He was appointed the unofficial member of the Executive Council in July 1941. He held the office until the fall of Hong Kong to the Japanese army in December. Before Hong Kong was occupied, V. M. Grayburn had already appointed Arthur Morse to the London office and transferred Bank's assets to London supported by the British government. The bank had also a large amount of US dollar reserve in the United States to avoid its assets being frozen if the Hong Kong office was fallen into Japanese's hand. In 1941 the British government appointed Morse as acting chief manager and chairman and commanded all branches of HSBC to follow order from London. 12 December 1941, Hong Kong Governor Mark Young announced London to replace Hong Kong as the headquarters of the bank. The Hong Kong government surrendered to Japan on Christmas Day of 1941.