1930-02-04 — Page 7

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THE BLIGHT OF WAR.

CANTON AND WUCHOW

TRADE LOSSES.

WORST NEW YEAR ON RECORD.

(FROM OUR OWN CORRESPONDENT]

CANTON, Feb. 3rd, Business in Canton and in most parts of Kwangtung has been very dull for the last lunar year," said a prominent local merchant, ia un. interview with the writer. Ban ditry, excessive taxation, and the two anti-Kwangsi wars have dane much to paralyze trade. The pros- perity of Canton, he said, is depan dent upon the interior of Kwang- tung, but river transportation was constantly interrupted by military operations, and when these erased, bandits and pirates appeared on the ! scene and contributed their quota of devastation. These gangs often established tull stationą at strategic points on inland rivers and exacted protection fees from every craft

Unless their de

passing though.

mands were met disaster would he fall the ships and junks. The Gove! ernment has been too busy with it own affairs to give much attention to bandit suppression, and the re- wult, was that piracy and brigand age were mere frequent last you than they had been for a long time,

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THE HONG KONG DAILY PRESS, TUESDAY, FEBRUARY 4, 1930.

FOUR MONTHS WITHOUT HARD

LABOUR.

MR. INSTONE BREWER'S LENGTHY STATEMENT IN MITIGATION.

INSTONE BANK NOT A "BUCKET SHOP CONCERN.

PUISNE JUDGE PERFORMS A "PAINFUL DUTY."

1162

When Mr. Noel Instone Brewer came up before Mr. Justice Wood for sentenes yesterday, following his conviction on charge of filing a statutory report in connection with the affairs of the Instone Banking Corporation, which report was false in a material' particular, he made a lengthy statement to the Court in mitigation of sentence.

After submitting that nobody could have been deceived by the report filed with the Registrar, he went on to declare that the Instone Bank was not a fraudulent concern, And that it had worked, and did always work, for permanency. Instone Brewer himself is not one who would lend himself to a frand,

I stood to make no profit out of this firm at any time,“

was one of his statements to the Court yesterday.

His Lordship, in passing sentence, said he fully agreed with the verdier of the jury. It was your ambition to appear as a Director of a Cerporation which had a gigantic financial stability, and you knew, and no one knew better that the Instone Banking Corporation was nothing of the kind." His Lordship concluded by adding that it was a painful duty to pass sentlice upon a member of the Bar of the Supreme Court,

MR. BREWER'S PLEA.

documents and advertisements stood a good chance of being read by in- vestors.

I was a barrister of the Court of Hong of good standing. I stood to make na profit out of this firm at any time. I had a salary of $500 a month and I considered, and it is generally agreed, I earned it. If I wanted to make money out of this firm, when the firm agreed to pay me 868,000 in respect of a Directors' agreement, I could have taken the money. That contract was worth the money. It was not, as has beer put forward, a right to

will tell you that it was a guarantee that a certain number of bonds were to be sold, and that guarantee was backed by securities.

..

Repaid $55,000,

Verdict a Foregone Conclusion. Front the moment that your Lord- ship ruled that these transactions were not cash transactions, the verdict was a foregone conclusion, because I have never maintained that we have had actual cash I have maintained that they were, aa Mr. Udy, puts it, theoretical cash. I believed they were cash by opera- tion of the law, I have never be lieved them to be factual; there- fore, if, as a point of "law, I was wrong, I cannot plead other than I know it to be false. I was un- questionably guilty to that extent, that, unless my contention of law is correct, I knew these to be falac. Also it was wilfully done, I la barrister and have a certain en- thusiasm for company law.

I pro- duced this Statutory Report, not s

a document, that intended to de- fraud anybody, but on the con trary, because I knew it could de- fraud no one. I produced it as an. enthusiast, in any line of work or profession, would produce some- thing new. It was a precedent and, te my mind, one worthy of appear-

ing some day in a text book. Ap- parently I was wrong. but the Registrar, while disliking my Statutory Report, believed it to be' legal before signing his name to it. Mr. Ross could not say how it should be done, Mr. Udy stated it was correct. With all these experts disagreeing, we have no one who could say that it was incorrect.

