CO129-555-6 Banking crisis 24-9-1935 - 18-10-1935 — Page 19

75176/35 Pal

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have passed the bank law translated on pp 405-408 of the

China Year book for 1934, but we do not know whether it is

mere facade or really operative. I will try to find out if

I go to Shanghai, or, failing that, here. In the meantime

could we have by air-mail as much as would be useful of

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the Palestine papers (including, I suggest, their Committee's

report, Waley's letter to Williams with enclosures, and your

final conclusions about their draft Ordinance) and also anything

else useful that you have?

H.E. has seen this letter, which is to some

extent in substitution for an official despatch which I had

thought of drafting, and agrees that further consideration

should be given to the possibility of regulating banking

here, perhaps by the appointment of a Commission or Committee

at once, unless it is thought better not to risk a renewal of

uneasiness by doing anything at the moment, but to wait for

the report of the Special Manager on the affairs of the Bank

of Canton, and hang an equiry on to that.

As regards Savings Banks, there is in existence

a sub-Committee of the District Watch Committee, which was

appointed last March; but its Chairman, Sir Shouton Chow,

has been ill, and it has not yet done more than circulate

a memorandum by the most active member recommending that a

savings bank should be compelled to keep separate records,

that its assets should be segregated and not merged in the

general assets of the parent institution (which at present is the universal practice here, followed even by the H.K. & S.B.)

and that investments should be prescribed.

Meanwhile Grayburn has asked Government to

legislate against such rules as 8 and 12 of the rules of the

Commercial & Industrial, of which I attach a copy. 'I