GIFT OF 
 HORACE W. CARPENTIER 
 
/ 
 
 THE 
 
 COMMEriCIAL LAW AFFECTIXG CHINESE; 
 
 W'l'I'U SI'l.i l.\l. lit:il.i:i:.\'l: lO 
 
 rARTNi:nsinr registratiox and bankruptcy 
 
 LAUS IN HONGKONG. 
 
 (Rrpriiifrd from ilio " Chiim Mail.") 
 
 HONGKONG: 
 
 PRINTED AT THE "CHINA MAIL" OFFICE. 
 
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THE 
 
 COMMEriCIAL LAW AFFECTING CHINESE 
 
 WITH SPECIAL REFEREXCM TO 
 
 PARTNERSHIP REGISTRATION AND BANKRUPTCY 
 LAAVS IN HONGKONG. 
 
 (Reprinted from the *' China Mail.") 
 
 HONGKONG: 
 
 PRINTED AT THE "CHINA MAIL" OFFICE. 
 
 1882. 
 

 (l''ay1A^^^f^^ic^ 
 
THE 
 
 COMMERCIAL LAW AFFECTINa CHINESE. 
 
 PARTNERSHIP REGISTRATION AND BANKRUPTCY LAWS IN HONGKONG. 
 
 (Repriided from the China Mail.) 
 
 I. 
 
 Financial catastrophes, like the one 
 which hus hitely overtaken the Chiue:-e 
 specuhiturs und the Chinese banks of 
 Hongkong, though bringing their evil 
 effects to bear on trade in general and 
 tending to involve the ujost prudent 
 merchant, invariably bring with them 
 their own remedy. Trade, like a staunch 
 lifeboat, may be swamped for the nonce 
 and capsize for a moment, but it is sure 
 to right itself again, though the operation 
 may happen to consume more time than 
 human patience or financial means make 
 bearable. In fact, such financial catas- 
 trophes, as they betray the errors in 
 which they invariably originate, tend to 
 cure or to avert for the future the evils 
 which they cause, by making men not 
 only sadder but wiser, by causing thfm 
 to pause and consider what brought 
 about their ruin, and by urging the 
 whole public affected by it to set to work 
 in earnest to rectify the errors com- 
 mitted. Thereby a healthier public 
 spirit is invariably aroused, the atmos- 
 phere of commercial morality is purified, 
 and as the slow pulse of commercial con- 
 science resumes a healthier action, the 
 veins and arteries of the commercial 
 body find their vital blood, capital, run- 
 ning into its old channels and the equi- 
 librium of credit is gradually and natu- 
 sally restored. 
 
 This process of recuperation is now 
 beginning to set in in the case of the 
 Chinese trade of this Colony, paudysed 
 as it partially has been for months past. 
 Though the equilibrium of the forces at 
 work in this process has not been 
 restored yet, there are already signs of 
 a healthy reaction. We learn on all 
 sides that the leading Chinese merchants 
 have come to the unanimous conclusion 
 that the late swindle, manifested in the 
 speculations in house property, was but 
 a symptom of a commercial disease, 
 the roots of which lie much deeper 
 than they appear at first sig"ht, and 
 stretch back over many years of the past. 
 We find that these Chinese merchants 
 unanimously point to the abuse of the 
 Bankruptcy and Partnership Ordinances, 
 which in their unsuitability to Chinese 
 ways of trade offered a temptation to 
 over-speculation, and opened the door to 
 reckless frauds, as the chief sources 
 whence the present stagnation of capital 
 and trade ultimately flowed. They point 
 to the systematic and successful practice 
 of entering bankruptcy fraudulently, and 
 to the habitual registration of men of 
 straw as pretended partners in Chinese 
 hongs, as the most radical errors com- 
 mitted in the past. 
 
 This is by no means a new discovery, 
 either to Chinese or European mer- 
 thauts. In 1874 the Chinese community 
 
 546;4:u8 
 
( 2 ) 
 
 petitioned the Government very much in 
 the same sense, but in vain. From 1874 
 down to 1881 members of the Legisla- 
 tive Council, members and witnesses of" 
 the Supreme Court Commission, and ' 
 especially the Chamber of Commerce 
 pointed more or less distinctly to the 
 same cancer which they snw ruth- 
 lessly eating deeper and deeper into 
 the vitals of Chinese commerce down 
 to the very moment when Sir John 
 Pope Hennessy trumpeted abroad, as 
 loud as his lungs permitted, the purity 
 of local Chinese commercial morality 
 and the exuberant soundness of the 
 native trade of Hono-kong-. 
 
 But though the discovery now acted 
 on by the Chinese community is by no 
 means a new one, the important point 
 at the present juncture of events lies in 
 this that the truth, though an old one, 
 has now at last come home to the native 
 community with redoubled force and 
 with an intensity sure to lead to per- 
 sistent action in the direction of purify- 
 ing the commercial atmosphere and 
 regaining the lost credit. The ideas 
 which are now being earnestly and 
 widely discussed in Chiaese commercial 
 circles, in connection with the question as 
 to what could be done towards promoting 
 a restoration of mutual confidence be- 
 tween capitalists and traders, between 
 the foreign and native banks of the 
 Colony, lie indeed at the root of the 
 difficulty under which Chinese com- 
 merce is now labouring. We under- 
 stand that the most intelligent and 
 honest native merchants seek the foun- 
 tain source of the evil in the deviation 
 of local Chinese trade from the general 
 principles of the commercial law and 
 usage of China, in the widespread 
 degeneracy of native commercial mora- 
 lity which ensued through the unsuitabi- 
 lity and consequent abuse of the Bank- 
 ruptcy Ordinance of 1864 and the 
 Partnership Amendment Ordinance of 
 1867, a degeneracy and corruption 
 which, they truly say, was brought to 
 a head by Sir John Pope Hennessy's 
 action in 1881, and the officious and 
 official support he gave to reckless spe- 
 culation in house property. 
 
 This view of the state of things, which 
 has now taken possession of the minds 
 
 of Sir John Pope Hennessy's " leading 
 Chinese merchants and native bankers," 
 opens up a vista of such importance 
 for the future of this Colony, that we 
 consider it our duty to the public weal, 
 carefully to examine and to test it by 
 detailed inquiry into the nature and 
 soundness of the propositions on which 
 the views of those practical men are 
 built up. In following out this " inte- 
 resting " inquiry, as Sir John would 
 call it, we propose in the first instance 
 to gather up the ideas afloat in the 
 Chinese community relative to the 
 deviation of the native trade of Hong- 
 kong from the leading characteristics of 
 commercial law and usage in vogue in 
 China. We will next proceed to com- 
 pare the condition of the native trade 
 of Hongkong previous to 1864 with 
 the state of things which ensued con- 
 sequent upon the passing of the Bank- 
 ruptcy and Partnership Ordinances. 
 If we then add to this a detailed inquiry 
 into the history of the movement which 
 brought about the uncalled-for applica- 
 tion to Chinese trade of the Amended 
 Partnership Law of 1865 (introduced 
 in Hongkong by Ordinance in 1867), 
 and sketch the attempts made since 
 1874 to cope with the growingly 
 manifest evils arising in the case of 
 Chinese commerce from the abuse made 
 of both those Ordinances, we shall not 
 only have completed our task of testing 
 the soundness of the views deliberately 
 propounded by the leading Chinese 
 merchants as to the fountain source of 
 the present paralysis of their trade, 
 but we shall by such careful diagnosis 
 be placed in a position to determine 
 the line of treatment really required to 
 assist nature in bringing about a radical 
 and lasting cure. 
 
 IL 
 
 It is a common mistake to suppose that, 
 as there is no published code of Chinese 
 commercial law, the Chinese have no 
 commercial law at all. We might as 
 well suppose that there was no Common 
 Law of England before our modern 
 commentaries on it were written. Apart 
 from the provisions of the Penal Code of 
 the Ta-tsing and preceding dynasties. 
 
( 3 ) 
 
 there are numerous collections of Im- 
 perial decrees, and of decisions by pro- 
 vincial judg-es on questions of commercial 
 law, in the hands of the law secretaries, 
 of the Superintendencies of Trade and of 
 all the inland Authorities. These col- 
 lections afford a safe o^uide to the 
 initiated, though the variation of trading- 
 customs in different provinces, which 
 customs are always respected in apply- 
 ing the law, makes the present collec- 
 tions of legal decisions on questions of 
 commercial law a bewildering maze to 
 all but those who make a special study 
 of the subject or who have grasped the 
 fundamental principles on which the 
 ■whole theory of Chinese commercial law 
 is built up. 
 
 It is much to be regretted that hardly 
 any sinologist, possessing the requisite 
 legal training, lias dived yet into these 
 unexplored depths of legal lore, nor 
 even collected and analysed the decisions 
 of the Mixed Court of Shanghai, which 
 provide a good deal of useful material 
 bearing on the subject of Chinese com- 
 mercial law. Mr. Alabaster once took 
 up the subject very brietly in 1867, but 
 unfortunately does not appear to have 
 pursued these studies furtlier. Mr 
 Dulcken also touched, in a brief article 
 published in the China Heview, on a 
 few points ot Chinese commercial law, 
 but stopped short there. In 1809, Sir 
 Rutherford Alcock, in concluding with 
 Prince Kung the Supplementary Con- 
 vention to the Treaty of Tientsin, stipu- 
 lated (Article IX), " that England and 
 China shall in consultation draw up a 
 commercial code." But nothing further 
 came of it, so that this stipulation ap- 
 pears merely to have served the purpose 
 of giving a Treaty clause authority to 
 the principle of joint investigations in 
 Customs cases. 
 
 Being thus left very much in the dark 
 by the luminaries of sinology and diplo- 
 macy, though grateful especially to Mr 
 Alabaster for the few rays of light shed 
 on the subject by his notes, we find our- 
 selves thrown back upon the resources 
 of our own observations and the inform- 
 ation freely placed at our disposal by 
 well-informed native friends. Nor does 
 it much matter. It is altogether foreign 
 to our purpose to write a technically 
 
 coiTCct epitome of the leading features 
 of Chinese commercial law. It is per- 
 fectly sufficient for the aim we have in 
 view, if we analyse and systematize the 
 conceptions our Chinese merchants have 
 of the first principles on which trade is 
 practically conducted and officially dealt 
 with in China, both in conformity with 
 Chinese commercial law, and in con- 
 tradistinction from the altered conditions 
 in which these same merchants find 
 Chinese trade placed here in Hongkong 
 under the different regime of English 
 commercial law and usage. 
 