I cannot say that I have drawn people's attention to thir Statutory Report, except in regard to some- thing of which I was proud as President. I bave never drawo at tention to the fact that the amount received for our shares issued for

as it showed I have produced a lega! document that was, as I say, a precedent of which I was' by no means ashamed.

The Sentence.

Mr. Justice Wood: You will realise that I have listened with very great patiengs to what you have said and I will assure you

Addressing the Court, Mr. Brewer to put such statements in their ads vertisements but the Instone Bank said:

never did so. The Instone. Bank My Lord, I have been found issued pamphlets, prospectuses, and guilty on this charge, but to be booklets, "setting out what trustre guilty on this charge may vary

barking was and explaining their position and yet in one of thosed from a degree of culpability to one booklets would they find cash re- Continuity, our inferung said, which is little more than technical.ceived mentioned, although those great deal of difficulty was experi There is a considerable amount of enced by many fraus during the last eviilence which normally would days of the Chinese year in effect have come out on the second and

Continuing, Mr. Brewer mid: ing the usual eettlement. Debt col third counts, dealing mainly with The Statutory Report itself, I say, sell bonds. The face of the contract cash was 8800,000 except in as far lectors would be offered old coins of the question as to whether the busi could not have been issued for a fraudulent purpose by any reason- douhifal value, which were 40 news was run

fraudulently, and able person because it had no chance wanted, and preference was given whether myself was fraudulently of succeeding in fraud. The In- inclined. That evidence was not to the new coins of the 15th year directly relevant to the question of existed for no fraudulent purpose. stone Banking Corporation itself of the Republic and also to Hong whether there was guilt or no guilt. It has been suggested that the Cor- For the benefit of the firm I allow

on the first count, and was there poration bought a building for the ed them to withdraw from a bind- Kong currency, The result was

fare not brought in on the hearing sake of improving our name, Cer-ing agreement that had been enter- that a premium of as much as 82.30 of the first count, but since it is tainly, buying a building did ined into, and repaid 855,000, which

er hundred dollars was paid to very relevant to the question of prove our name and status but the is ten years' salary." get the new coins. The exchangey Lord, that that evidence, be showed people that we were faild- whether I am guilty or not, I ask, reason why it did so was becauar it rate in local silver for Hong Kong adduced before I ask for mitigating for permanence. Anybody who shares in the Company and asked that the facts, as you have set cut, money also jumped to $1.32, Canton,

is building for fraud does not in whether, if he was a fradulant man, money, and merchants were willing

Vess the majority of their capital he would have returned the 85,000 and hoped by means of fraud to to pay that price because of the

in house property. doubtful value of the old coins,

put 800,000 into No. 23, Das Voeux raise the value of his 200 shares to Road Central, we notified the public $55,000 above par "I invested my own money in the Instone Bank, I

You stand convicted on a charge with which Canton je fooded.

that we were there to fulfill our

did not nsk for free shares. I made of having filed with the Registrar promise to them, and, as I say, we followed that up by purchasing our nothing out of the promotion of of Companies a Statutory Report in connection with the Instone own premises in Shokki, also this Company. Had I wished to

defraud 1 cause, we were building for perman-position. I made out the Memoran-contained a

was in an admirable Banking Corporation, Ltd.; which The Instone Bank was a

statement untrue in trustee bank. It is a good iden and dum and Articles of Association. I substance and in fact, and which one on which somebody will make made my own contract as President you knew to be untrue. The false money in Hong Kong some day. It and fixed my own salary as Pre- statement contained in the report" sident. I did not, in fact, is, ds you know, that the Inatone requires only a small capital and, as has been pointed out, a trustre

"squeeze" anyone, and never sold Banking Corporation, Limited, in bank largely takes the place of a

my shares and I still possess them respect of its shares issued..for cash for what they are worth. Had my

had received in cash the sum of family solicitor, who, of course,

sintentions been fraudulent, I would $876,750, and it appeared, from the does not require a big capital, or a property broker, and as we know,

a large capital.

RUINED MERCHANTS.

This was the worst year on record | for the collection of ong standing accounts. Generally not more than 50 per cent, could be obtained and one firm only netted about $200 out of debts aggregating" more thas $30,000. Two main reasons were given. In the first place business

į

tion.

