In Hongkong we have seen fluetuating conditions throughout the 1 year very dependent, as always, on the entrepot trade with China. The fall of Canton and the closure. of other southern ports has of course had an adverse effect on the business community, but it has caused no. panic and we are prepared to wait and sce what this coming year will bring forth, Fortunately the cur rency and finances of the Colony are sound, so we are in a position to face the future with conddence.
The trade and finances of the Philippine Islands showed some recession in 1998, but there is plenty of optimism about the coming. year. The gold output and base metal production both grow steadily and are increasingly important factor the economic outlook. Supporters of the movement to bring independence to the Islands earlier than 1946 seem to have veered round in their views as a result of the conflict in China, and the report of the Joint Preparatory Committee on Philippine affairs has helped to put a seal on this agitation.
In Malaya the set-back which] started in the last quarter of 1937 continued into 1938, The trods figures are far from satisfactory while Banks heve been overloaded witn cash. Malaya, of course, depends for prosperity largely on the rubber and Un industries and in both cases 1938, saw decreases in production as well as reduced average prices. Stocks are now gradually falling, but the future depends, as always, on demand from America.
Trade in India has heyn cull and exports of merchandise have fallen. somewhat alarmingly. A. notable change took place in. the exchange market when last April the Reserve Bank of India dropped its buying ale, 'The effect was to cause change to weaken and attacks on the market "by speculators were only' checked in December atter the Issues of a strongly worded communique by the Government stating their determination to. maintain the exchange value of the Mediation Urged Before I end, I have one more word say about the situation in the Far East. For many years relations be-liven these great neighbouring coun. {eles of China and Japan. has been Unsatisfactory, "and unfortunately there are at the moment few indies tions of any clearing of the air. In fact, things are drifting dangerously, and the gap will grow more and more dificult to bridge unless mediation is attempted soon. For merch-nts of all nationalities the desirbility of an" early cessation hostilities is manifest, but for. mil-lens of desperate people it is of Vital importanee—a matter of life and death. This is not the occasion 40 dilate upon the desolation existing over hundreds of square miles of trrilory: upon the wretched condi-ion of millions who first by military operations and then by succeeding waves of brigandage have been pile Joged and despoiled and are likely suffer repeatedly in similar fashion until peace is once again restored. 1 only urge that these "conditions should be kept in mind by those who are charged with the direction of ity be missed to mediate with a view both to relieving the appalling distress as well as to obtaining situation in which China and Japan can develop naturally and pacifically to the benefit of the whole world.
1 cannot conclude without referring to the excellent work of the members of the Staff of the Bank, and parlia cularly of the Managers and Agents stationed ut ports in the Far East who have had to deal with problems! such as bankers elsewhere rarely, if ever, have to face. They have served well, and sure you will agree special thanks are due to this year,
Text read from the printed page and cleaned; old type leaves the occasional error.