On June 4, 1935, there began Shanghai a run onthe offices of the Sociely, which spread to all other branches, The press campaign, which had not abated, caused a panic among the Donahélders, but all those who asked for Loans and surrender values were ald without delay, thanks to the devotion of the shaft, and to the Brrangements made from the begin~ ning.
Tu the meantime, a new law, which was {o complete the Chinese renal code, had been voted and the follow. Ing aztlele was Incorporated therein:
"Art, 209-—Those who operate savings vall. be sentenced to. an ime Drisominent of under six months and/or Shalt be Imposed with a fine of under 000.
This aw was applicable as from July 1, 1985, 2
Why Interior Agencies Closed 'A direct attack not being possible, mears had to be found to handicap the Society through its Chinese agents, Tt became obvious that outside the Concessions, Chinese agente of the Society could no longer work with out incurring serious. personal risk. This could not be allowed and the Chinese Government faced the Society with a case of force majeure, compelling closure of agencies and subagencies in the interior which were In the charge of Chinese as soon as the law began to operate, "The French Legation was kept informed, and the Society closed these fageneies and sub-agencies on June 80, sinaintaining only those, branch managed by foreigners, to which branches bondholders inthe interior had thus directly to address. themselves, The Sociely is accused of having thus harmed bondholders by deprive Ing them of a convenience to which Jdhey were accustomed; it would be well {0 ponder on the complete in" Gifference shown in their regard by those who were responsible for an unjustified panic, causing a large number of Bondholders to. withdraw their savings prematurely, thus losing {in part those advantages they normal. ly "would have had it they had retained their bonds until maturity, This law was not applicable to the International Savings Society account of the French nationality of the Society—and although the me sigator of the two articles mentioned above made it clear in his comments that it was aimed solely. against our Society, yet we felt our. selves sufficiently protected by our extraterritorial right# and by.our agreement of 1929, which was sill in force.
Towards the end of July 1994, the Ministry of Finance requested " the Society to deposit with the Central Bank of China (the Government bank), a considerable part of the Investments made on account of Mathematical Reserve which repre: sents the guarantee or bonds in ores. The Ministry. forgot then and Inter that even had the Society been agreeable to comply, it had not the right under French law, which alone is. applicable to. the Society, to abandon control of any part of the: reserve for which the Society solely responsible towards bondholders, and from this lack of understanding, together with the desire of the Ministry to take over the Society, as shown on various occasions, has arisen the impossibility to arrive later on at an equitable and accept fable agreement.
Text read from the printed page and cleaned; old type leaves the occasional error.