 It is generally a suggestive indication of 
 the different way in which foreigners, 
 other than Englishmen, look upon com- 
 merce, when we find that they constantly 
 repeat, as a remarkable observation, that 
 we are a nation of shop-keepers, that 
 wealth gives with us higher social rank 
 than intellect or culture, and that the 
 foreign policy of our Government in- 
 variably sinks all moral considerations 
 when the necessity of pushing our trade 
 appears to demand a certain course. No 
 foreigner, however, wonders more at our 
 so-called strange infatuation for trade, 
 and no foreigner despises us more for it 
 than the Chinese literati and officials. 
 They have been tutored in the notions, 
 laid down by their writers on the theory 
 of commerce (political economy) two 
 thousand years ago, viz., that commerce 
 exceeding the bare circulation of the 
 necessaries of life is, in the long run, 
 injurious to the welfare of the mass of the 
 people and that accumulation of wealth 
 on the part of merchants can succeed 
 only in proportion to the impoverishment 
 of the labouring classes which, after all, 
 arc the chief support of the State. Apart 
 from the mere exchange and circulation 
 of those commodities which are required 
 to keep the mass of the people content 
 with their lot, Chinese commercial law 
 knows therefore no other legitimate 
 raison cCetre for commerce, but that 
 commerce encourages agriculture and 
 labour generally by facilitating the 
 intercourse between consumers and 
 producers. Accordingly we may say 
 with truth that for Chinese commercial 
 law the object of tender care is not the 
 merchant, as we should suppose, but the 
 producer. From this cardinal point of 
 
( 4 ) 
 
 difference flows a host of practical diver- 
 g'ences in the development and direction 
 which commercial legislation took in 
 China and in England. The commercial 
 code of England is designed to protect 
 and facilitate trade as much as possible 
 and the general tendency is to free it 
 from all interference on the part of the 
 Government as far as it is practicable. 
 On the other hand, the chief aim of 
 Chinese commercial law is to restrain 
 trade within fixed limits, and it is a 
 canon of Chinese political economy 
 to give no encouiagement to merchants 
 in their desire to enrich themselves (un- 
 less it be at the expense of foreigners). 
 It is the chief aim of Chinese com- 
 mercial law to bind trade down to the 
 traditional established grooves and to 
 keep it under the constant supervision 
 of the Government. The reason is a 
 peculiar one. As it is the theory of 
 English political economists that the 
 absolutely free and unrestricted move- 
 ment of capital from employment to 
 employment results in a strong tendency 
 to an equality of profits, so the Chinese 
 theorist declares it necessary that the 
 Government should step in between pro- 
 ducer and consumer and lay down fixed 
 rules for the conduct of trade in order 
 to bring about this desirable equilibrium 
 of profits. It is with this end in view 
 that all conceivable branches of trade 
 are fenced in by Chinese commercial law 
 between immovable barriers, and that 
 the Government prescribes for each its 
 proper mode of procedure. An example 
 or two will suffice. Thus the commercial 
 law of China requires that under all forms 
 of commerce business must be transacted 
 through middlemen responsible to the 
 Government, and that every distinct 
 trade should be organized in the form 
 of a guild. It is well worth considering 
 these two significant features of Chinese 
 commercial law in their practical ap- 
 plication. 
 
 First, as to the system of middlemen. 
 Chinese law requires the interference of 
 licensed marketmen or brokers who fix 
 the market rate and whose duty it is to 
 mediate as responsible agents between 
 producer and consumer, be the latter 
 native or foreigner. Accordingly, to 
 use the words of Mr Alabaster, " the 
 
 producer is compelled to sell his produce 
 through a licensed broker or marketman 
 to the merchant, who again, on arrival 
 at his destination, is forced to sell his 
 goods to the consumer through another 
 licensed broker or marketman." The 
 object of the law is not, as Englishmen 
 are only too apt to suppose, to enable 
 the Government to tax trade, or, to use 
 the term so commonly a})plied to every 
 mode of Chinese taxation the procedure 
 of which we do not understand, " to 
 squeeze." The real aim of the law is to 
 keep trade under the constant control 
 of ttie Government with a view to protect 
 the producer and the people generally 
 against that form of trading which we 
 consider smart but which Chinese com- 
 mercial law calls unfair and treats ac- 
 cordingly as criminal. Those licensed 
 marketmen or brokers, being officially 
 authorized to fix the value of })roduce 
 or merchandise passing through their 
 hands, are also liable to be criminally pro- 
 ceeded against not merely in case of fraud 
 but even in case they encourage unfair 
 trading-. In the latter case the nv rchant 
 also, who, for instance, attempts to obtain 
 the coiiimiind of the maiket with a view 
 to hold the whole stock and to refuse 
 to sell except at exorbitant prices, will 
 be criminal!}'' proceeded against on the 
 ground of unfair trading. For, to quote 
 Mr Alabaster once more, " unfair traders 
 shall be punished with eighty blows, and 
 if the profits be large they may be pro- 
 ceeded against as thieves." 
 
 Next, as to guilds. It is manifest 
 from the foregoing- that the individual 
 merchant must find it a protection 
 against abuse of the power which the 
 laws against so-called untair trading- 
 jilace in the hands of Government 
 officers, a serious matter especially 
 in a country like China where there 
 is no distinction of civil and cri- 
 minal proceedings and where judicial 
 and executive functions are always com- 
 bined, to act always in concert with 
 other merchants in a co-operative 
 capacity. Chinese law also, which, as a 
 matter of principle, knows no person 
 but treats each individual as a member 
 of some organized body, encourages 
 the formation of guiliis, for every 
 single trade. It must not be sup- 
 
( 5 ) 
 
 posed, however, that these f>ullds 
 resemble the modern trades unions of 
 England or even the guilds of medi- 
 aeval Europe. A Chinese guild, as 
 constituted under the commercial law 
 of China, is an officially recognized 
 corporation, the object of which is invari- 
 ably defined in the openingsentence of its 
 statutes as being the endeavour to 
 encourage fellowship between those 
 engaged in a si)ecific trade and to 
 " tranquillize the minds of the traders." 
 In other words, the object of the insti- 
 tution of guilds is, as far as the Govern- 
 ment is concerned, to keep trade under 
 control, and as far as the merchants are 
 concerned, to ensure safe and yet profit- 
 able trade. The official character of a 
 guild consists in this, that the rules 
 made by a guild for the conduct of 
 trade within its particular sphere are 
 sanctioned and supported by the Go- 
 vernment as being in accordance with 
 the commercial law of China ; that the 
 guild, through its officers, may act as 
 official arbitrators in commercial dis- 
 putes; that the guild may stand 
 security for any member accused of a 
 breach of commercial law ; but that the 
 guild also undertakes, when called upon, 
 to arrest and hand over to the Govern- 
 ment any member whose guilt is prhnd 
 J'acie established. Each guild has 
 special premises, generally consisting 
 of a meeting hall, a shrine for worship, 
 a theatrical stage, and a few rooms for 
 entertaining travelling graduates or 
 officials. The officers of a guild are a 
 committee annually elected by ballot, 
 a secretary to conduct the official cor- 
 respondence, an accountant to look after 
 the subscriptions and securities given 
 by and the advances made to members, 
 business managers for each branch of 
 the trade conducted by the guild 
 (native or foreign trade, wholesale or 
 retail trade, &c.), a priest to conduct 
 the religious services, and some ser- 
 vants. Each guild meets from time to 
 time, in concert with its })rokers, to 
 discuss the market rates and to regulate 
 the operations of the guild on special 
 occasions. As the laws against unfair 
 trading are specially devised for the 
 protection of the native producer and the 
 people of China, they do not apply to 
 
 the trade between Chinese and Fo- 
 reigners. Consequently tea and silk guilds 
 are under no restrictions as to unfair 
 trading with foreigners, and meet during 
 the season every day with the distinct 
 object to keep entire command of the 
 market., A limit is appointed by each 
 guild, in concert with its brokers, for the 
 quantity and quality to be placed on the 
 market, and a rate is fixed below which 
 no sale can be effected, whilst the mem- 
 bers of the guild are bound under heavy 
 penalties, sanctioned and upheld by the 
 Government, to obey the laws and 
 resolutions of the guild. 
 
 It is easy to see what a power these 
 guilds possess and how different they are 
 from European trades unions. Whilst 
 the latter are hotbeds of temptation for 
 ambitious demagogues, hurrying labour 
 into a destructive war with capital, the 
 guilds of China are conservative bo- 
 dies, acting the part of a commercial 
 police, and worked by the Government 
 for the purpose of keepin"; a duo mean 
 between the interests of the native pro- 
 ducer and the native consumer. Euro- 
 pean trades unions constitute an ela- 
 borate attempt to handicap ability and 
 industry and to exclude competition, and 
 produce on the one hand a selfish anta- 
 gonism of classes and on the other an 
 artificial equality among privileged 
 workmen. Chinese guilds are co-opera- 
 tive associations of traders and brokers, 
 of capitalists and employers, combin- 
 ing the interests of the Government 
 and the people, of ca|)ital and labour, 
 in common dependence within any 
 given trade. 
 
 Our readers will pardon us for this 
 lengthy digression if they but remember 
 that our aim is just now to j)oint out how 
 different the position assigned to a 
 Chinese merchant in China is from that 
 which he occupies here in Hongkong-. 
 
 III. 
 
