1937-02-27 — Page 3

THE HONGKONG TELEGRAPH. SATURDAY, FEBRUARY 27. 1937.

Hongkong and Shanghai Banking Corporation Annual Meeting

POLITICAL SCENE DOMINATED BY SINO-JAPANESE RELATIONS

China More Than

Ever Determined To Stand Her Ground

"NWARRANTED Interference" with the legitimate

functions of the Chinese Customs Administration was mentioned by the Hon. Mr. J. J. Paterson when pro- posing the adoption of the Report and Statement of Accounts of the Hongkong and Shanghai Banking Corporation.

The Customs Administration has throughout the year been confronted with unprecedented difficulties in North China, and the integrity of the service has from time to time been seriously threatened," Mr. Paterson declared. Relations between China and Japan dominated the political scene, he added, and the outstanding feature of the year was that China had maintained the status quo.

"In spite of difficult periods she has shown that she is more than ever determined to stand her ground," the Hon. Mr. Paterson said.

(Continued from Pape

HON. MR. J. J. PATERSON (Photo: Kobza)

these will be melted down or come

to

and

system.

24 well-regulated sudgetary

PLAYTHING OF POLITICS

. Without such a basis, manage- inent," like monopolies, tends to be- come the plaything of politics, instead of following natural values. Morcover, one kind of "management" leads to another. It becomes a kind of whirlpool drawing into its control industries, imports, exports and 80 on until rigid state control reigns supreme.

realise that there

ato

We, of course,

few countries with a completely independent Central Bank system And that, consequently, politics often play a permanent part in currency matters. For this reason it will be obvious to you that very great im- portance attaches to the actual terms of the new Central Reserve Bank Act, which will be

be keenly scrutinized by all who are interested in China's

& finance.

currency & inn

and

in

П

MR. V. M. GRAYBURN

If conditions in China keep up the steady

It is recognised that the Customs Improvement which has been made recently, and if unification of Administration have throughout the the country 3 maintained

and year been confronted with unpre internal strife is avoided, perhaps cedented difficulties in North China, China will be more willing to allow and the integrity of the service has

at from

time to into the hands of the authorities.

time been seriously free play to the natural forces

of threatened. expected to issue silver token coins, recovery are clearly apparent and the In due course the Government is supply and demand. The signs

m-UNWARRANTED INTERFERENCE it none of these bave as yet been excellent crops throughout the coun

try minted.

have been great

But by the exercise of great resolu- did 紧 3 time The arrangements with the United coming as they

tion, coupled with tact, Sir Frederick Chen when exchunge had made by the K. P.

just been Maze has succeeded in maintaining Min last summer, full particulars axed at a reasonably low level, and the authority of the Customs Inspec- nt which have not been revealed, when the demand for China produce torate in the midst of much political provided, so far as is known, for the was Improving abroad. As a few confusion and unwarranted Inter- aurchase by the United States of

of instances, we may mention the im-terence with its legitimate functions. regular and substantial amounts of provement Chinese commodity The Customs Service have a

have a fine re- Considering that part of the reads to Japanese on various occasions in liver at the average monthly world prices, the rise in yarn, the demand curd and again and again have they justment of 1935 had to take place different parts of China, and there prices, while China on her side agreed for piece goods which has resulted in remained practically the only outward during 1930, the difference, in our were also set-backs caused by the

of closed cotton- and visible sign of the prestige and Agures is not so great as one might attitude of the other side. Finally enlarge the use of silver and main- the re-opening

tain an independent

of the Central Govern- system mills. currency

encouraging progress re- of Chiang Kai-shek at unlinked to have expected and can roughly be the seizure

Sovereignty of foreign monetary ported by uillity companies.

ment in regions where otherwise In- stated to be อก follows! On the Sinn and the subsequent develop unit. Thus it will be seen that silver

Shanghai is, however, still faced dependent regimes existed. This re- Habilities

side Notes and Current Accounts are up some S02 and ements in Shensi so pre-occupled the thas not yel been entirely cast off, with one serious handicap to entire cord has considerable

significance $80 Government that discussions were though its future influence in Chinn recovery in the deadlock that exists from a financial standpoint and has millions respectively, while Fixed held up and the negotiations be-scen

seems likely to be small,

In regard to its mortgage and real contributed very largely to the con- Deposits are down $20 millions, and tween the two countries remain for

