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in England. This wrong impression should never have been allowed to grow up, and I submit that in future there must be a properly accredited and able representative in London who can at all times supply the Press with the real facts and prevent such alienation of public opinion as undoubtedly took place this time.
Our Financial System.
93. The recent financial crisis has shown us how imperfectly the banking system in Hongkong is centralised as compared with the systems of larger States. Hongkong finances the trade of the whole of South China, directly or indirectly, and it includes among its banks one of the most powerful in the world-the Hongkong and Shanghai Banking Corporation. But there is no banker's bank here as there is in London, or in the areas of the Federal Reserve Banks in America. The connection between the three types of banks I have mentioned is comparatively slight; and in the event of a crisis there is no very obvious means of safe- guarding the banking system as a whole, while providing against unsound practices by the various banks. The Hongkong and Shanghai Bank is in every way predominant, through its large capital, through having its head office in Hongkong, through being practically the Government's bank, and also by reason of its great prestige among the Chinese. This leadership is shared in a less degree by the Chartered Bank. But it is not so over- whelming as to enable the Hongkong and Shanghai Bank to play the part of the Bank of England in such a crisis as this. The question is, however, one that should be studied with extreme care. It is my intention, when I can spare the necessary time to do so, to examine thoroughly the systems of the Chinese regis- tered banks and of the native banks with a view to seeing whether centralisation, as applying to them, would be desirable or not. If my study carries me far enough, I may submit a memorandun on the subject for the information of the Government.
Capital and Labour.
94. The importance of a better understanding between Capital and Labour has not been thoroughly realised in the past, thoughṛ matters have improved since 1922. Lately, the Chinese General Chamber of Commerce has on two occasions entertained repre- sentatives of the guilds. On the second occasion Mr. Chow Shou-son and I were present. There were no speeches, but there was a general atmosphere of good will and friendliness, and con- sequently both parties benefited from these meetings round the tea-table. General Leung also realised the need for improvement in this respect, and held several social parties. The first of them was experimental, only a few brave spirits from six of the guilds being present, but when this proved a success the later meetings were well attended. And out of them grew proposals for forming the Labour Mutual-Help Society "(referred to in para. 96), and for creating some machinery for settling disputes in a friendly manner.
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