 Having in our proceeding observations 
 roughly sketched the position which the 
 merchant occupies in China, and the 
 attitude which the Chinese law and 
 Government assume towards him and 
 towards trade in general, we may now 
 proceed to consider the position of a 
 
( ) 
 
 Chinese merchant more pai'ticuhirly 
 with reference to questions of partner- 
 ship and bankruptc3\ 
 
 Partnership is a medium of commerce 
 known to the Chinese from time im- 
 memorial. Owin^ to the g-eneral sub- 
 division of property there are few great 
 capitalists in China. As the rig-hts con- 
 nected with property are comparatively 
 vague and ill-defined, it is but natural 
 that what floating- capital there is does 
 not run much iu the direction of invest- 
 ments in land or by means of landed 
 securities. Larger portions of such 
 capital are invested in Government 
 farms and monopolies, in banks which 
 undertake financial operations or collec- 
 tion of revenue on behalf of local Au- 
 thorities, in pawnshops which lend 
 monej'- on pledges at a rate of interest 
 fixed by Government, and in the various 
 branches of trade and industry. The 
 inborn business capacities of the Chi- 
 nese, and their marvellous co-operative 
 instincts, led to the employment of such 
 floating capital on the basis of partner- 
 ship and joint-stock associations at a 
 time when our ancestors were still 
 squatting in the bush. It is the more 
 to be wondered at, however, that, whilst 
 there are so many opportunities in 
 China for the investment of larger por- 
 tions of capital in business undertakings 
 of more or less magnitude, and whilst 
 the thrifty, saving habits of the working- 
 classes constantly accumulate in the 
 hands of working men and women 
 small sums which they immediately 
 seek to invest profitably, there are no 
 savings banks in China for the invest- 
 ment of such small sums. As there is, 
 moreover, no gold in ordinary circula- 
 tion, no silver coinage even, and the 
 only currency consists in bulky copper 
 cash, the proverbial resource of the old 
 stocking of the saving classes in Europe 
 is manifestly out of the question in 
 China. Hence it is that the innate 
 desire to re-invest even small savings 
 forthvpith in a profitable way, led, in the 
 absence of savings banks, to the prac- 
 tice now universal throughout all the 
 larger cities of China, to invest money 
 in shops and trading concerns of all 
 descriptions with the understanding 
 that the lender receives a certain per- 
 
 centage on the annual net profits of the 
 business, as shown by the annual bal- 
 ance sheet made out by general custom, 
 after stock-taking, at the end of every 
 year. Domestic servants, male and 
 female, employes in Government offices 
 or houses of business, artisans and small 
 farmers, men and women of all classes 
 are thus most commonly dormant part- 
 ners to a graduall}^ increasing extent in 
 business or industrial undertakings. 
 Business men, also, find it affording 
 useful information or help, to invest 
 surplus funds of their own business, on 
 the basis of dormant partnership, in 
 parallel or competing shops or firms. 
 Persons who thus invest their savings 
 frequently also arrange, when the 
 amount at stake is large, to get a trusty 
 relative employed in the business in 
 which they are dormant partners, so 
 that he, whilst earning his own wages 
 as servant, salesman or accountant, 
 may keep the dormant partner in- 
 formed as to the stability or sol- 
 vency of the concern, or check 
 the correctness of the annual dividend 
 allotted. Another precaution taken by 
 such small investors consists in this, 
 that they generally select for their in- 
 vestments business concerns the respon- 
 sible partners of which belong to fami- 
 lies or clans well known and accessible 
 to the investor, so that, in cases of 
 fraud, the latter may fall back for com- 
 pensation on the families or clans con- 
 cerned. On the other hand, persons so 
 investing their money in any legitimate 
 business undertaking are not held re- 
 sponsible by Chinese commercial law 
 for liabilities incurred by the firm to 
 which they lend their funds, nor are 
 they known to outsiders or held respon- 
 sible by the law in case of insolvency 
 except merely to the extent of their 
 funds actually invested, for the recovery 
 of which they have a right to sue the 
 actual partners. The Chinese law, in 
 fact, treats as responsible partners only 
 those partners of a firm who are the 
 actual unpaid managers, or those in 
 whose name or under whose orders the 
 business is conducted. But such ge- 
 neral partners, who actually, either 
 in person or by their agents, manage 
 a business, are held by Chinese lavy 
 
( 7 ) 
 
 jointly and severally responsible, with 
 their property, person and life, for 
 all the liabilities of their business con- 
 cern. 
 
 So far, therefore, it would seem that, 
 a})art from the registration of partners, 
 which is not required by Chinese com- 
 mercial law, the law and usage regard- 
 ing partnership in Chinese bear a con- 
 siderable resemblance to the French 
 sySitera of partnership en commandite 
 which, like the Chinese system, dis- 
 tinguishes those partners who are actual 
 responsible partners from those irres- 
 ponsible dormant partners who merely 
 furnish a particular fund or capital or 
 stock, and exempts these camman- 
 ddtiiires from liability to any loss beyond 
 the extent of the funds of capital fur- 
 nished by them. But the analogy holds 
 good only in part. For there is a most 
 essential and uni(|ue characteristic 
 feature in Chinese law which materially 
 distinguishes the extent of responsibility 
 involved in Chinese partnership from 
 that attributed to partnership under the 
 French or any other Europenn system. 
 According to Chinese law the respon- 
 sibility of a general pctive partner 
 in a firm does not end with the extent 
 of the personal assets, nor is there any 
 distinction of a man's property from that 
 of his wife or sons, but the responsibility 
 extends, if a partner's personal property 
 or that of his immediate family is in- 
 sufficient to cover his liabilities, to the 
 property and persons of his father, of his 
 brothers, of his uncles and if necessary 
 even farther. All the members of a class 
 are, in theory and in practice, solidarily 
 responsible with their persons and goods 
 for the liabilities of any one of them. 
 The creditors of a partnership concern 
 need not rest satisfied with prosecuting 
 the actual managing partner but may 
 even set him aside if he has no wealthy 
 clan behind him and proceed, on the 
 ground of this law of mutual solidarity, 
 against several or all of the other gene- 
 ral partners and their clans. This 
 terrible power being exercised in the 
 form of the harshest criminal proceed- 
 ings, it is manifest that the consciousness 
 of eventually bringing whole families 
 or clans into the chitches of the criminal 
 law makes the position of a partner in 
 
 Chii a a far more serious concern than 
 anywhere else in the world. 
 
 This brings us to the question of 
 bankruptcy. 
 
 IV. 
 
 If the term "bankruptcy law " implies, 
 as it justly may be taken to imply, the 
 idea of |irotection afforded by the law, 
 under certain conditions, to an insolvent 
 debtor, we may at once say that there 
 is no bankruptcy law in China at all. 
 Chinese law knows' nothing of that 
 distinction between insolvent non-traders 
 and bankrupt tiaders which was in force 
 in England uj) to the year lISGl. The 
 idea of giving a debtor, whose assets are 
 insufficient to cover his liabilities, a 
 certificate of discharge, even after he 
 has been stripped of his property or 
 assets, and to free him thereby not only 
 from imprisonment but even from the 
 liability to pay the balance, still due to 
 his creditors, at any future time, even 
 should he afterwards become rich, is 
 entirely opposed to the first principles 
 of Chinese commercial law and usage. 
 Such a whitewashing process, sanctioned 
 by law, ai'pears to every Chinese busi- 
 ness man a piece of incom})rehensible 
 folly, the inevitable effect of which 
 must, in his opinion, be the demoralisa- 
 tion of the trading classes. Chinese 
 law makes no distinction between bank- 
 ruj)tcy caused by reckless speculation 
 and bankruptcy caused by misfortune, 
 and extends no leniency to any in- 
 solvent debtor whatsoever. 
 
 'J'lie only provisions of Chinese law 
 which might possibly be construed as 
 coming near to the idea of shewing 
 leniency, if not a measure of protection, 
 to an insolvent debtor, are those statutes 
 which were enacted to prevent creditors 
 from taking the law into their own 
 hands and using illegal force against a 
 debtor or his family. With the evident 
 purpose of maintaining the sovereignty 
 of the law rather than affording any 
 protection to insolvent debtors, Chinese 
 statute law has enacted the following 
 stringent provisions. 
 
 If a creditor, whose debtor has 
 failed to fulfil his agreements, instead 
 of applying to the proper Authorities 
 
( 8 ) 
 
 (District Magistrate), arbitrnrily seizes 
 the debtor's cattle, furniture, or 
 other property, he shall be punished 
 with 80 blows (redeemable by 
 payment of the established fine), pro- 
 vided he has not seized more than was 
 actually due. If the pro])erty seized 
 exceeds in value the amount due, the 
 cieditor is liable to a further number of 
 blows in pioportion to the excess, and 
 the excess is to be restored to the debtor. 
 If a creditor accepts the wife, or wives, 
 and children of his debtor in pledge for 
 eventual payment, he shall be punished 
 with 100 blows, and if he is found to 
 have had criminal intercourse with them, 
 he is liable to further punishment. If a 
 creditor seizes and carries off, by force, 
 his debtor's wives or children, he is 
 liable to increased punishment, and if 
 he has criminal intercourse with the 
 females, he is liable to be strangled to 
 death after the usual periud of imprison- 
 ment. Such females or children are to 
 be returned and the debt due shall not 
 be recoverable. 
 
 That these enactments against arbi- 
 trary and and criminal j)roceeding's of 
 creditors are nut prompted by any 
 merciful consideration which the law 
 might be supposed to extend to unfor- 
 tunate bankrupts, will at once appear 
 from the rig'orous enactments, also made 
 by statute, against debtors of all de- 
 scriptions. 
 
 If a debtor fails to fulfil his agree- 
 ments with a creditor, either regarding 
 paynient of principal or interest, he is 
 liable to 10-60 blows for debts from 5 
 to 60 Taels, with an increase of 10 blows 
 every succeeding month, according- to 
 the time and amount regarding- which 
 he is in default and his responsibility 
 continues until discharg-ed. For debts 
 of 60-100 Taels, the penalty is 20 
 blows with a monthly increase of 10 
 blows up to 60 blows. For debts of 
 over 100 Taels the penalties beg-in with 
 30 blows and continue with a monthly 
 increase of 10 blows up to 60 blows with 
 the heavy bamboo. In cases of heavier 
 indebtedness or defalcations, penal ser- 
 vitude (including- transportation) may 
 be added if bambooing- produces no 
 result. Finally, if a debtor absconds, 
 the heads of his family or clan are sub- 
 
 ject to the same penalties until the 
 debtor is surrendered or payment made. 
 
 Apart from the cruelty of such treat- 
 ment in the case of unfortunate debtors, 
 it is easy to see the convenient effects 
 which a law must have that applies cor- 
 poral punishment to the person of the 
 debtor with remorseless increasing- force 
 from month to month, until the debt is 
 paid or the debtor succumbs, and which 
 substitutes, if need be, his nearest re- 
 latives in his place. Chinese law regard- 
 ing- insolvent debtors causes, in the first 
 instance, a salutary dread of over- 
 speculation and bankruptcy -, it makes, 
 in the second instance, absconding com- 
 paratively rare, and finally prevents the 
 prisons from being- filled with small 
 debtors. 
 
