Witness—Ton days later. I agked him what he meant by telling me 10 days ago that he had these goods, and his reply was that he had been lying the whole time. I said "That is fraud," and he said Yes, it is." He admitted it.
Mr. Van Haute—How did you think a firm which had a debit with one Bank amounting to Tls. 700,000, which had to be guarantee ed, could do business?
Witness—Half the firms doing business in Shanghai have large debits to their name. Those debits are being held over, and new business is being carried on straightforward lines. Thig export account is an account which stands on its own merits entirely. It has nothing to do with past indebtedness to us. He might have owed the Asia Bank five lakhs, but that should not prevent him from doing honest and straightforward business. We have other accounts against him, exchange contracts, and a loan not secured, but that should not have prevented him from running hig business honestly so far as export goes. It is current business standing on_ its own merits entirely.' If fraud is" to be condoned because a firm is in debt and has no security. to cover its indebtedness, then most of the arms in Shanghai would be committing fraud. There are very few firms in Shanghai at present on their feet. That is the position.
Continuing, witness said that when defendant came and confessed fraud, he (witness) pointed out that when the godown was inspected in April he had the goods all right, and asked him how ho could have lost all that money since then. He replied: The goods you saw in April were not paid for."
Mr. Van Haute—The money had been advanced.
Witness—The bank had paid defendant, but he had not paid the dealer.
Text read from the printed page and cleaned; old type leaves the occasional error.