1938-02-26 — Page 43

THE HONGKONG TELEGRAPH. SATURDAY, FEBRUARY 26, 1088.

HONGKONG & SHANGHAI BANKING CORPORATION ANNUAL MEETING

POLITICAL SCENE DOMINATED BY DURATION OF SINO-JAPANESE WAR

Greatest Importance

That Peace Should

Not Be

Delayed

Knatchbull-Hugessen at his mis- fortune in being seriously wounded when travelling from Nanking to! |Shanghai on offelal duty,

CHINA'S FINANCES

At a time like the present for obvious, reasons it is impossible fur those outside Government circles to make any reliable atatement of the currency and Anancial position of China, or for that matter of Japan.

Wartime conditions prevall and

must be faced with a scalisation of

the dislocations which they mean.

Lasting Prosperity

Cannot Come to H.K.

Without China's Aid

Bright Spring Wear for Little Folk

The difficulties of the Shanghai problem are immense,

LIGHT WEIGHT TWEED COATS However, due credit must be given but they deserve the close attention of the Powers whose THE TOTS WILL LOVE THEM, ATTRACTIVE STYLES & COLOURS foreign exchange market during the responsibility it is to obtain at any rate a satisfactory.

to those who have directed China's,

THE POLITICAL BAROMETER is still too low to warrant a forecast of fine weather for merchants in the near future. Perhaps, said Mr. Miskin in his speech at the Annual Meeting of the Hongkong and Shanghai year. Stability has been maintain modus vivendi if an agreement on a permanent basis can- Banking Corporation, the catastrophe is perhaps magnified and in fact during the early part of in the eyes of many.

"We shall have to wait a time for a real recovery, but the recuperative powers of both Japan and China are great and will, in due course, be sure," Mr. Miskin said.

the year, as threats of unorthodox not be found just yet. financial experiments were warded

the

off, the new currency gained in Hongkong has been fortunate in that the misfortunes strengths and merchants showed In-of China have not so far had any ill-effects on the Colony. creating confidence.

There was, of course, valuable co- It is, however, certain that for real and lasting prosperity speration on the part of foreign banks. the Colony must rely upon normal and sound trading con- "It is, however, of the greatest importance that peace Moreover, a number of factors ditions in China, and the present struggle is therefore be- on reasonable terms should not be long delayed. Other-icted towards equilibrium modity ing watched with much anxiety. Mr. G. Miskin, address. balance of payments: commodity wise the dislocations will be less easily repaired; there will prices were still rising; there had ing Shareholders of the Hongkong and Shanghai Banking

been two years of be the danger of other countries becoming involved, while internal conditions were quieter thun Corporation this morning.

bumper crops;} both combatants may be driven into desperate expedients for some time; the opening-up of the which will deadlock all trade.”

country was increasing the circula-" tion of banknotes;

for arrangements the formation on sound and modern lines of a Central Reserve Donk were (Continued from Page 1)

though we were aware that the cloud I well advanced, and a fresh attempt of Sino-Japanese distrust still hovered at budget control had been initiated. | Other changes in the Balance Sheet in an 11-omened way on the horizon. bave not been very startling: Bilis It is doubtful if this cloud could have July the first signs of a serious con- Such was the situation when in Payable are up about $834 million, been dissipated even with the best Blet were sen. In August, when the Current Accounts up $51 million, will in the world. while Fixed Deposits are down $20)

Cghting broke out at Shanghai and million.

An accumulation of aggravations bomba fell in the business centre of the year.

כום

Į

when commenced.

the Sino-Japanese conflict Justification for Its continuance in an

unimpaired form.

If and when the Powers are pre- pared to negollate, and agree upon some new regime for Shanghal, then but in the meantime it seems to me of course the situation will be altered, and to your Directors that, as a result of the recent events at Shanghai, we have sufficient cause to call

BUOYANT CUSTOMS REVENUE

The Chinese Customs Revenue in millions, an increase of $18 million 1937 amounted to no less than $342 over 1936, thanks to the excellent start given in the first 7 months of

for

稍

of the

On the other side Cash with Certi- made it almost inevitable that the Settlement, It Was necessary to You are aware that negotiations strengthening rather than a wealten- ficates of Indebtedness is up 501 storm would have to take place be- take steps to prevent a panic, so are proceeding in regard to the Cusing of the present Municipal Council million,