 It is no doubt owing to these rig-orous 
 and merciless provisions of Chinese law 
 which, through the extortionate avarice 
 of the subordinate executive officers, be- 
 come in practice even more appalling- 
 than they appear in theory, that as a 
 matter of fact bankruptcy proceeding's 
 in the Courts of China are of rare oc- 
 currence, and are only resorted to by 
 creditors who have become so enraged 
 by fraudulent proceedings of a bankrupt 
 as to sink all other considerations in 
 their desire for reveng-e. In such a 
 case the creditors, having- taken posses- 
 sion by force of the debtor's books and 
 — supposing him to have absconded — 
 having placed some one in charge ol 
 his premises, proceed to the District 
 Magistrate, state their complaint to a 
 clerk who, after receiving payment of 
 a fee corresponding with the amount of 
 property at stake, drafts for them a 
 petition in due form, a copy of which 
 the creditors retain, whilst another copy 
 signed by them is, after further payment 
 of fees, in due course laid before the 
 Magistrate on his next sitting- day, or, 
 if the fees are not forthcoming with 
 alacrity, after some corresponding delay. 
 The Magistrate then issues a summons 
 for the bankrupt to appear and delivers 
 it to one of his police officers, who, re- 
 ceiving no salary, must look to the fees 
 they can exact in the serving of sum- 
 monses and in the execution of warrants 
 for a])propriate compensation for their 
 own and their subordinates' services 
 
( 9 ) 
 
 which at all times are at the disposal of 
 the Magistrate. The fortunate police 
 officer, in possession of the summons, 
 dispatches some of his hungry runners 
 to the bankrupt's premises to be fed and i 
 lodg-ed there, till further orders, out of I 
 the estate or at the expense of the ere- ' 
 ditors. Meanwliile the police officer ; 
 sends f ^r the creditors, informs them -, 
 that he has a summons, but hints that ' 
 to expedite its being served his expenses '• 
 must be prepaid. Having- received the | 
 amount he expected, he authorizes one [ 
 or two of his runners to serve the sum- \ 
 mens. If the distance to be traversed 
 he great, tliese runners sell the mono- 
 poly of serving the summons to the 
 highest bidder among the hangers-on of 
 the Yanien. The one who obtains the i 
 summons proceeds at his own expense 
 to the residence of the bankrupt's father, , 
 where he instals himself and is kept in 
 food and drink whilst haggling for a j 
 sufficient money |)ayment to induce him 
 to return to the Yaujen with the sum- | 
 mons unserved, whereby the bankrupt's ! 
 family obtain time to negotiate with 
 their own clan and with the creditors. 
 If these negotiations fail, the creditors 
 press the police officer in question once 
 more to serve the summons, and after 
 receiving a heavier fee than before, the 
 officer in question authorizes one of his 
 subordinates to serve the summons in 
 earnest. He proceeds in a sedan chair, 
 with half a dozen runners who also ride 
 in sedan chairs, and the whole party 
 instal themselves at the bankrupt s fa- 
 mily residence, live upon the fat of the 
 land, feast and carouse at the expense 
 of the faudly, until a large tee satisfies 
 every member of the party that the 
 summons has been duly served, where- 
 upon they return with their s])oils, por- 
 tion of which goes to their superior, to 
 the Yamen, reporting that the summons 
 has been served. Weanwhile the nego- 
 tiations between the bankruju's family 
 and the creditors continue under the 
 superintendence of the heads of the clan, 
 who put pressure upon the bankrupi^'s 
 family and nearest relatives to ))rovide 
 funds ibr the satisfaction of the claims 
 of both creditors and Yamen officials, 
 according to the amount now required 
 to stay proceedings. The first thing is 
 
 to sell or pledge the bankrupt's daugh- 
 ters, then to mortgage or sell what 
 private property the bankrupt, his fa- 
 ther, or his brothers possess, to keep 
 the clan property untouched. If all 
 this fails to satisfy the demands 
 of the Y^amen officials and the creditors, 
 the Magistrate is moved, after further 
 fees paid by the creditors to the clerks 
 in the Yamen, to issue a warrant of ap- 
 prehension against the bankrupt. This 
 is handed to a Police officer in the 
 Yamen, and he goes through the same 
 process with the warrant, as previously 
 was done with the summons, until he 
 and his subordinates have had their 
 share, when, after a new fee by the 
 creditors, a petition is presented to the 
 Magistrate complaining, on the part of 
 the creditors, that the Police officers 
 do not exercise due energy in their at- 
 tempts to arrest the bankrupt. There- 
 upon a warrant is issued stating that the 
 officers charg-ed with it shall receive 30 
 blows if the bankrupt is not brought 
 into Court on a certain day, the date of 
 which is placed sufficiently remote to 
 enable the P<dice officers and their 
 runners, who now proceed in earnest 
 to the bankrupt's residence to obtain as 
 much as can be got out of the clan by 
 way of fees. The period so fixed is usually 
 further prolonged by a report that the 
 bankrupt nun est inventus. Thereupon, 
 after renewed fees by the creditors, the 
 Magistrate is moved to issue a notice to 
 the gentry and clan heads concerned, 
 that they will be deprived of their 
 buttons or literary degrees if they do 
 not surrender the bankrupt or his nearest 
 relative by a certain date. Meanwhile 
 the Police officers, having exhausted the 
 resources of the bankrupt's family, live 
 on the property of the clan, until the 
 bankrupt or his substitute are sur- 
 rendered or until the Police officers are 
 bought off or the Magistrate is bribed 
 to drop proceedings, or an arrangement 
 is made between the clan and the 
 creditors. But if all these means should 
 fail to stay proceedings, the bankrupt 
 or his substitute is conveyed to the 
 prison of the Yamen, when it is the turn 
 of the gaoler and his subordinates to 
 exact fees from the prisoner's relatives 
 ior supplying the prisoner with food 
 
( 10 ) 
 
 and medicine. At every hearing- of the 
 case before the. Magistrate, torture is 
 applied, for whenever the bankrupt gives 
 an answer appearing to be evasive or 
 untrue, he receives a nxirnber of strokes 
 on the lips or on the cheeks or he is 
 made to kneel on chains, quite apart 
 from the regulation blows administered 
 with the bamboo in accordance wish the 
 degrees of punishnn^nt prescribed, as 
 above stated, by the Penal Code. As it 
 is in the hands of the underlings of the 
 Yamen to administer these vai ious forms 
 of torture and bambooing with more or 
 less severity as they please, it gives 
 these men also a chance to exact fees 
 from the bankrupt's relatives. 
 
 We spare our readers any fiirther 
 enumeration of these harrowing details, 
 which are perfectly sufficient to sh(-w 
 that, tbougb the harshness and cruelty 
 of the penal statutes concerning btuik- 
 rupts are somewhat mitignted by the 
 delays and the system of bribery which 
 pervades their practical application, a 
 bankrupt coming into the clutches of 
 this Chinese law is really a person to be 
 pitied. ]No wonder therefore that bank- 
 ruptcies are very rare in China, and 
 that in ninet3'-nine out of a hundred 
 cases of insolvency the estate is wound up 
 and an arrangement made between the 
 creditors and the bankrupt's family and 
 clan to pay a certain percentage in satis- 
 faction ot all claims, whereupon the 
 bankrupt, having become the debtor ot 
 his clan, has to work the rest of his life 
 to clear off his liabilities to his clan till 
 its members are satisfied. 
 
 A consideration, however, grows out 
 of the above description of bankruptcy 
 proceedings in Chinese Courts, which, 
 though not directly connected with the 
 purpose we have before us, we may 
 point out en passant. The fact that 
 vicarious punishment and torture are 
 inseparably cpnnected with this Chinese 
 procedure in bankruptcy, lays it open 
 to question whether the Hongkong 
 Government, which always stipulated 
 the omission of torture before extradit- 
 ing a Chinese criminal, should have re- 
 coui'se to Treaty stipulations in demand- 
 ing, through H. M. Consul in Canton, 
 that the Chinese authorities procure the 
 apprebension and punishment of a Chi- 
 
 nese debtor absconding from Hongkong 
 into Chinese territory, and the re- 
 payment of the amount for which he 
 may be in default. We can quite un- 
 derstand that Sir John Pope riennessy 
 set this terrible law and its more ter- 
 rible mode of procedure in motion, 
 through the Consul, whenever a Chi- 
 nese banker or Nampak Hong merchant 
 petitioned him to do so. For did he not 
 proclaim that torture in China was but 
 rarely applied and of the mildest de- 
 scription, and that the laws of (Jhina 
 were the most paternally merciful and 
 kind laws to be imagined '( In the face 
 of the above i'acts, however, we think 
 that the least the Hongkong Govern- 
 ment should do in the case of petitions 
 tending to invoke the help of the Chi- 
 nese bankruptcy law with a view to 
 recover debts due in Hongkong b}^ a 
 runaway Chinese debtor in CJhina is this, 
 that the Government should insist upon 
 the creditors proving their claims fiist in 
 Summ-iry Jurisdiction in Hongkong, and 
 transmit the claims, if proved, to H.M. 
 Consul in Canton for settlement only on 
 the distinct understanding that no vica- 
 rious punishment or torture be employed 
 in the process of recovering the dnbts. 
 Should it be proved, on the other hand, 
 as we think it to be .the case (similarly 
 with torture), that it is tdtra vires oithQ 
 Cantonese Authorities to dispense with 
 the process of vicarious punishment and 
 torture if the Chinese law is to be set in 
 motion at all, there is a clear necessity 
 for the flongkong Government suspend- 
 ing the operation of the Treaty Clauses 
 bearing on this subject and demanding" 
 a revision of the Treaty without any 
 delay. 
 
 V. 
 
 We have seen from our preceding in- 
 quiries what the position of a Chinese 
 merchant is in his own country, how he 
 is perpetually controlled and vexatiously 
 interfered with by his Government, how 
 he is hemmed in by traditional barriers 
 and a Governmental system of middle- 
 Tnen, and how he is driven to seek 
 protection in co-operative guilds and 
 trades-unions which again are compelled 
 to work under Governmental control 
 
( 11 ) 
 
 and are made the tools of the Govern- 
 ment for executive pu' poses. There is 
 no registration, because there is no need 
 for it. The Chinese merchant is practi- 
 cally, at every step and turn, held fast 
 in the leading strings of a paternal 
 Government, which are more effective 
 than any system of rpgistration possibly 
 could be, but also more burdensome. 
 As to the legal status and liabilities of 
 a Chinese merchant, we have further 
 seen that Chinese law knows no limit- 
 ation of responsibility as regards partner- 
 ship such as our Partnership Ordinance 
 introduced in Hongkong. iSor does 
 Chinese law know bankruptcy in the I 
 sense ol entertaining an}' idea of afford- | 
 ing "relief" to insolvent debtors. Le- i 
 gaily speaking, the ])osition which 
 Chinese law assigns to a native mer- 
 chant in China is, to a great extent, 
 similar to the position which an English 
 merchant occupied in England before 
 the statute (34 & 35) of Henry VIII 
 (c. 4) took the jurisdiction in matters of 
 bankruptcy out of the hands of the ccra- 
 mon law, and before the statute of 
 Anne (4th, c. 17) introduced into 
 English law that novel expedient of 
 whitewashing a bankrupt and discharg- 
 ing him from all further liabilities for 
 debts contracted ])reviotis to Ins sur- 
 rendering Ills whole effects and conform- 
 ing to the law of bankruj)tC3'. We have 
 fmally seen that the Chinese law makes 
 no distinction between traders and non- 
 traders in its provisions regarding 
 debtors, and that the mode of procedure 
 against insolvent debtors in China, 
 based as it is on the principle of unli- 
 mitf^l vicarious responsibility, and 
 involving corporal punishment and tor- 
 ture, makes the position of an insolvent 
 debtor, and thereb}' of merchants gene- 
 rally, so truly terrible, that bankru])tcy 
 ■ is practically eschewed with fear and 
 trembling and that cases of insolvency 
 are by all but universal practice settled 
 out of Court by liquidation or composi- 
 tion through arrangement with the most 
 importunate of the creditors. 
 
