operated com- China last year averaged only about 11% of the sums so due.

panies are active in those areas. The North China Development Company is a large controlling concern operating 18 subsidiary Various unofficial statements companies (there many be more by hinterland can normally provide. have been made by members of now). These control Transporta- For example, not only in value the Nanking regime to the effect tion, Wharves, Cotton Growing, but also in quantities the imports that a portion of the Customs Mining, Salt Production, Tele- to that port of rice, cotton, coal, funds deposited in the Yokohama graphs, Power Stations and so on. tobacco, sugar, four and artificial Specie Bank in occupied ports The Central China Development silk in 1940 were all higher than has similarly been earmarked for Company concerns itself with sim- in 1936. the last normal year. In foreign loan payments, but so far ilar operations in the Yangtsze that year cotton, cereals, tobacco as we are aware such statements Valley, and in addition with Silk and coal accounted for only 13% have never been confirmed, Last production and flatures, River and of import values. In 1940 they

Fish estinated Coastal Steamships, accounted for over 51%. Mean that $380 million lay in the Yoko-keting and Real Estate. Many if while the export position is cloud-hama Specie Bank on Customs not most of these companies have ed over by monopolies, controls account."

monopoly trading rights; some of naturally have a serious effect on and extraneous influences which

By now that figure must have them make profits but others are been doubled, but if and when | handicapped by shortage of equip- the balance of trade and on cur- the dollar quotas are released ment and local difficulties.

to the Chinese Government by rency exchange.

I will not élaborate the ab- In view of their bearing on ex-|

the Yokohama 8peole Bank, vious effect of these develop- and change

there will stilf remain the trade balances, }

ments on foreign firms, You may change problem, that is to say have read an illuminating state- should here mention the various credits and loans which China the problem of how to obtain has received during the year from the requisite amount of foreignment published a little time ago by the Tientsin American Cham- currencies, foreign sources. Detailed parti- culars have not been made public,

There has, however, been no re.ber of Commerce commenting on but you must be aware that such pudiation of the pre-conflict for the much quoted phrase of Mr. loans were made chiefly for poll-eign issues, neither by the Chin- Matsuoka, "we shut the open doop

Other organi tical reasons.

ese Government nor by the au-nowhere to none." thorities controlling the Customs sations, both British and Ameri- funds in the occupied areas, and can, have been equally frank, and than refer the problem of exchange may not I need do no more be so difficult for China as for you to the last Annual Report of the world the China Association, and to the other countries when

the Speech of the Chairman at gets back to normal.

One beacon of hope to bond- Inst annual meeting of the Shang- holders is the continuance of hal British Chamber uf Com- tually used) should be complet. the Customs

Administration, in, merce.

The published announcement dealing with the most recent of the United States loans showed that the donors were destrous that "arrangements for purposes of monetary protection and management" (the words ac-

ed,

year

your

Chairntan

ex.

under the

Mar-

Sir Frederick This is not the occasion to re- Mile. the Inspector-General, fer in detail to Shanghai's Muni- Fortunately it seems to have been cipal and other problems, but I to generally realised that undue in- feel that you will wish me terference with the established say how much we sympathise with Customs Ad-] that great city in its embarrass-

of

Chinese

not After making fall provision for | met any serious complications un- for losses and contingencies, the|til recently in Japan, as I will net prents for the year amount mention later on, to $13.999,869.99. n merrase about $7 lacs compared with the Far East Developments

That is satisfactory so far as it the form in which it has existed Shanghai's Troubles DEUVTORIS year. Alter deducting

goes but that is all the informa- for so many years, the terms dividend paid at 172. Developments in the Far Easttion which is at present available. able guidance of W6. and Directo“.. remuneration have followed the course which a tac including $3,411,329 55 careful observers expected and Shanghai Exchange hought forward from fast year, foretold two or three years ago.

