Accordingly it has been suggested that the import of goos from north China into this country should be disallowed unless accompanied by consular certificates that they had been purchased in the open market with free exchange and that similar steps should be taken by the French and American Governments, Since then, and since the paragraphs of our report dealing with the currency situation in China were printed, there have been fresh developments. A new Bank of Issue, called the Hua Hsing Bank, has been instituted, with a capital of Eh. $60,000,000, the joint shareholders being the Nanking Gov. ernment and six Japanese banks. This is to operate in central China. Its notes will not be linked with the yen, but will be convertible into foreign exchange at approximately the same rate as the Chinese dollar.
We have not got enough information as yet to form a reliable opinion as to the seriousness of this development. On the face of it, however, it looks threatening. For, if the new notes prove in fact to be convertible into foreign exchange they will possess a quality which the Federal Reserve Bank's notes in north China have never had. That fact, however, has yet to be established, and on a scale big enough to give the new bank's notes a standing comparable with the Chinese Government's notes.
Moreover, as far as circulation in the interior is concerned, the new notes will probably meet with the same opposition and mistrust as those of the Federal Reserve Bank in the north have encountered. The Japanese may, however, endeavour to meet this, as they have tried to meet it in the north, namely, by controlling exports, through regulations similar to those introduced at Tientsin and Tsingtao, and possibly through Customs control. If that is attempted in Shanghai, some form of retaliation would become very much more urgent than conditions in Tientsin made it seem.
Text read from the printed page and cleaned; old type leaves the occasional error.