 Such has been the practical position 
 of a Chinese merchant, and such the- 
 commercial law and usage of China for 
 the last six centuries (since the Yuen 
 Dynasty), and virtually for the last 
 
 two thousand years. The effect of it 
 has been, in the course of centuries, to 
 mould the character and instincts of 
 Chinese merchants accordingly and to 
 imbue them with habits the net result of 
 which has been to keep commercial 
 morality in China on a comparatively 
 high level. 
 
 In proceeding now to sketch the posi- 
 tion which the Chinese merchant occu- 
 pied in Hongkong, previous to the pass- 
 ing of our local Partnership and Bank- 
 ruptcy Ordinances of 18G4 and 18G0, 
 we must not forget that it lies in the 
 nature of things that the heirloom of 
 centuries, the inherited instincts, the 
 ingrained habits which form the com- 
 mercial character, remain little affectetl 
 by the transfer of a Chinese merchant 
 from ( hina to Hongkong. That loyalty 
 to Queen V ictoria, those Anglo-Chinese 
 notions which Sir John Po})e Hennessy 
 found it politic to ascribe to the Chinese 
 merchants, traders and shop-keepers of 
 Hongkong, are pure fictions and have 
 no reality, and what expressions of such 
 feehngs were some j-ears ago embodied 
 in addresses to the Governor and to the 
 Queen were, as we all know, dictated to 
 them and obediently signed by them, as 
 they would have done it by order of iheir 
 Mandarins, without meaning anything. 
 The Chinese merchant of Hongkong 
 was, and is, and ever will be Chinese in 
 his loj'alty to the Chinese Government 
 and to his country, though he does not 
 object to make what profits he can make 
 out of the double status he occupies as a 
 Chinese subject and as a resident of a 
 British Colony. 
 
 In the first instance Chinese merchants 
 brought with them to ilongkong that 
 inherited national love for commercial 
 combination, which developed, accord- 
 ingly, trades unions and guihls 4jere in 
 Hongkong on essentially the same i)at- 
 tern on which these institutions are 
 built up in China. As the local Govern- 
 ment could not be expected to recognize 
 these institutions officially, nor assume 
 tlie same central guidance of them as 
 the Chinese Government undertakes in 
 China, the innate instinct of the Chinese 
 merchants of Hongkong supt)lied, within 
 a few years after the estaulishment of 
 the Colony, and ever since maintained 
 
( 12 ) 
 
 the supply of this deficiency of a central 
 organ by the appointment of a General 
 Committee in which each guild and 
 trades union has its representative, an- 
 nually elected by ballot. This Central 
 Committee, which by its casual assump- 
 tion of the management, in addition 
 to its other functions, of a general Chi- 
 nese Hospital, came eventually to the 
 surface in 1870, when it was officially 
 recognized and constituted by Ordinance 
 as a corporation, under the name " Tung- 
 wah Hospital Committee," existed all 
 along unknown to the Government, and 
 exists to the present day, as a re- 
 presentative Vigilance Committee of all 
 the Chinese guilds and trades unions in 
 the Colony, carrying on officii)! cor- 
 respondence with the Chinese Govern- 
 ment direct on questions connected with 
 the Chinese Imperial Maritime Customs, 
 or regarding matters affecting Chinese 
 emigration, Chinese paupers, orphans, 
 kidnappers and other subjects, like a Chi- 
 nese Consulate without an Exequatur, 
 and organizing branch Committees in 
 San Francisco, Bangkok, Singapore and 
 elsewhere. We have no violent objec 
 tion to this organisation, provided it is 
 kept by our Government in due ciieck 
 and not encouraged, as was constantly 
 done by Sir John Pope Henness}'',. to 
 meddle with local politics. On the con- 
 trary, we gladly recognize what we 
 think is a fact, namely that we owe it 
 to the existence of this mouthpiece and 
 safety valve of the feelings of an 
 ignorant Chinese community, that our 
 Colony has ever remained free from that 
 curse of Chinese communal life in the 
 Straits Settlements, the existence of 
 conflicting Secret Societies. We espe- 
 cially recognize with pleasure that this 
 Central Committee of the Chinese per- 
 sistently hang back whenever Sir John 
 Pope flennessy attempted to utilize its 
 organization for his private political- 
 manoeuvres, that it was this body which 
 so long ago as 1874 petitioned the 
 Government to introduce an Ordinance 
 making the registration of partners in 
 Chinese firms compulsor}', that it was 
 this same Committee which in summer 
 1881 in vain entrented Sir John Pope 
 Hennessy to stop his disastrous en- 
 couragement of speculation in Chinese 
 
 house })roperty, and which, within the 
 last few weeks, canvassed the whole 
 Chinese commercial community with a 
 view to reform, and has now laid before 
 the Government, in eight propositions, 
 definite recommendations to revise and. 
 modify our Partnership Law and our 
 m<ide of procedure in Bankruptcy as 
 affecting Chinese commerce. 
 
 But we aie digressing and must come 
 back to our ]»resent subject, the position 
 of a Chinese merchant in Hongkong as 
 compared with that assigned to him in 
 his own country. 
 
 We remarked above that Chinese mer- 
 chants and tradesmen naturally brought 
 with them to Hongkong the trade in- 
 stincts and habits of China and quietly 
 transplanted to English soil, unhindered, 
 their national institutions of guilds and 
 and trades unions. We must add now 
 that they not merely brought with 
 them their national system of em- 
 ploying middlemen for all mercantile 
 operations, but successfully compelled, 
 in the quietest possible manner, even 
 foreign merchants to employ middlemen 
 likewise. These middlemen have be- 
 come known, on ihe Chinese side, in 
 the commercial intercourse between Chi- 
 nese and foreigners, under the hybrid, 
 name " Macheen" (a Chinese corruption 
 of the, to them unpronounceable, term 
 " Merchant") as the designation of the 
 rejtresentatives of Chinese firms dealing 
 with foreigners, and on the European 
 side, under the name " Compradore " (a 
 term borrowed from the Portuguese 
 language) as the Chinese representative 
 serv^ants of foreign firms dealing with 
 (Jhinese. Now it is important to note 
 that the Chinese middleman or broker, 
 as represented by the Macheen of Hong- 
 kong, has a different position here from 
 that which he occupies in China. In 
 China he is simply a broker, responsible 
 at every moment to a paternal but cruel 
 government, and occupies a position 
 analogous, in some respects, to that of a 
 sworn broker of London, but liable to 
 criminal proceedings, involving corporal 
 punishment, even for acts coming under 
 that vag'ue and doubtful category of 
 "encouraging unfair trade," which makes 
 his position one of extreme personal risk. 
 The Hongkong Macheen, on the other 
 
( 13 ) 
 
 hand, is the private representative of 
 one or more native firms ; he may or 
 may not be a broker ; he may be a 
 principal or merely an agent and 
 servant ; but he certainly is like a wily, 
 slippery serpent as f^ir as responsibility 
 is concerned and at the same time like 
 a harmless dove to all outward ap- 
 pearance. Every Chinese firm in the 
 Colony, that has larg-e dealings with 
 foreigners, emplo3's one or more of these 
 Macheens, who, by a more or less im- 
 perfect knowledge of the slang called 
 piclyin English, combined with an in- 
 timate acquaintance with English modes 
 of trade, with the markets and local 
 financing, have made themselves the 
 indispensable intermediaries between 
 Chinese and English in commerce in 
 Hongkong. The real principals of the 
 largest Chinese firms of Hongkong re- 
 main personally as inaccessible to the 
 foreign merchant in Hongkong as the 
 prime movers of Chinese politics remain 
 inaccessible to the foreign diplomatist 
 in Peking. The mischief of the Macheen 
 system lies in this, that in the course of 
 time each of these Macheens becomes, 
 in the consciousness of the foreign mer- 
 chants with whom he regularly deals, 
 identified with the Chinese hongs or 
 shops which he represents and in which 
 he commonly has a share interest. 
 Things work smo(<thly and pleasantly 
 enough as long as there is no hitch in the 
 solvency of the concerns represented by 
 a Macheen, but the moment one of these 
 Chinese firms becomes hopelessly insol- 
 vent, let the foreign merchant attempt 
 to fasten any res|)onsibility on the 
 Macheen, and he is met by a blank 
 smile on the part of the latter and the 
 assurance, which on inquiry is proved 
 by abundant Chinese evidence, that he 
 never held himself out as, and in fact, 
 never was, an3'thing else but a paid 
 agent and uninterested employe. Many 
 of these Macheens transact a large amount 
 of brokerage business without assuming 
 the title or reputation of regular brokers, 
 but to the eye of the foreign merchant 
 the whole position of a Chinese Macheen 
 is studiously veiled in such a haze of 
 obscurity that in 18G6, when the ques- 
 tion arose of introducing here the system 
 of sworn European brokers, there was a 
 
 conflict of opinion among the most ex- 
 perienced English merchants of Hong- 
 kong as to the question whether there 
 were any Chinese brokers in this Colony 
 or not. At a meeting of the Chamber 
 of Commerce, the head of one English 
 firm said there w'as no such class as 
 Chinese brokers, that he knew of dealers 
 who bought goods, but, as these same 
 dealers both cleared and paid for their 
 purchases and claimed no brokerage, 
 they could not be regarded as anything 
 but principals. The head of another 
 English firm concurred in this remark, 
 adding that, although he was in the 
 habit of selling to the Chinese, he had 
 never yet paid brokerage on such sales. 
 But the head of a third English firm 
 contended that Chinese brokers did 
 exist, that he had had transactions with 
 them, and moreover that Messrs Jardine, 
 Matheson & Co. did business through 
 Chinese brokers. 
 
