CO129-555-6 Banking crisis 24-9-1935 - 18-10-1935 — Page 8

ONFIDENTIAL.

Hr

Ought Government to try to control the acceptance and

use of small deposits with shopkeepers, etc, by friends and rela-

tions? and if not where is the line to be drawn between them and

institutions which accept the savings of a wider public?

One alternative is to exclude the former from any

legislation, perhaps by confining the scope of legislation to institutions which (1) advertise their willingness to receive deposits by the use of the words "savings bank" "savings depart- ment etc or the equivalents in the Chinese language, (2) enter

deposits and withdrawals in books (the distinction between

banks" and "savings banks" being inter alia made according to the use of, cheque books and such books) (3) any other criterion.

The other is to legislate for all institutions which receive deposits, but not to enforce this among the minimis. may be that this would have advantages in practice which would

outweigh the obvious objection of principle. (The Chinese Dank

Law of 1931 lays down among the enterprises to be regarded as banks those engaged in receipt of cash from depositors and advancing loans to depositors".

institutions which receive deposits are only regarded as banks if they also make advances to depositors).

This appears to mean that

It

It is suggested that the Committee should have before

it an analysis of the published accounts of two or three of the

institutions which receive savings deposits, on the lines of the rough analysis included in Hr. Young's letter to ir. Vernon, if

one of its members would undertake this. This might be the best way of setting out some of the dangers to be dealt with.

Are the provisions of the Hong Kong Companies

2.

Ordinance adequate?

It is suggested that a detailed comparison