Asked by what means the Bank knew of the Company's financial position, witness answered that they knew it had no financial position. Like half the firms in Shanghai, it was practically bankrupt but, as in the case of the others, business was carried on. The Bank thought defendant was honest and trusted him to a certain extent. He seemed to do a big business with Europe and America, apparently had a big turnover, and as he had no capital, witness used to question him a good deal about his shipments; in short, witness bothered him a good deal the whole time, and he always gave an assurance that things were going all right. Witness thought defendant must have obtained a good deal of this money absolutely by false pretences, without having the Roods at all.
Mr. Yam Haute—Why did the Bank continue to make advances to defendant in the circumstances?
Witness—Because that is what the banks are here to do, to finance export and import merchants. We had dealt with defendant before and we thought*he was honest. We knew ho had lost money, but he owed the Bank money, and he had good connex-jons; and as we thought he was honest we continued to finance his business. I think that makes the situation worse from his point of view.
Mr. Van Haute—After the crisis of 1921, you knew perfectly well that the Belgian Trading Ca. had not only lost its capital but was even far behind?
Witness—Yes. It was in our own books. I am afraid he was not the only one in Shanghai, but the other firms have not been dis, honest. They lost money but carried on. We have carried them Mr. Van Haute—Were your advances always made for goods already in the godowns or goods still to be purchased Witness—In his forms be said ihe was purchasing goods. The advance was a specific one against certain goods which could be obtained or which had been obtained.
What brought the situation to a head, witness continued, was that the Bank found that no goods were being shipped. On August 17, he questioned defendant, observing that he had not appeared to have shipped much of late. In answer to this he sent in a list of goods and said they were open to inspection, but naturally the bank did not send a man round straightaway to count them. They thought defendant was telling the truth, and left it at that.
Mr. Van Haute—On what date did defendant tell you there were no goods at all in his godown?
Text read from the printed page and cleaned; old type leaves the occasional error.