 The position of a " Compradore " is 
 different from that of a Macheen, and 
 yet analogous to it, as but another link 
 in the chain of thraldom with which the 
 foreign merchant is environed and as 
 offering equal facilities to evade personal 
 responsibility, 'i'he position and func- 
 tions of a Compradore are of a rather 
 complex nature. He is in the first in- 
 stance the paid servant and confidential 
 agent of the foreign merchant, but he is 
 occasionally mixed up by his employer 
 in special contracts mane hy the firm 
 for special operations, which makes him 
 for the occasion a principal, and yet, if 
 it suits him, he may easily throw off 
 even then the responsibility he incurs, 
 owing to the great responsibility Eng- 
 lish law attaches to masters in respect 
 to their servants. But, whilst being a 
 servant of his foreign employer, the 
 Compradore is also an independent 
 merchant on his own account or in 
 partnership with native firms, and, may 
 be, a member of native guilds which he 
 occasionally supplies with all-important 
 information as to the limit of what the 
 foreign markets can pay and the extent 
 of the necessities of the foreign firms 
 for buying. Again, the Compradore is 
 frequently also acting the part of broker 
 and commonly receives, unknown to his 
 employer, a share in the profits which 
 
( 14 ) 
 
 the nntive deulfir, introduced by the 
 Conipradore to his employer, makes on 
 transactions with the latter. The Com- 
 pradore system is a convenient and 
 indispensable institution, the growth of 
 time and sustained by the force of 
 circumstances, but at the same time it is 
 a system frai g'ht with danger to the 
 foreign merchant and banker. The 
 Cora]>radore's services are convenient, 
 because he is guaranteed by the native 
 iTierchants as to his own .honesty, because 
 lie guarantees the honesty of all the 
 native employ6s of the foreign firm 
 Avhose trusted confidential servant he is, 
 and because he stands security for the 
 solvency of the firm's native customers 
 introduced by him. What makes the 
 Compradore, however, indispensable to 
 tiie foreign merchant and banker, is the 
 abyss which, studiously maintained by 
 all native merchants, separates the 
 latter in language, social intercourse 
 and ways of thought, from all 
 foreigners whatever. For it is this na- 
 tive exclwsiveness as regards foreigners 
 which secures, on the side of the for- 
 eign merchant and banker, to the Com- 
 pradore the monopoly of intimate ac- 
 quaintance with the native markets and 
 with the solvency or insolvency of 
 native dealers and banks, an amount of 
 knowledge which he, as a native and as 
 a partner in native firms and a member of 
 native guilds, can collect and keep au 
 cournnt, but which, as long as this ex- 
 clusiveness of native merchants conti- 
 nues, will ever remain inaccessible to the 
 foreign merchant, be he ever so good a 
 Chinese linguist. But the danger which 
 lurks in the whole Compradoric system 
 to the foreign merchants will be found 
 in two circumstances, first that, while it 
 pretends to take, in many cases at least, 
 a considerable amount of responsibility 
 oif the foreign merchant's shoulders, 
 the functions of a Compradore are so 
 complex, and his j)osition accordingly so 
 many-sided, that it affords him far more 
 loopholes to evade responsibility, when 
 his own interests demand it, and second- 
 ly, that the Compradoric system is virtu- 
 ally the means by which the native 
 trader, with his inborn adeptness in 
 commercial intrigues, is enabled to con- 
 spire with the Compradore in order to 
 
 play fast a:.d loose with the capital of 
 the foreign merchant. If it is true, as 
 some theorists have maintained agnin 
 and again, — a theory which Sir John 
 Pope Hennessy adopted with eminent 
 gusto and proclaimed as a fact with re- 
 joicing, — that there is a tendency in 
 Chinese trade, as at present conducted, 
 to convert the great export and import 
 houses of foreii'-n trade into mere ag'en- 
 cies of the native merchant, it is the 
 Macheen and Compradore system which 
 most strongl}"^ supports the alleged ten- 
 dency. 
 
 Ap irt from the system of trades unions 
 and guilds, which have all along flou- 
 rished securely in Hongkong, and side 
 by side with the system of middlemen, 
 exemplified by the Macheens and Com- 
 pradores, the Chinese who settled in 
 Hongkong brought with them also and 
 maintained here all along their national 
 forms of partnership, as referred to 
 above. To begin with, that Chinese 
 form of partnership, en commandite, to 
 which we alluded in a former article, is 
 widely spread throughout the Chinese 
 community of Hongkong. It is a matter 
 of common occurrence that a foreign 
 merchant's table-bo}'^, cook, house-coolie 
 and amah, may each be a dormant 
 partner in one or more local shops or 
 hongs, just as the foreign merchant's 
 Compradorr", whilst serving him j^s the 
 employe of the foreign firm, may at the 
 same time also be a dormant partner in 
 several native shops or hongs, and an 
 active partner in one or two others, 
 besides carrying on a regular business 
 or special occasional ventures on his 
 own account. 
 
 Among Chinese unconnected with 
 foreigners there has likewise been at all 
 times a most extraordinary network of 
 investments, for which there is hardly a 
 parallel among corresponding classes of 
 any other nation, except perhaps the 
 Jewish people. There are, in the first 
 instance, so-called money-loan associa- 
 tions, most common among the non- 
 trading classes and specially patronized 
 by domestic servants, most especially 
 however by women. These associations 
 are based on general well-understood 
 principles and guided by unwritten but 
 generally^ accepted rules, into which we 
 
( 15 ) 
 
 cannot enter here in detail. Most com- 
 monly they are formed on the tbilowiuo- 
 scheme. Some ten or more individuals 
 agree, at the proposal of a middleman 
 or female broker, to take shares and 
 bind themselves, orally or by signing- 
 articles of association written on the 
 first few leaves of the sissociation's ac- 
 count book, to pay, during a period of 
 as many months as the association 
 counts members, on a fixed day of each 
 month a stipulated nominal sum. On 
 the first of these call-days e;ich share- 
 holder meets with the others in person 
 or by prox}', frequently combininj^ with 
 the occasion a sort of dinner party, and 
 each presents a closed tend* r ufii-ring a 
 cert-.dn amount of interest for the loan 
 of the whole subscribed cajiital of the 
 association that is payable on that day 
 and for the time fixed by the articles of 
 association. The sh;ire contributions of 
 Ciicli khareholder are then j)aid in, and 
 the tenders publich' opened, whereupon 
 the person found to be the iiighest suc- 
 cessful bidder receives the sum total 
 minus the interest, which is at once de- 
 ducted, and, though he has henceforth 
 to j>ay his call every month like the 
 others, he is henceforth excluded from 
 the option of tendering for a loan. On 
 the next cull-day the other siiareholders 
 put in their tenders as before and are 
 dealt with in the same way. The same 
 process is repeated every mouth till 
 every member of the assuciatioii has had 
 his turn, whereupon the association 
 meets for the final passing of the ac- 
 counts and is thereby wound up, the 
 manager and collector of the associnlion 
 having received sjjocial remuneration out 
 of the common fund. The convenience 
 of this financial operation is obvious. 
 But as many private individuals are 
 thus at the same time mana;;ers or 
 shareholders in sevend different money- 
 loan associations, this network of cn- 
 gagemenf^, if disturbed by the dt-ath, 
 teu)porary absence, insolvency ot ab- 
 sconding of a manager or shareholder, 
 leads to an entanglement of conflicting 
 interests, and to a complication of ac- 
 counts, which forms a fruitful source of 
 disputes wasting much of the time and 
 severely trying the jiatience of the Judge 
 in Summary Jurisdiction, who, strange 
 
 to say, has no Court Accountant ac- 
 quainted with the Chinese language to 
 assist him in any question of Chinese 
 accounts coming before the Court, 
 
 The same classes of natives amongst 
 which these money-loan associations 
 flourish are also very much giv^n to 
 investing their small savings in shops 
 \ and industrial undertakings on the prin- 
 ciple of partnership en commandite as 
 i above mentioned. It may in truth be 
 ! said that there is- hardly any distinction 
 ' nmonii the Chinese population in lltmg- 
 kong between traders and non-traders, 
 for the national passion for trade in 
 some fiTui or o'lier is as ingrained in 
 evfMvbody, man, woman and child, and 
 jis freely :ind generally indulged in as 
 the natituial jiassion for gambling, 
 which, in the view of t!ie better classt-s 
 at leii.<t, is indeed morally reprehen>ible, 
 but after all merely a more speculative 
 form of trading. An instance of this 
 ' will be found in the late mania for spe- 
 culations in house property, in which 
 domestic employes, clerks and school- 
 I Hjustcrs, and persons of all descriptions 
 were mixed up more than profoi^sioutil 
 ' merchants. The only distinction that 
 can be mnde with reference to the Chi- 
 ' nese residr-nts of Hongkong in this re- 
 gard is this that we may distinguish open 
 and proU'ss-^d traders from underhand 
 ; jind amateur traders, for with rare ex- 
 ' ceiitions'they are almost all participat- 
 ing in trade operations, directly or 
 I indirectly, in one way or other. 
 I As among these nondescript trading 
 i spirits of the Chinese community of 
 ' llon^'^kon'!' the network of investments 
 is of an extremely complex nature, thus 
 also the professed trading classes of our 
 Chinese residents ever move in an 
 t qu-.dly puzzling entanglement of part- 
 nership engagements. The typical 
 Chinese shopkeeper or merchant who 
 finds himself confronted by an opposi- 
 tion business competing with him in his 
 particular sphere, feels no temptation, 
 as a European would, to fly into 
 a rage and try to undersell bis 
 competitors by lowering his prices, 
 but his first endeavour will be, in all 
 good humour, to manage, directly or 
 indirectly, to obtain a partnershij) share, 
 whether dormant (to begin with) or 
 
( 16 ) 
 
 active, in the opposing concern, with a 
 view to eventual amalgamation, if the 
 liitter is successful, or, if it is found un- 
 successful, with a view to withdraw 
 from it again and to proceed in his own 
 line unconcernedly. It is this cool- 
 headed gregarious instinct, and the pre- 
 dominance of that passion for comhina- 
 tion and association, which distinguishes 
 the Chinaman in Hongkong and abroad 
 from the trading classes of all other 
 n;itions, and which gives him naturally a 
 considerable advantage to start with. 
 Accordingly, there is hardly a Chinese 
 firm or Chinese merchant in this Colony 
 that has not partnei'ship connectinns 
 with other firms or other merchants in 
 one and the same line of business or in 
 several kindred lines. Side by side witli 
 this permanent warp and woof connec- 
 tion between different Chinese firms and 
 merchants, there are constantly specinl 
 partnership agreements made between 
 different firms or persons for temporary 
 and individual ventures. It is likewise 
 a common practice among Chinese shop- 
 keepers and merchants in Hongkong to 
 carry on business in several distinct 
 localities at the same time, and to use 
 in each of these localities a different firm 
 name, although these different firms 
 may really consist of the same individuals. 
 The advantage to be derived from this 
 common device need not be discussed 
 here, but it is well to point out that this 
 practice, though not exactly illegal, is 
 devised with the intfmtion to deceive, 
 and acts injuriously, not so much 
 to the Chinese consumers as to the 
 foreign moichimt and banker who 
 may be induced to entrust goods, give 
 credit or advance money to these seem- 
 ingly different firms under the belief 
 that they iiave different resources and 
 different bases of credit. There is no 
 means, short of registration, to protect 
 the foreign merchant and banker against 
 the mischief with which this common 
 device of Chinese trade is fraught. 
 
