The New York herald., 1921-07-01
Z
.BANQUE DE CHINE
FORCED TO CLOSE
Deficit of Paris Institution Is
Estimated Close to 400,-
100000 Francs.
LITTLE LIABILITY IN q. S.
Agency Here in McLaughlin's
Hands-French Prestige
in China at Stake.
LITTLE LIABILITY IN q. S.

| Special Cable to THE New YosK HERALD.
Copyright, 1891, by THE NEW YoRK HEsA'.p-
New York Herald Bureau.
Paris, June so.
| Although the closing of the doors of
the Banque Industrielle de Chine this
morning is not expected to affect any
large French credit organizations. all
advances by them baing covered by sub
stantiaI guarantees, 1t is feared here
that there will be a more serious effect
SO far as the smaller banks are con-
cerned. and long period of hesitancy
on the part of Investors which may re-
act on the proposed loans.
| Financial circles admit tonight that
| they are worried regarding the latter
feature. and are anxious that bankers
of the Unitsd States should not misin-
terpret the banks downfall as evidence
of Governmental inability to extricate
France from her delicate financial sit
uation.
On the contrary. THE NEW YORK HER.
AID is informed. there Is now little
danger that the Societe Generate Banques
de Province will go under, as important
private interests are practically certain
to provide help necessary to cover the
more than fifty millions deficit on con-
dition of reorganization and greater
control of future operations, That pos
sibility has had the effect of counteract-
ing. the pronounced depression which ap-
peared when news of the failure of the
Banque de Chine was published.
he iy,an Opto nf "a fa 1ttra
coming on the day when the German
Asiatic Bank reopened all its Chinese
branches. is chiefly in loss of French
prestige in China, as 1t is considered
impossible to retain confidence of Chi
nese depositors and merchants. This
will involve abandoning public improve
ments In Pelxin under French direction,
which would have made Pekin the centre
of French influence: cessation of work
on Port Piellow, destined to be the great
est of the Yangtse River ports. with its
junction of all the north China rail-
roads and certain French Indo- China
interests also will suffer.
The amount of the banks deficit is
not yet certain, but it is estimated to
be between 30o,o0O.0o0 and 4oo,oo0.oo0
francs, which. according to the banks
officials. could have been saved had the
French Government agreed to discount
about S0,000.000 francs worth of notes
which the Chinese Government was
ready to issue, with Chinese monopoly
revenues as a guaranty.
The Bank of Paris and the Bank of
Pays Bas, it is reported, was willing TO
lend 400, 900. 900 francs If authorized by
the Ministry of Finance, but Minister
Doumer, after comforting with Par
liamentary experts. refused to engage
In any auch financial adventure. There
was no excitement among the banks in
vestorS, only few of them gathering
before the banks barred door to talk
over the situation, with special police
ready to prevent rioting.
The banks situation had been con-
sidered precarious since last January.
The Industrial depositors had drawn out
the biggest accounts, but thousands Of
Chinese clients will be left with COM
paratively empty sacks.
The Banque de Chine was founded by
Andre Berthellot. He established q
reputation IN China through connection
with q Pekin syndicate and obtained
permission to print his own bank notes.
which should be taken as legal tender
by the Chinese Government. After the
armistice the capital was raised from
rs. 100000 to 100000 900 francs, profits
showing a rise from 5000, 900 to nearly
high exchange continued, all went well,
but a slump. abundance of overesti-
mated paper and Ill advised speculation
brought about a crisis.
1t was stated that there was little
liability In the United States although
it was the first European bank to open
branches in Manchuria where American
capital was readily deposited. Ameri
can accounts began to be closed as soon
as danger of failure was known.
Following receipt of information that
the Bandue Industrielle de Chine had
suspended payment. the State Banking
Department yesterday took charge of
the banks agency in New York. Ten
or twelve days ago the agency stopped
giving quotations and selling drafts on
the Far East, but nevertheless the news
from Paris was somewhat of a surprise.
o. J. Thomen, the banks agent here,
confirmed the dispatches from Paris,
and the following statement, signed by
George v. Mclaughlin. Superintendent
of Banks, was issued yesterday:
1.-THE Banque Industrielle de Chine.
having applied under the French mora
torium law. promulgated July 4, 1919,
for an administrator to liquidate it's af-
fairs, the State Superintendent of Banks
of New York. at the request of the New
York agent and of its counsel has taken
charge of the New York agency at q
Pine street.
20. J. Thomen. former agent, is act
ing as a special deputy for the Superin-
tendent of Banks, along with James J.
Kennedy of the Banking Department.
The agency of the bank in this State
operates under a yearly license and has
no power to transact deposit busi-