The foreign banks, with the excep- estate problem, with which is bound idence placed abrond In loans among our assets Investments and the moment in suspense.

tion of the Japanese,

panese, handed over up the question of the right of land-secured on the Chinese Maritime Loans show increases of $39 and $58

There are Customs. all their stiver against legal tender lord vis-a-viz tenant. million each, as againsi à decline in

notes early in the year, but no in-anomalies in the laws governing Bills Receivable of $20 millions.

formation is available

The last published financial report us to the these matters which require to be actual stocks now held by the Chinese straightened out, Chinese property of the Chinese Government related to (fovernment. Considerable amounts owners are just as much affected as the fiscal year which ended on June have, of course, been disposed of foreigners und we trust that the 30, 1035. The deficit for that year The legal tender note issue at the Legislative Authoritles will deal was $190 millions. As regards the end of the year was about $1,100,- with these points shortly, as we be-year 1935-36, an official statement

| as 000,000,--which excludes the issues lieve they are being urged to do.

declared that the defeit larger than the previous year; never- of the commercial banks, whose notes

CHINA'S FOREIGN DEUTS is again being used in regard to con- putiated the title of Dictator. All have not yet been entirely recalled,

budget less the.

for the year 1930- ditions in some countries, particular- the same influvice is felt

only provided for $125 milions as

from loans. ly in England and the United States, where in China, and either directly and of the Farmers' Bank, the posi

Without official Bgures it is

is Impossible to say more.

ARTIFICIAL BOOM

THE SIAN AFFAIR The seizure of the Generálissimo at Slan on December 12th, which the Chinese now refer to as the Double It is generally agreed that the Twelfth affair, came as a great shock trade depression which developed into China, and although he was re- 1828 has now moved away from the leased within a fortnight, a tragedy I believe greater part of the world. In fact, was at one time feared. that almost ill-omened word "boom" that the

}រas

appalling in their complexity.

his

Generatissimo

to the Sian incident the

seemed

HONGKONG AND CANTON

nuw

h:15

are

Early last year an Internal Debt reeds

of which is somewhat obscure. Consolidation scheme was presented

current

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Lion Nevertheless, there is a wide reali- or indirectly his hand can be traced According to the reports of the Cur-to and accepted on domestic but the recent improvement in the THE LATEST DECCA &.BRUNSWICK RECORDS sation that the outlook is still behind most of the progressive rency Reserve Board, fully 60 ner whereby the interest rate on pure obscure; that there is an artificiality schemes of development which have evnt, cover against the notes of the bonds was reduced to 8 per cent, and purchasing patter of the people should about the boom; if it can be called been initialed during the lust fes

Government Banks is held in "cash," amortisation schedules were epn-have a favourable effect on revenue such; that in most countries the years.

He has done much for Chinn, which term includes foreign curren-siderably extended. About the same receipts, both of the Internal Revenue word is applied with very little real and his removal would be serious cles. These legal tender nates are time Recovery Loan of $340,000,000 Administration and the Customs, basis; and that it is able to dis-blow to the progress recently made.

bin if steps!

in every province

"the Government through an increased demand for in- was

placed with appear like pricked balloon if

Prior right

throughout China in varying degrees Banks. Since then the Government ernal consumption goods, as well as

mene for imports. are not quickly taken to put

of popularity and they are steadily have had no recourse to the domestic certain basic economic factors which country

to be reasonably replacing other forms of currency;"

References have in past years been bond market but have covered their are known to be swry. But apart quiet and the Central Government

requirements by other means. There made by my predecessors to the great from economic factors there is also firmly installed, but since then there

have, however, been a number of progress in the development of com- the political situation in

has again been uncertainty, though Europe

The cumula- Sir Frederick Leith-Ross has stated provincial and Railway bond issues, munications in China. which gives rise.

e. to

if not the Plenary Session of the Central that the Chinese Monetary reforms some of which have been secured on tive affect of these developments as hesitation

Executive Committee just concluded nlurm. Our Home Government are

have been justified by their results.

revenues of the Centrul Govern-making itself felt, and the coun- facing

very difficult tasks lu strug-as we trust cleared the air.