 In connection with this network of 
 partnership connections which is so 
 characteristic a feature of Chinese com- 
 merce, we must draw attention to this 
 remarkable point in it, namely, that with 
 all this innate love for and clever- 
 ness in intricate commercial organiza- 
 
 tion and combination, the Chinese 
 community of Hongkong have ever 
 scrupulously abstained from joining in 
 partnership with foreigners. Here Ties, 
 in our opinion, the principal reason why 
 the Chinese trade of Hongkong requires 
 exceptional legislation, different legisla- 
 tion, we mean, from that evolved by the 
 necessities of the trading communities 
 of England. But herein lies also the 
 main strength which Chinese trade pos- 
 sesses in its competition with foreign 
 trade. If Chinese would freely and 
 cunfidently amalgamate their interests 
 — and there has been no lack of willing- 
 ness on the foreign side — by joining in 
 [)artnership for commercial purposes 
 with English and other foreign mer- 
 chants of Hongkong, the great differ- 
 ences which now exist between them in 
 the mode of conducting trade would 
 gradually disappear by mutual assimila- 
 tion, uniform legislation for both Chinese 
 and foreigners here would become a 
 possibility, and, last but not least, the 
 Macheen and (Jompradore system vi'ould 
 be finally doomed, though it is indeed 
 proof against any other device to remove 
 the yoke it has placed on the foreign 
 commerce of this Colony. 
 
 Along with their systems of trades 
 unions, middlemen and partnership com- 
 binations, the Chinese brought with 
 them to Hongkong also their national 
 and inherited code of commercial mo- 
 rality. We remarked above on the 
 causes, chiefly of a penal and restrictive 
 nature, which contributed to keep the 
 commercial morality of Chinese mer- 
 chants in their own country on a com- 
 paratively high level. For years the 
 Chinese merchant of Hongkong con- 
 tinued to distinguish himself by general 
 honesty and promptness in his dealings 
 with Foreigners as with his country- 
 men. For years he continued to look 
 upon a promise or guarantee given by 
 him as of equally binding force whether 
 given verbally or in writing. For years 
 he abstained, as a general rule, from 
 rash speculations and though there were 
 always individuals gambling in opium 
 and quicksilver time bargains, the 
 general body of the Chinese merchants 
 of Hongkong condemned these practices 
 as vicious and injurious. Most of all, 
 
( 17 ) 
 
 however, it is to be noted, that for years 
 the Chinese merchant of Hongkong- pre- 
 served that wholesome inherited dread 
 of bankruptcy which distinguished his 
 confrere in China. On this point we 
 have the testimony of one of the most 
 experienced local English bankers, who 
 said before the Supreme Court Commis- 
 sion some years ago, "formerly there were 
 no failures amongst respectable Chi- 
 n^^se," and who on the same occasion 
 observed, " the respectable Chinese do 
 not want bankruptcy laws at all ; their 
 system is, if you have money, you must 
 pay, sell everything you have and your 
 earnings for the future." These re- 
 marks are perfectly true as an historical 
 observation applying to the whole course 
 Chinese trade ran from the foundation 
 of this Colony in 18i2, down to the 
 time 1864-18(57, when tlie Bankruptcy 
 and Partnership Ordinances began to 
 exercise their baneful effects on the 
 commerc'iil morality of the native mer- 
 chants of Hongkong. The same ex- 
 perienced English banker, who stated 
 that " formerly" there were no failures 
 amongst respectable Chinese, points to 
 the Bankruptcy Ordinance of 1804 as 
 one of the sources whence the altered 
 state of Chinese commercial morals 
 flowed in later years. For he referred 
 pointedly to the abuses connected with 
 the working of the Bankruptcy Ordin- 
 ance, when speaking before the Supreme 
 Court Commission. " The trickery, (he 
 said) that is going on in connection with 
 Chinese bankru])tcies is dreadful. The 
 bankruptcy laws are playing havoc 
 with the morals of the people. Men are 
 making it a profession to go round and 
 advise people to fail. . . . Now they 
 are beginning to realize that they can 
 get off scot free, and their respectability 
 is not standing ])roof against the temp- 
 tation. I know bankruptcies in which 
 nearly a Lie of doUais' worth of property 
 has been made away with to bankrupts' 
 friends and then he gets it back when 
 he comes out of Court." This was said 
 in 1879. But the harvest that was then 
 being reaped in the bitter experience of 
 foreign merchants in Hongkong, was 
 really sown during the years 1864-1807 
 to which we referred. There was indeed 
 insolvency law in force in Hongkong 
 
 I even before 1804, when the Imperial 
 ! Bankruptcy Act of 1861 was made 
 operative in this Colony. But the 
 baneful effects of that Act, which were 
 . as strongl}' felt in England, and there 
 led to the substitution of a new Bank- 
 ; ruptcy Act in 1809 — never introduced 
 i in Hongkong, — were not set in motion 
 in Hongkong to the damage of Chinese 
 commercial morality until the Pactner- 
 , ship Ordinance of 1807 limited the 
 ' responsibility of partners in Chinese 
 as well as in foreign firms, and thereby 
 I held out to the Chinese, unaccustomed 
 to such liberty and unrestrained by the 
 English custom of advertizing in the 
 public papers the partners of each firm, 
 : a terrible temptation. The temptation 
 consisted in this, that the Chinese who 
 previously understood it to be a matter 
 of course that all the partners of a firm 
 would, without exception, be held re- 
 , sponsible for the firm's liabilities, now 
 I learned, from the practical application 
 j of the Partnership Ordinance of 1867, 
 that by the simple process of represent- 
 , ing the paid manager or the poorest of 
 I the partners of each firm as the sole 
 i active partner, and by entering in their 
 j books the funds contributed by each 
 I active partner as mere loans given to 
 the firm on condition of receiving a 
 I certain percentage of the firm's annual 
 : net jirofits, they could not only make 
 I use of the Bankruptcy Ordinance to 
 ! shiike off troublesome debts, when in- 
 j volved, but even come in, though in a 
 I secondary position, as creditors of 
 their own quasi-bankrupt estates, 
 and recover a portion of their 
 assets out of the liands of the real 
 creditors. In this proceeding they 
 were sjiecially siieltered by the absence 
 of that custom of previousl}'^ advertizing 
 the names of partners in their firms, 
 and by the general obscurity in which 
 all partnership connections regarding 
 Chinese firms were studiously veiled, 
 especially to the eyes of foreign mer- 
 chants. A further temptation and en- 
 couragement in such proceedings was 
 jirovided by the fact that most Chinese 
 firms in Hongkong have branch -offices 
 in Canton or elsewhere in China, or 
 have partners residing there. Taking 
 advantage of this proximity of their 
 
( IS) 
 
 own country, it was an easy step to 
 transfer part of their available assets 
 out of the jurisdiction of the Bank- 
 ruptcy Court of Hongkong-, before 
 sending- that man of straw, their 
 manager or indigent partner, to declare 
 himself bankrupt on behalf of the firm 
 as alleged sole partner. To all this 
 must be added the general reluctance of 
 Chinese creditors to sue in Court and 
 throw good money after bad, the specific 
 indolence which ever characterized the 
 official management of bankrupt estates 
 in England as well as in Hongkong- 
 where it generally took some 15 or 
 more years to wind up an estate if it 
 had once got into tiie Registrar's hands, 
 and especially the ignorance ot the 
 specific features of Chinese commerce 
 and Chinese accounts which naturally 
 hampers an English Bankruptcy Court 
 in the absence of Chinese Commercial 
 Assessors and Accountants. On this 
 latter point a startling- light was thrown 
 by the evidence of a professional English 
 Accountant, who had had special ex- 
 perience in the manner in which the 
 Bankruptcy Court dealt with bankrupt 
 Chinese estates, and who described 
 before the Supreme Court Commission 
 the general practice which prevailed, in 
 these terse words, " a Chinese bankrupt 
 brings his books and no one looks at 
 them." Under these circumstances it 
 cannot be a matter of surprise to any 
 one, that the noble plant called Chinese 
 commercial morality, thoug-h it had con- 
 tinued to flourish for many years after 
 it was transplanted into the British soil 
 of Hongkong-, began to fade after the 
 years 1864-1867 and gradually withered 
 and died away under such sinister in- 
 fluences. Thus it came about that, 
 whilst the Chinese merchant of Hong, 
 kong- brought with him from China and 
 maintained here all along his native 
 commercial instincts and institutions 
 and developed here undisturbedly his 
 trades unions, his middlemen and 
 partnership systems, working- pretty 
 much in the same grooves as in China, 
 his commercial morality g-radually de- 
 cayed under the influence of inappropri- 
 ate legislation and through the absence 
 of any substitute for the accustomed 
 trade restraints of his own countrv. 
 
 To complete the above sketch of the 
 g-eneral features which commerce as- 
 sumed iu the hands of Chinese merchants 
 in Hongkong-, we add, though it is a 
 subject foreign to our present inquiries, 
 that neither the traditional code of 
 Chinese commercial morality nor the 
 characteristic patriotism of Chinese mer- 
 chants in H(jngkong- ever had any ob- 
 jection whatever to smuggling transac- 
 tions 01- to underhand arrangements with 
 subordinate native Customs stations 
 with a view to compound the tariif 
 duties. The temptation ofi'ered by the 
 high duties on opium, and by the salt, 
 sulphur, tin, copper and other monopolies 
 of the Chinese Government, coupled 
 with the peculiar facilities which the 
 topographical situation of a free port 
 like Hongkong offered for smuggling 
 operations, brought it about that the 
 Chinese trade of Hongkong, as carried 
 on by our Chinese mercl)ants exclusively, 
 ever was to a great extent based on 
 direct or indirect smuggling operations. 
 
 VI. 
 
