CO129-564-5 Possible removal of Chinese Government Bank's headquarters to Hong Kong 31-8-1937 - 27-11-1937 — Page 26

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Assuming that there is no state of war, I think the

question whether the head offices of Chinese government banks

could properly be located in Hongkong and the main business of

the banks be carried on from there depends entirely on the local

From the neutrality point of view, there could, on the

basis of the existence of no war, be no objection to such a

course. The question whether it is in conformity with local

law does not seem to be a matter for the Foreign Office.

law.

2

Assuming the existence of a state of war, we should

have to consider whether permitting such an operation would be

consistent with our duties as neutrals. There is of course

nothing to prevent a belligerent in time of war from carrying

on banking operations in a neutral country and there is nothing

to prevent neutral countries from allowing such operations to

be carried out. Nor would there I think be any objection to

belligerent private banks (in the sense of non-government banks)

having their head offices located in a neutral country, though

this would be, to say the least of it, unusual. It might even

not be a technical infringement of neutrality if the central bank

of a belligerent had its head office thus located, assuming that

the central bank was not actually a government organisation or

department. Actually in most countries, though not in England,

I believe it is.

If, however, the bank can be shown to be an actual organ

of the government, I think it does become a question whether it

would be consistent with neutral obligations to allow the head office

of the bank and its direction to be located in a neutral country.

It is a fundamental law of neutrality that a neutral government

as such must not give direct aid to either belligerent and this

duty is not overruled by being prepared to give direct aid to

both