Mr. Justice Wood; I am granting you a great privilege, Mr. Brewer, in hearing you at all, and I don't propose that, the matter you have suggested be made públic. If you wish to speak. I will not prevent you.

Mr. Brewer: You will hear the speak i

Mr. Justice Wood: Yes.

Mr. Brewer: But you will not permit that evidence to be given!

Continuing, Mr. Brewer said: I am addressing your Lordship on the grounds that my eulpability on this crime is not great. The State tory Report which I knowingly and wilfully caused to be published,

ebuy.

When

WA

Mr. Brewer said he only had 200

|

so far as they have appeared in the evidence before the jury. I have fully considered.

evidence, as you yourself recognis

that account was possibly less than a tenth of that eum.

in Canton has been bad, and many which has been declared to be false property broker does not require Public believed the company to leed, that the actual cash received on

Arms lost money and were forced was not printed or circulated pub- to close up. The money market | Tiely. The point which I am going. was very tight, and the debtors to make out was that it was not

Adequate Capital.

The Rocks.

have got rid of my shares while the doing well. Both I and my wife were, and still are depositors in the Bank. We saw the Bank coming to The verdict of Guilty" brought a crash but we did not draw out in by the jury was their unanimous done fraudulently or wilfully. The We had a capital in every way the money that belonged to us. The verdict. It was given after a close were unable to meet their obliga Statutory Report was typewritten adequate for our purpose. We re Bank still owes us money, Wo nad careful consideration of the tions. In the second place trade in and not printed, and only enough quired, to start business, 8100,000, knew the Bank was a sound pro-evidence before them... The trial the outlying districts of the Pre-pies were produced to eirculate but we got 8200,000. Every share position and we fully believed the lusted for four days and they-listen ane to each shareholder and one to holder and Director, in the Com-Bark would have paid all creditors, ed carefully to the evidence and vince was equally poor and it was the Registrar of Companies. The pany purchased shares with his own as in fact they were in a position everything that was said. difficult to collect money from mer copies sent to shareholders deceived money and under his own liability to do."

I think it is right that I should chants in the war devastated areas nobody. The shareholders were all That is no fraud. The minimum

say here that, having followed the of the North and the West Rivers parties to the letter of application shareholding a Director could have loan, and knew the method adepted. was $10,000 and there were no large

evidence with them, I myself agree Dealing with the books referred fully with the verdict, and that the Many shops in these districts were If they had any doubt they had fees or salaries taken out. The to in the evidence, Mr. Brewer said verdiet is the only possible one looted and burned by the retreat opportunity to query the nature of Directors received only $250 a year that they had been consistently fustified by the evidence. In what the deposits. The actual amount of in respect of their fees and the kept, and the Court had had expert you have said to-day you have tried ing Kwange troops and Iron.

cash in possession of the firm was salary of the President himself was evidence that the books were in ex- sides. Our city, Szewui, was en-

clearly stated in the Statutory $500. The salery of the secretary cellent condition, that it was easy self and the Crown, I put it to the to re-open the issue between your- tirely reduced to ashes, and it was

was $250. Other expenses were all impossible to collect any money Report as $40,000. The copy sent to

for anybody coming to the books jury that if they found that the to ate how things stood. The re-statement was a sham intended to from merchants in places above the Registrar could deceive nobody kept low because we were building for the future and for permanency. because he himself was fully aware Wuchow. A large number of these of the nature of the Statutory No founder shares were issued al-

curds were all entered and kept mislead people who might be pro- with great care, Everything was Kwangsi merchants deal with the

though the Company had a right to Cantonese, but on account of the Report, and the circumstances un-

der which it had been produced. do so. The founders tried to get not, bucket shop nor "y-by-you guilty of making a false state- done to build up a permanent firm, posing to give credit to your bank, then there was ground for finding war and blockade not one cent

The Crown Prosecutor adduced in no benefit whatever except what night." The unforeseeable trouble could be collected.

ment, and their verdict means that his ant speech that this was an they were legitimately entitled to. in Shekki and Canton, he said, they have found that this was not important document calculated to That the capital was adequate were not the fault of the manage- WUCHOW'S PLIGHT.