Securities up $23 million, fore the air could be cleared. But restrictions were placed on the with-toms tariff and administration in the Administration. There should, more- Bills Receivable

$46 million,

I do not propose to detain you withdrawals of deposits in the Chinese areas controlled by the Japanese over, be guarantees which will ensure while Loons are down $20 million, any comments about the enuses and banks. These measures were supple- forces. It is hardly necessary for me the strict observance of neutrality in

Your Directors are very glad to be origins of the war (let us be frankmented by what is known as the Wel- to emphasize how important it is that regard to its boundaries. able to present to you to-day such and call it war outright), Our Bank Wah or blocked currency system, the Customs Administration should The difficulties of this Shanghai a sound Balance Sheet and a wel is in a delicate position because of its which permitted the constituents of remain as now constituted, and con-

problem are immense, but they Account at interests in all parts of the Far East, the Chinese Banks to transfer funds tinue to be the sole instrument con- deserve the close attention como Profit and Loss such a time. All known and likely and at critical times like these the from one blocked account to another trolling Customs affairs throughout Powers whose responsibility it is to losses have been amply provided for, old proverb "icast sald soonest by means of Wei-Wah cheques or the whole country.

obtain at any rate a salisfactory and in addition a moderate sum has mended" proves its apiness. The orders. This proved effective in The present administrative system modus vivendi if an agreement on a been allocated for any possible losses easy and rapid transmission of news preventing any large-scale panic which may come to light later on.

from one end of the world to the Bight from the currency though it and civil strife over many years and yet

has weathered political upheavals permanent basis cannot be found just other is sometimes a mixed blessing, was subjected to pressure for some

HONGKONG INDUSTRIES Too many spokesmen are in fact time. Gradually the demand for the maintenance of Its existing status quite as bad as too many cooks.

foreign currencies declined appre advantage of both China and Japan, China:

and credit is unquestionably to the

And now to turn away from clably and at the end of the year the in order that in due course the re problem was no longer so serious.

financing and rehabilitation of the country may proceed smoothly.

CONDITIONS IN FAR EAST Conditions in the Far East are to- day more serious than they have ever been in the history of our Bank.

The two great nations of the Let us turn from politics to trade. Orient are at grips, grimly deter-You all know how promising the

FAR EASTERN TRADE

of

mined to fight it out. All the efforts situation was during the Arst half dependent on 11s conversion into Japanese, that the foreign loans will of our local industries have made

August, at a critical time in Shang-it is remarkable that at the end of hai, which formally

promised "all the year the Import and export figures possible measures to protect British together yet showed on increase of lives and interests" at that port. We approximately nine per cent. over feel confident that when necessary 1936. and in face of every difficulty we can count on support for our legit- mate intermis.

FOREIGN DEBTS

are can-

tinued to increase in value. The

"OPEN DOOR" CLOSED

Here in Hongkong we have been fortunate in that the misfortunes of SHIPMENTS OF SILVER

China have not so for had any 11- I am glad say that repeated as- China's interest in silver remains surances

have been given by the effects on the Colony. In fact, many made in recent years to outlow war the year. Prices were rising, the im- through treaties, pacts and coven-provement

satisfactory progress during the year, communications by currency reserve fund in gold or be respected, In ants have broken down.

It is, however, certain that for real rail, road and ult was opening up the foreign exchange. Thus, during the

Sir Frederick Maze is in a dificult and lasting prosperity the Colony So far from intervening to bring, country more and more, the standard year, large amounts of silver were this conflict to an end, the leading of living was improving owing to shipped from Hongkong to foreign position. He is an official of the Chi-must rely upon normal and sound Western countries are seen aligned good crop conditions in the interior countries on account of China. Last nese Government, but as Custodian trading conditions in China and the Into groups supporting widely as well as the greater demand for summer Dr. H. H. Kung made an of the revenue earmarked for the present struggle is therefore being opposed theories of Government; export produce; furthermore

with Mr. Morgenthau service of important foreign loans he watched with much anxiety. CX arrangement watching each other intently, like change, both internal and external, for the car-marking of gold against has certain responsibilities which are In Japun foreign trade has con-

nature. Bond- boxers at the opening of their bout. had never in our time remained for Chinese silver. This

was supple of an international Under mich conditions British In- so long a period with such small mentary to the agreement-of-May holders of all countries look to him excess of Imports was at one time un- terests in the Far East might well variations.

