New-York tribune., 1918-03-31
Far East Traders
Strive to Smash
German Prestige

Long Credits System Is the
Real Secret of Enemy
Success
The war has struck German CONNER
clal and trade interests in Hong Kong
and the Far East staggering blow, ac-
cording to George E. Anderson, the
American Consul General at Hong Kong
British China, who has completed 8
study of the credit situation there.
Reports from this consulate in the last
three years have indicated the increas.
ing determination of the British com.
merclal interests in Hong Kong and the
Far East generally to break up the
system of long credits built up by Ger
man traders in Eastern ports, to which
most nonGermans have ascribed the
German success in securing trade from
old established British interests. A
pecullarity of this credit system lay in
the fact that it rested in turn upon
British export and financial houses. Sc
closely were the operations of these
houses connected with German credits
that the charge was freely made before
the war. and to some extent since the
war commenced, that German houses
were given financial facilities which
British houses could not obtain.
The examination into German meth
ods resulting from the liquidation of
the affairs of German firms in HOMO
Aong has not indicated that German
firms had facilities which British or
other firms could not secure, but it has
been the means OF ascertaning exactlv
how German firms conducted their
business. The subject is of general in
terest to British traders in Hong Kong
and in the United Kingdom as explain
ing the credit system. To American
exporters 1T is not only interesting for
the same reason, but it also has the ad
ditlonal merit of demonstrating to
5nem the great disadvantage they have
suffered in not having the machinery
lof financing their trade represented
by acceptance houses" and. part;cu-
larry the general discount market
winch has made such houses possible
and profitable.
Financing Exports
An authoritative statement of the
matter In its esscntia! features annoarc
IN certain correspondence between tho
CHINA Association (a London organ
'zatlon), the British Colonial Office.
,he government of Hong Konr and tho
Iong Kong General Chamber of CON.
merce, Just published in the HoneEonlr
hiuc BOOK of 1917. From this CORE,
sspohuehce 1t appears that German
le"'a aoing business in Hong Kong ann
;me "pen ports of China not only dealt
III III GERMAN products Gin which trade
emeS were AIDED by the German gov
80 ;.''neh', out they also dealt in Brit
lsh goods and We're financed in both
cases largely by British houses. and
were ., so leAently treated by the latter
tnat strict compliance with the terms
~ the hnanclal arrangements was sell
coin insisted upon. AS a matter Of
TACT, their trade in British and ~
some cases, IN American manufoctnros
was the foundation of the nrosner;t, -,
OF some, at least, Of the lead;nn C.arS
man houses. The manner of tnanc;no
eAports IS succinctly set forth in 70
51alement put before the British and
Assac;nt;ns e MGns governments by the China
,aIoG,aeioh ornI Ga and the Hong Kong Gem
efai chamber of Commcrce.
Arrangem ents are made with q
tha tha IAN u n e.acceptlng house" to accent
ene GRATIS OF the shippers up to -
shinnad r".., amount; f,. When the goods are
or Hamburg a bill is drawn az ~ ora si,i
months sight on the accepting housn c s,A
~"icn accepts it, and the drno,o,.
1nen discounts it in the open ma1Lat
liaSmuch as the draft is fine nano,. ..
on account of the standinr of ,ba
"cceptor, 1T can usually be disconnt
80 80 at | per cent below bank rata
n;1rL. mt ,acceptor usually charges one.
80 s".n VI L per cent per month for
fn...a; t,,r service. and the total cost Of
.nnneihH nn,H IS merely the acceptinr
cen. n,'''ass!on lone-eighth Of 1 per
eens per month";, interest at ne,
cent below bank rate, and tho cnst nst
of the bill stamps. The fe' accent;n'. tne cost
mouse sends the documents wiz iih"s
ip''e1 in Chno of lien eith attached to its clients
al, an Eastern bank-usually d;Hac' d;ract
Inc Inc China China house signs the letter tIi'e,f Of
1en. returns it to London. and takes
oe1,very Nv rsst Of the goods upon arrival.
., IN most cases the China house
pledges itself in the letter of 'Jisn len
not not only to meet the BIN at maturity
Dut to keep the proceeds of tbe
e9IOas etIos IN trust and separate from all
other transactions and moneys ha.
longing to other persons. in N.
case case OF the German firms in Honp
kong this trust has been broken i,
Almost hnmo every case. The goods were
handed over to the Chinese buvers
on four to eight months credit. and
US they were paid for the money
was placed to general account and
wiz Wiz ior carrying on the business.
bills at maturity were met out Of
the general funds Of the house