distribution They perceived that the trend of i The Shanghai Foreign Exchange $10,870,745.77 which it is proposed events wou'd bring increasingly, Market in 1940 fluctuated between prine ples of the to deal with as follows: . To pay serious obstacles to trade. But a high mark of 4.29/32 pence andministration would result in un-ments and with the Chairman and a fand dividend of £2. 10/- per optimists can rightly claim that 8.1/16 U.S. cents, which points favourable repercussions which Secretary General of the Shanghai share subject to deduction of in- iade has not in fact proved se were touched in January, and a would outweigh possible advant. Municipal Council who have both come Tax $6,453,781.51: Transfer bad as recent political develop-low mark of 3 pence and 4.31/32 ages. There is to my mind little narrowly escaped the hands in Bark Premies Account $1,000,-, ments seemed to foreshadow. Both U.S. cents in May. The your doubt that Sir Frederick Maze assassins during the past year. 000: Carry forward to New Ac-¦the pessimist and the optimist can ended with rates about 3.1/2 pence himself is largely responsible for Restrictions Ot The movement count $3,422,964 20.

team to be right. If you look and 5.1/2 U.S. cents. The Stathis satisfactory state of affairs, from the interior of rice, that very While there is no very great, back at some of your

the formerbilisation Fund continued to car- and his eminent services will no important item in change in the total of our balane» Chairmen's Speeches you will be ry out its stabilising operations as doubt be more clearly recognised diet, and of other native produce, sheet, there are quite considerable surprised how often there have necessary and, considering that when the smoke of conflict clears which were potent factors in cause changes in the individual items, been gloomy stories about "unpre- the proceeds of exports are being away.

ing exchange to fall, have driven on either side.

cedented difficulties", "adverse cir- largely monopolised both by the Salt Monopolles

up the cost of living over 250 cumstances," "abnormal condi- authorities in the occupied and

points since January 1940: the Changes In Accounts tions," "uncertain outlook" and so unoccupied parts of China, it is The Salt Administration is, un-price of rice increased 120 per Yet if you, as a man of some remarkable that the value of the fortunately, by no means so well cent, in the year and over 600 On the liabilities side there is years' experience in the East. Chinese currency has been main-placed as the Customs Adininis- per cent. since the Sino-Japanese a substantial increase of $72 mil yourself think back and recall the tained with so little difficulty. tration. in the areas it controls conflict commenced in 1937. This lions in Current Account Balances many turbulent periods of the The establishment of the new it has had its task cut out to en- has naturally led to higher costs which is largely offset by de- last two or three decades, and Central Reserve Bank in Nanking sure that adequate supplies of all round and particularly to de- creases of $32 million, in Fixed, then look at ports like Hong Kong on January 6, 1941 and in Shang-Salt are, distributed to the un-mands for increases of pay and Deposits and $24 millions in Bills and Shanghai and their trade and hai on January 20th had little occupied areas of China. Mean so brought financial cmbarrass- Payable.

shipping returns, you will realise serious effect on the Shanghai Ex-while in occupied China little ment to the Municipal Council. On the other side, holdings of that the upward curve of pro- change Market, but it cannot be information has been made public The latter's powers of taxation be- Cash and Bills have Increased by gress has shown a continual ad- gainsaid that the establishment of as to how Salt Revenues are col-ing restricted by the $32 millions and $52 millions res-, vance.

Shanghai this Bank, coupled with the exist-lected and employed. It appears. Land Regulations, they have been pectively, against which Securities | Dictators and others with por. currency situation in North however, that Japanese-controlled forced to ask authority from rate- and Loans show declines of $30

China, has mude for millions and $36 millions respec-

uneasiness Salt Companies have monopolies payers for a considerable increase since it is feared that further tively brought about by the neces

in the production and distribution in rates rather than to adopt other measures

the sity of keeping a liquid position

may follow. All leading banking interests in the taking large quantities

of Salt and that Japan is now forms of taxation or subsidies. owing to the war and the many

of Salt

1 am afraid that a proper 60- Far East lay stress on the import from North China to replace sup-

· pitfalls i11 finance which war

lution of the Shanghai problem ance of the continuation of the plics from elsewhere which have brings in its train.

existing free market at Shanghai,

(11.

verted ideas may slow

the movement down, but on the dia appearance of them and

their like the rate of advance will again at once accelerate to make

up for lost time.

