CO129-431 - Governor Sir May - 1916 [1-2] — Page 469

心

The issue of insurance policies covering goods of the enemy against war risk is forbidden by King's regulation No 17 of 1914; apparently, however, German firms in China are not regarded as enemies, as they are not resident in the enemy country.

Attorney General, House of Commons, September 10th introducing * Trading with the Enemy Bill."

1. "They were slightly varying the permission previously given about dealing with branches.

"So long as the branch was, for example, in China, the advantage accruing to our "own trade by allowing ordinary dealings to continue was infinitely greater than any

advantage which would accrue from stopping such trade.

"They could not have any new transactions entered into with the Head Office in "the enemy's country.

4

There was no objection to entering into transactions with the branch in a neutral territory of a house established in Germany, as long as the contract was made with and the goods delivered to the branch, and as long as there was no direct contract with "the Head Office in Germany or Austria.

"But it could not be allowed if the Branch was in neutral territory on the Continent " of Europe.

"No offence would be committed under the proclamation by trading with the branch "of a German or Austrian house as long as the branch was out of Europe or in the

United Kingdom where it could be controlled

2. "To allow trade with a brauch in some neutral country-say Italy-with borders on the frontiers of the countries with which we were at war, would be to supply "a very considerable loop-hole for trading with the enemy."

NOTE. The Attorney General lays it down tha if English subjects in China were to trade with the branch of a German firm, say in Italy, that would supply a very considerable loop-hole for trading with the enemy, but apparently thinks there is not a loop-hole if a German firm in China trades with this same branch in Italy. In this connection it is interesting to note that the Japanese Chamber of Commerce at Yokchama have been urging upon their Government the importance of establishing a direct shipping service between Japan and Italy. (L. & C. Telegraph, 7th December, 1914).

From the foregoing it would appear:—

1. That German firms in the Treaty ports of China may continue to carry on both outward and homeward business,

(a) with Great Britain and its Colonies,

67

(b) with friendly or neutral countries :

(c) and apparently with Germany itself through neutral countries.

2. That goods shipped by or consigned to Germans in China are not enemy goods.

3. That the prohibition against covering war risk for goods of the enemy will not apply to German firms in China, as they are not considered "enemies,”

4. That British subjects may trade with German firms in China without restriction

but not with German firms in Europe.

5 That German firms in China may carry on their business with branches in Europe although if British firms were to do the same business, that would "furnish a considerable loop-hole for trading with the enemy."

The "Trading with the Enemy Bill" appears to be practically inoperative as far as trade with Germans in China is concerned.

Under it there is no attempt made to capture German trade, though for the most part that trade could be carried on equally well by British subjects.

The suspension of German business in China during the war would be a blow to German prestige in that country, and it seems undesirable that our action should enable Germans to make it appear to Chinese that they are able to maintain their commercial position in China notwithstanding that they are at war with us.

It is understood that German feeling in the Far East is very bitter against Great Britain, and that they have organised an anti-British propaganda in China, in connection with the war.

If the China Association were to recommend that steps be taken to prohibit trading with Germans in China, treating them as "enemies," it would be advisable that united action in this direction be taken by all the Allies-Great Britain, France, Russia and Japan.

pursue

As far as we

The Japanese Government permits German subjects to remain in Japan, to their occupations, and entitles them to appeal to Japanese Courts of Law. know there are no enactments prohibiting Japanese from trading with Germans in China, The Foreign Office ruling is no doubt as correct in law as, in my opinion, the Shanghai Consul-General's ruling is correct in principle. The question is whether the law should be brought into line with the principle by an Order in Council or otherwise.

December 12th, 1914.

F. ANDERSON,

466

|