a mere matter of accounting, not a deceive investors, but in Hong could be seen by what we did. The ment. He pointed out that in all business started in Hong Kong and subsequent meetings of shareholders

mere matter of book-keeping, but The merchant further told the Kong that is not true-it may be so

that it was a false statement placed in England, where people refer to we purchased a building here. he was proposed and passed un- writer that business conditions is

Then in Shekki we purchased our animously as one of the liquidators, tion.

on public record for public informa- Wachow, of which he had intimate the Statutory Report-but it is not

true in Hong Kong. I know that own building and in Canton we At the finish he was proposed volun-

A principal object of the knowledge, were just as bad, if not there was not a thousand to one started under leased premises. Our tary liquidator and be did his best have the principle affirmed that Crown in these proceedings was to worse than in Canton. The whole chance of any potential investor failure was not due to any shortage then to show himself deserving of city has been vary acrvous ever looking at that Statutory Report and of money, but due to the action of their trust, and the first thing be taking advantage of the Companies persona, commercial men, who are since General Chea Tsui Tong's being deceived by it. It is signi- Canten Government, utterly un- did was to get Messrs. Lowe. Bing- troops have been in occupation.

Ordinance and the privileges there- Stringent martial law has been en-fieant that in every single case no foreseeable, and, on the face of it, ham and Matthews "to go, through under mutt also be held bound to forced and this, coupled with the shareholder has come forward when unreasonable, and had it not been the books and to find out exactly comply strictly, and honestly with

investors.

for that, the Instone Banking Cor how things stood.. That was not the presence of a huge number of troops questioned about his liabilities to

the provisions of the ordinance in the suburbs of the city, has made say that he looked at the Statutory poration would still have been setion of one who had been defraud- which is designed to protect the

Report and was deceived by it, the going strong. Even after we wenting the concern. He gave Mesars. public who deal with them. things uneasy. Night life in Wu-

reason being that the existence of into voluntary liquidation the state Lowe, Bingham and Matthews.

You have been indicted and you. chow has long been at a standstill. The prices of daily necessities have such a report is unknown to Chinese of our inputsiders come in yong every assistance possible and there yourself, realise the gravity of the

to make come in, willing by enabled them to put through an doubled and even trebled, for exam-

to carry on the business and to pay agreement with Singapore people, victed, and it.

charge on which you have been con- ple the prices of ducks and other

Nothing To Gain.

my duty to pass our ereditors in full. An actual in which agreement the position of fowls rose from 50 cents to si per

a sentence which, it is hoped, will eatty. A proportionate jump in the

was signed whereby the bank was plainly set out and After dealing with the impro- agreement

deter you from doing anything of prices of vegetablen has also been hability of anyone visiting and creditors would have been paid in at no time was it distorted.

the kind again. It was your am- made. Firewood, which in normal inspecting the Registrar's file, Mr. full.

"When the compulsory liquida.bition to appear as a Director of a times is sold at about 70 ccats per Brewer contended that it was not I, myself, am not one who would tion came into effect, I produced a Corporation which had a gigantic pical, is now fetching 82 per picui.conceivable that he would commit a lend myself to a fraud. If the voluntary balance sheet showing financial stability, and you knew, All this is due to the interruption criminal offence when he stood to prosecution could have adduced how the firm stood. I gave every and no one knew better, that the of the river transportation between gain nothing. Mr. Brewer em- that I was a fly-by-night" or a explanation that I could to the Irstone Banking Corporation was Wuchow and the interior of Kwang-phasized that in all their advertise man of straw, it would have told Official Receiver and special man nothing of the kind. si. It is now almost impossible to ments in the local newspapers it strongly in favour of the prosecu-nger. Also, when I was publicly tion. I have been domiciled here examined, there was no attempt to travel in Kwangsi because of the was never stated that, the amount war. Thus it is that the merchants received in respect of shares issued for the last 10 years, 12 of which hold back about 40 odd pages of

"words of Wuchow felt the war just as for cash exceeded £800,000 or any have been spent in residence. I am

spoken by me, not one much, if not more, than those of thing like it. He pointed out that known to be not a rich man but of which have I ever had to retract

it was customary for banking firms l'in possession of moderate savings, or wish to re ́ tact. Canton.

It is a painful duly to pass 307)- tence upon a member of the Bar of this Court. The sentence which I pass upon you is that you be im- prisoned for four months without hard labour.

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