CO129-433 - Governor Sir May - 1916 [5-6] — Page 345

CONFDENTIAL.

343

32766

REC

RES I JULIF

GOVERNMENT HOUSE,

HONGKONG. 27th. May, 1916.

!

Sir,

Jer 390

I have the honour to acknowledge the receipt of

your Confidential Despatch of 6th. April, making enquiries with re-

-gard to a certain combination of the importing firms here.

SW 13340 2.

What I referred to in paragraph 6 of my Confiden- -tial Despatch of the 9th. February was an agreement between all the

British importing firms, come to at a meeting of a section of the Hongkong General Chamber of Commerce shortly after the expulsion and

internment of enemy subjects, that no goods would be delivered in

future to Chinese dealers except for cash. The Chinese dealers

accepted without any opposition this sudden shifting of the trade from a credit basis to a cash basis, although in many cases they

were entitled under their contracts to obtain delivery on credit.

The only concession made by the importing firms was to allow 2% dis-

-count. The new system appears to have worked well, but of course if

there were any large number of importing firms who refused to do

business only on a cash basis it would be necessary for the other

firms to re-consider their position.

The long credit system is said to have led to

speculation and over-trading, and the opinion has been expressed

here that the Chinese themselves do not disapprove of the recent

change

RIGHT HONOURABLE

ANDREW BONAR LAW, M.P..

&c..

&c. ..