Everyone will agree that so fur there ment.

try is being opened up remark- gling to preserve Europe from get-

has been no hitch, but rather there Excellent progress has been made Jable way. It is ting embroiled in a general conflict,

every

motor or by sign of skiiZul throughout the year in, the settlement Calha by rail now possible to cross I must before passing on mention and the many political and economic

of foreign debts in arrears. Apart air. It is possible to telephone or Occasional political scures in the status of Kwangtung. Here

from

to here problems which they are facing are the change which has taken place management by the Centrale from the steps taken to clear, of radiophone direct

caused speculative manipulations, but numerous commercial debts due by Shanghai and from Shanghai to are particularly We It is a relief that my task to-day in Hongkong

not 10

10 review

the situation as it affected by the transfer of control, the official rate has nevertheless been Government departments, the initio Japan, Nanking, Hankow or any one

maintained without has existed in Europe during the and it has been a matter of consi-the resources nt the vering and tive taken by the Governor of the of nine adjacent provinces, Radio

disposal of

England in forming a broadcasting stations are almost ex- derable interest and importance to Government yeor. What

Banks We were glad to see how firm-me

have

Chinese proved

Railway

has proved to be of influence is being widely felt, for countries in which we operate andily and yet adroitly the Generalissinqucquate. During the whole of 1936 mitice in London Bondholders' Com- jeessive in their number, but their

for the pound great value and assistance. particularly to China, where condi- no dealt with the situation preval- the rates in Sween 1/2.44. the Ministers of Finnner and Roll- who are thus less and less under the Instance, in the broadcasting of last summer, and while we do 1/2.10/323., a have remained

As a result of negotiations Initiated market prices to up-country, farmers tions have at any rate not been so not expect, and indeed do not want,

ing

nalen difference of only by depremingly tense as in Europe.

the U.S. Dollar rate ways, terms of readjustment of the

thumb of the middleman, very rapid changes--the situation is 13/324., while 2012 15 300 Those T. 1. the Honan Railway still too impermanent for that-wes ranged

R. Loans,

RAILWAY CONSTRUCTION look forward to close collaboration differences, can be

be attributed in part Loan the Hoj Railway Loans Let us start off with China, The

Railway From the Bank's point of year 1938 has in some ways been between Hongkong and Canton in all to #uctuations in the London/New and the Canton-Kowloon

York cros

cross rate. will deal with the

the progress in railway Committee for the acceptance of Bri-construction is the good foundation, lalabvious that the lowered rate of ex- tish Bondholders. These offers have torost. Since the present Minister special in- been one of changes, bright periods and periods of gloom, marchings and His Excellency Sir Andrew Calde-

Nevertheless the rott, when he visited Cantan lost change has encouraged counter-marchings.

been adverse- London bright moments have definitely had your, will be productive of benefit though Imports had exports, and in every case been well received in of Ralways took offleé in December

as being the

1035; many very important and ex- ly affected, nevertheless the steadi in the circumstances. A ness of exchange has to some extent of the Hukuang Railways Lana has way. His, ambition is to complete Your Board of Directors fully offset this disadvantage. I cannot been complicated by the international

(Continued on Page D.) associate themselves with theo better than quete Sir Frederick nature of the flotation, but an an- many public expressions of regret | Leith-Ross' opinion of last June when nouncement may be expected in the at the transfer of Bie Andrew to he said: Ceylon after so short a perindas the Governor of this Colony, Our

past

1 am enlled upon to do is to direct your minds to the us

THE YEAR IN CHINA

the

Bank

and

typleal of recent years. It has again inter-connceted matters and trust tende Agures later on, but it in the Loan have been recommended by the view

the

that

best of it

11 and, although there to both sides. will almost certainly be bad patches from time to time, yet we feel fairly confident that, in due course, as the stability and authority of the Chinese Government become consolidated, the outlook will still further.Improve, It must not be forgotten how Immense is the task of

of unifying and governing such

a great country as China. It has often been pointed out that the proper comparison is between China and Europe rather then between China and a single country. This indicates that patience: is needed and too much must not tions. In Hongkong we started the yet be expected.

loss is their gain. We feel sure that he will in the

IS OLD

•

of

the hestensive projects have been put under

Matter What The

Weather

RESPIROID

future. A settlement of the Vickers- Marconi

debt has also been negotiated No KAN things considered there by another Committee and ut the would appear to be every reason present moment it seems that all so far as economic factors are con- Chinese loans fouted confidence

in London, ex- cerned for confidence in the present cepting the Hukuang, have been read- currency scheme, provided that The Justed as satisfactorily Chinese Government complete and and

Us can be expected.