1930 under which the United States to steer a course between strongly usually high, but the imposition of be pictured in the eyes of His

Treasury had already arranged to conflicting currents. We Mojesty's Government ay only Proof of this satisfactory state of purchase regular and subatantini fident that with his customary tact stricter impart controls affected amall item in the sum total of the affairs can be seen in the Chinese amounts of silver from China and to and pollideal sagacity he is doing his duction, and the year ended, accord vast interests of the British Com Customs returns. At the end of July provide facilities in United States, utmost to preserve the integrity of ing to the published returns, with the adverse balance somewhat over Yen monwealth of Nations. Neverthe experts had increased 45 per cent, dallar exchange for currency stabill-this important administration. As 600 millions. The war has, of course, less, the

an international trustee he deserves brought in its train abnormal condi- Indications are that the and Imports 38 per cent, as compared sation purposes.

International support. The foreign tions in trade and finance and the Importance of the Far Eastern ques-with the same period in 1930. Later

No official figures are avaliable to powers have in the past brought their future must be largely dependent on tion is fully realised, and very wel- Imports and exports of course fell off.

clr- come was the statement Issued last the former more than the latter, but show what funds in gold or foreign influence to bear under similar the outcome of events in China.

exchange are held by the Corest cumstances and they are, we under- Government, and while abnormal stand, doing so now, particularly as conditions prevail we can hardly ex- the retention of the "Open Door" in pect progress to be made in the pub-China depends a good deal on the In Manchukuo the expansion of

leation of reliable statistics.

continued

existence of an inter- trade figures has continued and there nationalised Customa Administration are indications that the opening-up such as exists at the present time. of communications, coupled with At the beginning of 1937 the Chi-

several years of normal trade, is SALT REVENUE * The political barometer is all too nese Government was still negotiat-| -|

Increasing the purchasing power of Few years have seen such con- trasts as the past year in China and low to warrant a forecast of fine ing for a readjustment of certain

The Salt Revenue in 1937 is report-the people. State monopolies and it is a sad tasks to set about review-weather for merchants in the near foreign debts in arrears. In April ed to have rem

very much the supervision or control of industries In Central China the the London Bondholders Committee, same វាទេ

1936 ing the political situation there dur- future.

owing to and exchange ore, however, making for further. increased ing 1037. The year started so well channels of foreign trade are now constituted to deal with such ques-

things increasingly.....'difficult but and ended so differently.

affected as never before since the tions, recommended the acceptance

foreign merchants and the "Open opening of the treaty ports. Yet, of terms for a settlement of the the

Administration bas Door" is now almost a thing of the may I be to bold as to suggest, that Hukuang Railways Loan similar to unfortunately failed to maintain its past. for this very reason the catastrophe those already adopted in readjust control over the North China Salt In each of the past few years your is perhaps magnified, in the eyes of ment of the Tientsin Railway Loans. areas.

In the coming year the question of Chairmen have ultered

extraterritoriality will have to be Two United States dollar loans were

This Administration warning about the dangers inherent

has beca faced by the foreign powers with in- scema likely, the Yangtsze niso put on a new basis, namely the in the unsatisfactory political rela-Valley continues to suffer throughout Chicago Bank Loan and the Pacific in the situation of an ugly duckling terests in the country,

World trade conditions, Last year your Chairman stated the spring and summer, the effect on Development Corporation Loan, both alongside the favoured Customs, and that relations with Japan dominated trade in general will naturally be dating from 1019. Furthermore, the by its therefore been rather neglected especially conditions in the United the political scene. He inentioned serious, but there will be adjustments, good work of setting up certain tong of foster parents, the internation- States, affcet in a varying degree

Nevertheless, it is Im- that negotiations between the 110 loss here will become a gain there, outstanding advances and material al powers.

should be treated on an

Thus fuirly optimistic reports from cquivalent countries were, when he spoke, in and I do not think it necessary to debts to Government departments portent that the Customs and Salt trade in all the countries of the East.

proceeded satisfactorily. suspense as a result of the Sion Inci- be too despondent.

basis, as the arguments used in the India are qualified by doubts as to dent when General Chiang Kai-shek We shall have to walt a fime for a

the coming year. The conclusion of agreements re- one case apply also in the other. The the state of world trade throughout was kidnapped. That, affair, it now recovery, but the recuperative

real

garding the Chinese Government outstanding foreign loans secured on

(Continued on Page 5.) appears, was a key-point in Sino-powers of both Japan and China are loans in default and the improved the Sall Revenues require Japanese relations. The result was great, and will, in due course, be outlook in China to which I have al- parauively modest annual remittance an accession of strength to those sure.

