CO129-555-6 Banking crisis 24-9-1935 - 18-10-1935 — Page 14

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had a long talk with the Treasurer of the Shanghai Municipal Council

Major Ford) about the effect there if Sincere here crashed and

perhaps brought down the other two, asked me to meet the heads of

the three principal stores - i.e. the two mentioned above and the

Sun Company. I did so, and they painted a very gloomy picture of

the Sincere Company's position. They wanted the Hong Kong Government

to come to the rescue, but I held out very little hope of this,

and said that for the moment they had better continue the negeeiatip

negotiations already in progress with the British banks in Hong Kong,

from whom they had not had a final answer; that I was sure that it

would be fatal to those negotiations if they (i) returned a flat

refusal to such a reasonable requirement as that they should cover

an open exchange position where that could be done without loss (as I knew, but said I "believed" had happened) or (ii) did not disclose

their full position; and finally that I did not expect the British

banks, if they were persuaded that the alternative would be a series

of failures which would do serious harm to the Colony, would refuse

to help before they had consulted the Colonial Government about the

position, and that this was the only line of approach on which I

thought that the Government would even consider the possibility of

any Government action.

They meekly accepted all my criticisms about their

nefarious practices in the past, and made it clear (1) that if ab-

solutely necessary the three companies would pool their assets in the

common defence (2) that they recognised that they could not hope

for help except under the most stringent conditions for the future.

(I had been especially rude about the Sincere Company paying 10%

dividends up to date, and Mr. Choy broke in to say that in his opinion,

if the companies were helped to tide over their present troubles,

they should pay no dividends until all was well again.)

Meanwhile the Hong Kong & Shanghai and the Chartered Banks

are considering the position jointly, and may find a solution. I

greatly doubt whether any action by the Government would be justified,

except perhaps to avert a crash until after other things have been