In the first few years the enrry through efficiently the pro-resultant charges on the Ministries gramme of Internal reforms in- of Finance and Railways are quite cluding especially the reorganisa-small, and this gives time for the tion of the Central Bank and the Government to complete their plans reform of the budget."

for the rehabilitation of the finance

and esteem of Ceylon as quickly as he did of Hongkong.

LOCAL CURRENCY

has shown that she 15 zay that our new currency has work-cation of the note issue, to the

nost satisfactorily, with a mini-interne

ed

mum of fluctuations, which has been of the a great help to Merchants.

no

SMUGGLING EVIL

consider-

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I will now turn to currency ques-

year with exchange at 1/31⁄2, rising Relations with Japan have again to 1/3, where it remained until the

of the country, which There was much more in Sir reason to doubt can be done it poll-held in the mouth and allowed to

we see no dominated the political scene, and middle of May. By the middle of

September rate declined to 1/24 Frederick's

the the outstanding feature of the year but recovered to 1/2 at the end of which still applies with great force.

admirable statement ticul stability is assured. China has that

maintained the

the year.

He referred to the necessity of status

In quo. spite of difficult

After a full year's trial we may periods the

Improved returns have been re-the respiratory organs, dispel the more than ever determined to stand

of the currency on ported by the Salt and internal terms before they have got a grip. her ground. In North China, at any

stability and to settlement Revenue Administrations, while the rate outwardly, there is little change

special Altuation in North increase of $0 millions in the Customs to

Chinn which has been, and-still-is,Revenue for 1930 came as be scen The Hopel-Charhar

As you all know, China is Political Council remains under the longer on

& potential danger to the Customs able surprise in view of the smuggl control of General Sung Che-yuan, standard. Her currency system may

free silver currency Revenue.

ing in North China which was known and the autonomous renime of East-

We understand that the Gover to have seriously affected the collec- Hopel still exists under Fin Ju-ford

foreign exchange standard,

ports. mensures of reform which were in her currency reserves arc

The Customs authorities have on promised by Dr. H. 11. Kung on Negotiations, or at any rate, con partly in foreign exchange, partly in November 3, 1935, and white pro- the whole successfully prevented the versations, between the Chinese gold and partly in silver. But the gress may seem to be slow, it is transportation of smuggled goods Foreign Offee and the Japanese connection with silver is a precarious realised that governments have many

southwards, but 'Ambassador, with a view to

in the East Hopel funda ane, in spite of the declaration of the difficulties which are unknown to district there has been practically no mental readjustment of the relations Government on May 17 last that 25 those outside the Inner circle. We casing of the situation except as and between the two countries.

have been proceeding in an intermittent the note issue would be maintained long before some sunouncement will caused a temporary slow-down in the per cent of the reserve held against trust, however, that it will not be when the saturation of supplies has way. The Chinese attitude hus if

If in sliver. anything · stiffened

be made up during the

of the action taken, smugglers' activities. that allver dollars, Managed currencies of liable to be take can only be pulliatives, and no Whatever measures the Customs year, but there were occasions when of the ald type, still etrculate compromise seemed possible. How-n medium of payment in some of bankers if the "management is not real solution will be possible unt!!

A serious danger to. merchants, and ever, both sides were responsible for the more distant parts of China, and founded on a firm and solid basis; the political status of the East Hopel set-backs;; thore

were unfortunate fair quantities are certainly hoard- such as is, implied when there is at Autonomous arca 18 incidents involving death or injury tp, but it is probable that in time independent Central Reserve Bank diplomatic negotiations.

er

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