Even now we see how China's ready referred, had a favourable ut funds and the revenues collected Chinese who, rightly or wrongly, misfortunes are leading to develop effect on Chinese bonds quoted on the should continue to be ample for these saw no hope of co-operation with ments in Western provinces which London Stock Exchange and it was requirements. ** Japari and advocated a policy of might otherwise have been un- thought, early in the year, that it It la satisfactory to be able to note stern resistance aggression.

might shortly be possible to bridge that, in spite of the war, the National

RELATIONS WITH JAPAN

CATASTROPHE MAGNIFIED?

words of

many.

tions between Japan and China,

attempled for decades.

Subsequently, when Dr. Kung was

Soli

in

Laxation,

EL cer-

1

TEMPRESS INDIVIDUAL WATE

The subsequent meeting of the 3rd It is, however, of the greatest lay- the hiatus in the London issues of Government has continued regularly. Plenary Session of the Central Exe-portance that peace on reasonable | Chincen loans which had existed, to pay the foreign loan obligations cutive Committee last February con- terms should not be long delayed. since the Reorganisation Loan of secured on the Customs, Saff and firmed that line of action, which had Otherwise the dislocations will be 1013, The Minister of Railways first Railways. already been made one of the main less easily repaired; there will be inflated discussions regarding the

STATUS OF SHANGHAI planks in the policy of the Kwangsi the danger of other countries bo- possible flotation of loans for new fenders and of the Communisis. From coming involved, while, both com railway construction in China,

Before I pass on to deal with other that ilmo on it seems that the in-batants may be driven into desperate

countries in which we operate, you Auence of those who wished for expedients which will deadlock all in London for the Coronation care will expect me to say something compromise and delay gradually trade.

monies, negotiations for the building about Shanghai since its status is An understanding WAE Meantime we extend our deepest of a rollway from Canton across likely to be a prominent subject once reached with the Communist army sympathy to the sufferers in the war Kwangtung to Melhafen made pro- again in coming monthin. and the way was prepared for action areas, where the conditions have not gress, At the same time Dr. Kung This is a matter which in of very by a united China as soon as the been paralleled. since the Talping also broached the subject of a loan great importance to all foreign busi-

Rebellion of some 80 years ago. Disto need should arise.

ured partly to provide addi-ness interests in Shanghol. You will remember that early in treas is also great in the foreign com- tional aralalance in the stabilisation We have seen the neutrality of a the year the liberni and friendly tone munities. The Lord Mayor'a Mansion of the Chinese currency and partly part the International Settlement of the utterances of General Hayashi, House Fund, gave help at a most for the refunding of a portion of the violated during the recent fighting, then the Japanese Prime Minister, opportune moment, but further help domestic debt. We were consulted This would probably have been and of Mr. Sató, his Foreign Minis is needed and the International Tted about this matter but no agreement avoided if intervention had taken ter, caused a feeling at opluniam in Cross organisations at Shanghai and was reached. We were, and are, place in the early stages and thereby regard to the development of rela- Hanitow ales deserve liberal support, bound by the agreement of 1920 be much loss of life and property might slons between the two countries. In I should further like to express Group of banks, so we naturally

tween the International Consortium have been saved. B China itself there were signs of word of sympathy to the relations of sought the views of the other groups regime cannot be quesioned: one har BEAUTY SHOP

The value of the existing Settlement slobily and progress auch na had the members of the British forces not been apparent for many years who lost their lives while serving at of course had to be left in abeyance there been no Sotitement at all to get The outlools was, in fact, hopeful Shanghal, and to gir Llughe

in regard to both these projects. They only to visualise the situation had

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