To the Editor of the "NontH-CHINA Daty Ney Sin,—Under "Notes ments" in your issue of today apears a contribution under the above caption.
Yoit speak of a piece-goods deal-ex starting with a capital of Tls. 32,00, partly his own, and partly borrowed, involving 30 for imperative need for the ud These, serio Goods 8 the British Chamber, but you might have added "and agreed to by the Chinese Piece Goods Guild."
Standard Contract—You tells that this was welcomed by the principal banks but certain other banks were not prepared to enforce it as the basis for credits, We will revert to this presently.
Clause 2 provides for any dispute to be settled by arbitration. We reently received u claim of 10 per cent, from a really good dealer and took the opinion of a number of resident Manchester men who all agreed that the claim was frivolous. We declined to pay the claim and the Manchester firm likewise declined to consider it but agreed to submit to arbitration, The dealer demurred on the ground that he did not understand what arbitration im. plied, although we feel perfectly con-vineed that after an elaborate explanation by our compradore he understood quite well even if he did not before—which we very much doubt. He wanted his 10 per cent. Successive interviews proved fruit Joss ud as the dowler persisted in his: rrefusul to be party to the arbitration our compradore suggested that we should Join with the Manchester firm in the arbitration and leave the dealer out, and if we were unsuccessful the compradore himself would pay the cost of the award. The award has gone against us but the dealer persists in his claim of 10 per cent, Whnt are we to do? Pay up and detain his business or report him to the Guild and antagonize him?
For several months we have been engaged in w dispute with a dealer who resolutely refused to submit to arbitration, Finally we filed a petition with the Mixed Court when his legal advisers persuaded him to submit to arbitration by the British Chamber of Commerce. due course the award was issued and We rendered an invoice to the dealer bused on the award. He took no steps to clear the goods. We again threatened proceedings and still he took no notice, To cut it short we obtained judgment by default and a fortnight luter we applied for execution of Judgment, as well as a despatch warrant, the dealer having gone up-country. Two days Unter friends of the dealer called and made payment to us. In the absence of security of what earthly use is arbiti We would suggest that before proceeding with the arbitration both sides should be required to deposit cash or suitable guarantees because, if the arbitra tion goes against the dealer, he may Cluuse 6, All goods to be clear-within three months after arrival and, if not cleared, the dealer has to furnish u cash margin of not less than 10 per cent. on the undelivered portion, Under normal trading conditions this clause would be useless for the simple reason that dealers would clear within three months. The clause is, therefore, to provide for abnormal conditions.
These abnormal conditions arose, particularly, in September when civil war broke out locally, which effectually prevented clearances, ing. the wholesale renewal ills. The native banks shut down on all financial accommodation.
Where was the dealer to go for the 10 per cent. margin on his renewed bills with from 10 to 30 foreign firms booked, as he probably was, up to the neck with each one? These abnormal conditions were advanced by every dealer in excuse for paying no margins at all. In many instances the dealers expressed inabiity: even to pay the import duty on new arrivals and the foreign firms had either to pay the duty themselves or allow the goods to be bonded. In times of abnormal conditions, ie, civil war, an excessive drop in exchange or in local values from any cause whatever, making clearances impossible excepting at 1 loss to the dealer far greater than resources will permit, he makes Ino bones about advancing these conditions as an excuse for paying neither margin nor interest. Of what use, therefore, is Clause 6?
You may ask why we do business with a dealer -having a capital of Tis, 12,000 when he is heavily committed to many other firms. It is only when the dealer files tion that we learn that we a of 80 firms interested, '00 Into to be sorry. If you can tell how we are to discover with what other firms he is doing business, fand to what extent, at the time he submits offers to us, wes@hould feel greatly obliged. Tt Seems to us that the Chinese employees of the for-ign firm are in league to keep the firm in the dark as to the real partners or principals in Chinese firms, their resource: and standing in the market, Tt ought to be made possible for 4 foreign firm to submit the name Jof a dealer to the Piece Goods Guild Jand to obtain from them the correct names of the principal or partners, and their capital.
Bargins—Yo0 have told us that the principal banks welcomed the. Standard Contract. Notwithstanding that Clause 2 provides for margin of not less than 10 per cent. Jon renewals, we are in a position to say that at least two of our British banks are asking for margins of 20 per cent., and not on the un-[delivered portion but on the whole bill. Two of our dealers, whose bills have necessarily had to be extended, are now in bankruptey. Are we in these times of stringency to be obliged to put up this margin?
Whilst on the subject of margins we may add that the London office }of a local house instructed its man-Jager to obtain margins at the time signing contracts. The manager replied that it was impossible to obtain, and unueuel to demand, mar.
time of signing contracts.
othe "London nine retort that their Shanghai manager's astions had been "flatly contradicted" By "Shanghai men" then Home on-leave, A Shanghai man on his Jquinguennial jag in London is perhaps not always responsible for what he says but the views of some other of your readers would be most entertaining.
Tam, ete, SMALL Porarors.
Text read from the printed page and cleaned; old type leaves the occasional error.