Aprit 17.
For the first time the Interna tional Savings Society has given an authoritative account of the truly! amazing ordeal through which it! has passed—with considerable eredit—during "the last cigtiteen months, The Society, dealing in premium bonds, received from the Ministry of Finance in March 1929 a duly signed agreement entitling it to operate throughout China under Government protection. On the strength of this agreement) agencies and sub-agencies were opened in various parts of the country, in extension of the activities already established in Concessions and Treaty Ports by the Societies branch offices. In May 1934 a cloud arose: a violent attack was launched against the society in the Chinese press, just at the time when a Financial Conference was being held at Nanking under the auspices of Who present Finance Minister. A month later, the draft of the Government's new barking}
Taw was amended to Include two articles which in effect prohibited the class of business—"savings with drawing"—undertaken by the Society. By virtue of extraterfiloriality the Society was not legally affected by this prohibition which, nevertheless, was clearly_ aimed' against its operations, approved though they had been by: the document already cited, The: Jaw was passed in July 1935; at the end of the same year, atter having made an. attempt—impracticable under the French law. which governed the Society's opera-Yons—to insist on. the Society's deposit of a large part of its mathematical reserve" with the Central Bank of China, the Government denounced the 1929 agreement!—on the basis of what the Society claims was a distorted interpreta~ tion of the text—and declared its Intention to liquidate the Society, In spite of diplomatic protests, this was followed, in. February 1935, by a demand for the delivery of the Society's assets to the Ministry, "The demand was lira vires and consequently ignored, but in June 1935 as the result of 1 press campaign the inspiration of which may be surmised, a panic spread among the Society's bondholders. It was reinforced by a new law which prescribed stringent penalties for dealing with premium bonds and lottery' tickets' without government—permission. 'The Society, having' withstood the run fon iis funds with remainable Success and courage, was then at~ tacked through its Chinese agents and, thus faced by the compulsory losing of its agencies and tub-agencies, had to confine its business to branches managed by foreigners. In the meantime, under the Central Bank of China, the newly-established Central Trust of China started to organize a business on the same lines as the International Savings Society and actually invited the Society to pool its bonds. with those of the Trust. Negotiations were started in spite of the treatment which the Society had. received, but in November 1935—a_ week after the announcement of the Currency Reform scheme for which the Finance Minister had specially invited foreign co-operation-—the Finance Ministry " forbade all (Chinese newspapers to accept the Society's advertisements, It sould be added that the Society had been among the earliest foreign inves in Chinese Government Domestic Bonds, at one time having bout $15,000,000 invested in those securities, and it had shared in the Underwriting of the first issue of bonds of the City Government of Shanghai, Tis active ce-operation in the financial policy of the Government is therefore clear.
This bald recital, on the basis of the statement made by Mr, Spelman, the chairman of" the Society, speaks for ilsclt. Tt raises serious issues to which the Government would be well advised to sive close attention. In many counties Governments have, for reasons con sidered by them to be good, developed a policy of national con~ trol of certain forms of business activity, but as a rule and a matier of common honesty, such a policy has been usually earvied out with ith ful regard to existing concerns. If the policy has prompted a desire to expropriate "such concerns, proper arrangements, after due negotiation, are made." Tu this case it would seem that, stulbtying its own recognition of the Society and in. virtual. violation of extrater~ riloriality, the Government has sought by devious measures to destroy the Society and, declassing is. business illegal, {o' create a Government institution in competition with and eventual replace men! of the Society as an instru-tment for the sale of premium bonds, It cannot be too strongly urged that such a sordid tale must have an adverse influence on the Government's policy of encouraging Jeign ce-operation in the financial and commercial reconstruction of the country. It poses a question of good faith to which, in the light of the facts adduced by Mr, Sneelman, a sorry answer must be returned. It indicates an irresponsibility which gives a most painful impression of the kind of control exercised by the Government over its subordinate departments. Dr. H. H. Kung has so admirably expounded the policy of Sino-for~ eign ce-operation that he will surely recognize the desirability of redressing the grievances thus exposed. The Society's patient and resourceful handling of the obstacles so unjustifiably placed in its path gives special weight to its representations.
Text read from the printed page and cleaned; old type leaves the occasional error.