1940

Customs Revenue

of

In all its aspects can only come when the political problems the Far East are solved. Alone of all the Chinese Rail- In the meantime let us hope Peking-Mukden that there will be a realisation of

Chungking Finance

By the proposal to write down bold as to claim that the graph of closure or tending to its restric-wa

No-one would, however, be so Any rash action, precipitating its been cut off as a result of the our Premises Account by a fur- prosperity is at this particular motion, whether from Chungking or ther one million dollars, that ac- ment pointing upwards at Shang- Nanking, might result in unfor-way Loans the count will be brought to the low- hai or Hong Kong. The foreign tunate reactions not est figure shown since our Balance trade figures for China in

only In Railway Loan (known as the the vital importance on humani- Sheet of 1922. We feel this is u

per tarian and common sense grounds Shanghal itself but also in China Chinese Imperial Railway 5 are at first sight amazing, wise precaution seeing that a con- allowing for inflated

even generally.

cent, Gold Loan of 1899) is still of reasonable.compromise for the siderable amount of our property prices of goods and for exchange war-time

up to date with coupon and amor-maintenance of peace, order and is in danger zones.

depreciation. But for many rea-

tisation payments, and its earnings the livelihood of the large popu- remain excellent. The Manchurian lation of that cosmopolitan city. European Scene sons, some of which were inen" The record Revenue collection authorities have, however, found tioned here last year, it is almost of the Chinese Maritime Customs difficulty in obtaining sterling ex- During the year, changes have impossible to make a reliable es- has been welcomed perhaps too change. Some of the British rail- occurred in Europe which no-one timate of the real value of China's effusively by those who have not way staff have been paid off but could possibly

There are many important pro- have foreseen. trade in terms of gold or sterling studied the situation sufficiently their treatment was decidedly nig-blems facing the National Govern-. There was the invasion of Den-currencies.. Smuggling, exchange carefully. Although a record in gardly and caused a good deal of ment at Chungking but it would mark and Norway in April, fol- and trade contro's, unrecorded terms of Chinese dollars, the figure dissatisfaction. lowed by the invasion of Belgium | Imports and exports (which must of 475 millions represents

take too long to deal with them and the Netherlands in May; the have reached big proportions), about seven & three quarter mil-

In West China progress has been here. There Is the undivulged eple evacuation of Dunkirk; the variations in the methods of valu- lion pounds as the average rate of made on the early stages of the financial and budgetary position Italian entry into the war; the ing goods, the employment of spe- | the year, whereas the previous railways running North and West of the Chinese Government; the collapse of France; the vandalism cial exchange rates linking im- year's collection of 331 millions of Kunming, but the severance of serious economic problem it is fac of the bombings of England; the ports to exports and so on, all was equivalent to about eight & communications with Indo-China ing--especially in regard to food the affect the issue. One even finds a quarter million pounds, and the naturally cut off the only feasible prices and distribution (rice is lutter's magnificent counter-attack considerable difficulty in dealing average value in Sterling over the route for the supply of heavy about ten times the pre-war price and recently our own brilliant exploits in North Africa some of the anomalies disappeur ese conflict was no less than 18 done on the

armics with a single port like Shanghai: ten years prior to the Sino-Japan- materials. Some work has been in Chungking); there are the dif

Hengyang-Kweilin' ficulties of communications, con- which have had a most hearten-but other complications arise.

million pounds.

Railway and also on the Western cerning which the state of the ing effect in the East. Such are

Moreover, owing to the coutin-end of the Lunghai line. The Burma Road is of urgent Import. the highlights of events unparal- “Unhealthy Feature uance of the Sino-Japanese con-railways under the control of Ja-ance; the complicated relations leled in our times which bring

flict, the position of the foreign panese companies, namely the with the communist armies, which home to us as nothing else can One unhealthy feature stands loans has in no way, improved in Central China Hailway Company, give rise to periodical friction as how precarious a world this is. out clearly. Shanghal last year the past year, Quotas in Chinese south of the Yangtze (but ex- at the present time; there are the Our London office is carrying on imported from abroad large quan- dollars are still set aside by the cluding the railways centred on interesting industrial and mining unscathed in the direct line, of the titles of native products which the National Government in the Cen- Hankow) and the North China (Continued on Page 13)

Italian invasion of Greece;

only