 Having stated the reasons for our con- 
 viction that the Chinese merchants of 
 Hongkong, who recently petitioned the 
 Government with reference to certain 
 amendments they propose in the law re- 
 garding- partnership in Chinese firms 
 and in the mode of procedure in Chinese 
 bankruptcies, are perfectly justified in 
 tracing back the decay of commercial 
 morality which they demonstrate to have 
 taken place of late in the case of the 
 Chinese community of Hongkong, to the 
 inappropriate and inadequate character 
 of the provisions of our local laws re- 
 garding bankruptcy and partnership, it 
 is well, before we proceed further in 
 our inquiry, to pause for a moment and 
 to consider the history of these laws. 
 
 The bankruptcy law of England was, 
 ever since the beginning of the reign of 
 Queen Victoria, when Coui-ts for the 
 relief of insolvent debtors were first 
 established, a source of chronic dis- 
 satisfaction. It underwent, accordingly, 
 periodical revolutions which have finally 
 landed us in such a chaos of conflicting 
 opinions as to the merits of the latest 
 ' draft bill of revision, now for years past 
 
( 19 ) 
 
 on the table of the House of Commons, that 
 in view of the six Government bills we 
 have had on the subject and the thirteen 
 amendments now proposed, it is not to 
 be wondered at that the idea is comings 
 to the front, it would perhaps be better 
 for all parties concerned to have no 
 bankruptcy law at all. When the Act 
 of 1861 removed all distinctions be- 
 tween traders and non-traders, abolished 
 also imprisonment for debt and threw 
 the portals of the bankruptcy Court open 
 to all, it was supposed the troublesome 
 problem had been satisfactorily solved, 
 but it was soon found that the evils 
 removed had but been substituted by 
 others equally potent, tbat debtors be- 
 came more reckless and that creditors, 
 seeing the ruinous perfection with which 
 money paid into bankruptcy Courts dis- 
 appeared under tbe bands of the official 
 assignees, preferred to remain inactive 
 and complained more than ever. The 
 Act of 1809 accordingly renewed tlie 
 terrors of imprisonment for debt, threw 
 the duty of looking after the assets of a 
 bankrupt upon tbe creditors themselves, 
 and, instead of allowing abankrupt a com- 
 plete clearance of his liabilities, com- 
 ])elled him to pay off within three years 
 of his bankruptcy, out of his future 
 earnings, 50 per cent, of the amount due, 
 under penjtlty of not obtaining his dis- 
 charge, any such sum that remained 
 unsatisfied assuming the nature of a 
 judgment debt recoverable by execution 
 on Lis then property. But it was soon 
 found that this Act rather tended to 
 encourage fraudulent bankruptcies, that 
 the creditors would not take upon them- 
 selves the duties imposed on them, and that 
 the official machinery of the comptroller 
 in bankruptcy was working with ex- 
 asperiting dilatoriness. Wew bills ac- 
 cordingly were brought out and with- 
 drawn again, and the latest expedient 
 now proposed is to place the Board of 
 Trade on the stage of bankruptcy law, 
 as a Dens ex machina, and to bring about 
 the desirable millennium by placing the 
 comptroller in bankruptcy with his staff 
 under the direction of the Board of 
 Trade. 
 
 Such is briefly the course bankruptcy 
 law has run in England since thebeginning 
 of our present reign. We will now turn 
 
 and see how this bankruptcy law affected 
 the Chinese merchants of Hongkong 
 during the same period. 
 
 Up to the year 1864 there was, 
 strictly speaking, no bankruptcy law 
 operative in Hongkong at all. There 
 was Ordinance 3 of 1846 for the relief 
 of insolvent debtors, but it entitled only 
 prisorfers in actual custody within the 
 walls of the prison to petition tbe Court 
 for relief. Ordinance 5 of 1846 added 
 to it an unimportant clause regarding 
 power to give notices under the pre- 
 vious Ordinance, and Ordinance 6 of 
 1846 added a further clause investing 
 the Judge at Chambers with powers of 
 Court. This was the only law regard- 
 ing insolvency in force in Hongkong 
 until tbe end of the year 1863. It is 
 noteworthy that up to this time, that is 
 for 20 years, the Colony of Hongkong 
 got along very well, prospered and 
 flourisbed, without bankruptcy law, and 
 that during this time, as we have stated 
 in our preceding article, bankruptcies 
 among respectable Chinese were few 
 and far between, and Chinese com- 
 mercial morality continued unchecked 
 at a comparatively high level. 
 
 When, however, the Bankruptcy Act 
 of 1861 became law in England, it occur- 
 red to Mr (now Sir) John Smale, then At- 
 torney General of Hongkonnr, to adapt 
 it to the peculiar needs of Hongkong. 
 He accordingly drafted an Ordinance 
 embodying the leading ideas of the Im- 
 perial Act with such alterations as he 
 thonL'^ht advisable. This draft was sub- 
 mitted to the Colonial Office, but for some 
 reason or other it was set aside. We are 
 not in a position to judge of the merits 
 of Mr Sraale's draft, but considering the 
 local experience he possessed, it is possi- 
 ble, if not probable, tbat his scheme 
 would have answered the requirements 
 of the Colony better than the Ordinance 
 soon after introduced. Most proba- 
 bly, however, it would have been better 
 to do nothing at all than to introduce 
 the Imperial Act wholesale as was done 
 subsequently. For some time the matter 
 rested, but in 1863 some Indian opium 
 merchants of Hongkong became de- 
 faulters to an enormous amount, on the 
 first notice of which fact a local Bank, 
 acting promptly and opportunely, took 
 
( 20 ) 
 
 possession of a large sum belonging to 
 the defaulters, and in spite of all the 
 efforts made by the other, less energetic, 
 creditors to have that amount included 
 in the assets of the insolvent estate, it 
 was found that the law of Hongkong-, as 
 it then stood, favoured the most im- 
 portune and most energetic creditor 
 at the expense of the others. Per- 
 sonally we are inclined to think that 
 this is precisely as in the nature of 
 thing^s it should be, but, however that 
 may be, the foreig-n community of 
 Hongkong was of a different opinion, 
 and as the China 31ail then put it " the 
 enormous opium fraud which is likely 
 to be for many years without a parallel 
 led to the want of a bankruptcy Ordin- 
 ance being- felt." The fact t:hat this 
 want was not sooner felt in Hongkong- 
 speaks volumes for the commercial 
 morality of Chinese merchants ol 
 Hongkong' previous to this time and 
 has a significant bearing on the de- 
 moralisation which subsequently en- 
 sued. 
 
 To proceed, however, with our in- 
 quiry, it was consequent upon this 
 assumed want of a bankruptcy Ordin- 
 ance, felt by the foreign merchants of 
 Hongkong in 1863, that the Authni-ities 
 at Downing Street entrusted a Mr Burke 
 Avith the preparation of a bankruptcy 
 Ordinance for Hongkong on the model 
 of the Imperial Act of 1861. This 
 Ordinance, which was facetiously known, 
 from the fee which the Colonial Office 
 paid for it, as the " Hundred Gui- 
 nea Ordinance," was characteristically 
 described by the Duke of New- 
 castle as having taken three weeks 
 to print. It was laid before the Legis- 
 lative Council in November 1863, when 
 the Governor referred to this new 
 bankruptcy Ordinance as one ''sent 
 from home," though neither he nor any 
 Member of Council, Mr. Smale perhaps ex- 
 cepted, appears to have had a clear concep- 
 tion of itsinappropriateness in view of the 
 peculiar circumstances of the Colony and 
 the mischief it was likely to work. Mr. 
 female, indeed, relieved his mind by 
 detailing the circumstances under which 
 lie had framed the bill which had been set 
 aside by the Downing Street Authorities, 
 but though he solemnly washed his hands 
 
 of the new Ordinance by saying he felt 
 relieved from the responsibility of an- 
 swering for the consequences that might 
 ensue from its adoption, he did not 
 oppose it or seek to modify it in any 
 material point. A communication from 
 Chief Justice Adams was read at the 
 same meeting, in which the absent Chief 
 Justice expressed his approval of the 
 tenor of Mr. Smale's rejected bill. 
 Nevertheless the Ordinance " sent from 
 home " prevailed, and a Committee was 
 appointed " to give the present Ordin- 
 ance a suitable form." But this Com- 
 mittee did not modify the Ordinance as 
 sent out in any essential. Thus it be- 
 came the law of the Colony and remained 
 so to this day, even when the evils 
 caused by it had become as glaring 
 in England as in Hongkong. 
 
 When these evils were sought to be 
 rectified in England, and the Act of 
 1869 was substituted for that of 1861, 
 it occurred to many in Hongkong to 
 apply the same remedy here. The re- 
 marks made, in 1878, on this subject by 
 the public press clearly show how 
 different the state of commercial morality 
 had become since the introduction of 
 bankruptcy law in the Colony. For the 
 same paper, the China Mail, which in 
 1863 stated that for a score of years the 
 Colony of Hongkong had been able to 
 get along- without bankruptcy law, and 
 which in 1863 with reference to the 
 fraud committed by Indian merchants 
 said that the want of a bankruptcy Or- 
 dinance was now being felt, referred in 
 1873 to a rumoured intention of the Go- 
 vernment to introduce in this Colony 
 the bankruptcy Act of 1869, in the 
 following words: — '^ Should the propo- 
 sition to make the Act of 1809 operative 
 here be carried out, it will go far to 
 check another form of fraudulent bank- 
 ruptcy in which Chinese and peo])le of 
 Indian nationality are disgracefully 
 adept. With many of these the bank- 
 ruptcy Court has degenerated into an 
 easily-availed-of means of unadulterated 
 swindling." These remarks clearly indi- 
 cate that in the opinion of the writer Chi- 
 nese commercial morality had degener- 
 ated in Hongkong through the influence 
 of bankruptcy law. However, much as 
 this law has to answer for, it was not the 
 
( 21 ) 
 
 only, and in our opinion, not the first 
 source ot the moral deg^eneracy which 
 invaded Chinese commerce in Hongkong-, 
 as the partnership law had as much if 
 not more to do with it. 
 
 In proceeding" now to follow up the 
 histor}^ of our local partnership law 
 from its fountain source in England to 
 its incorporation in the Hongkong Or- 
 dinance No, 7, of 1867, in the way in 
 which we sketched it out in the case of 
 our bankruptcy law, we have to go back 
 to the year 1837. 
 
 Practical ditficulties which constantly 
 occurred in England, in connection with 
 the aj)plication of partnership law, 
 especially also the trouble then involved 
 in legal proceedings against firms the 
 partners of which were numerous, and 
 the great difference between the then 
 existing English and Continental laws 
 of partnership, had aroused j)ubiic at- 
 tention in 1837 so much that the Board 
 of Trade was moved to take the matter I 
 up. With laudable caution, however, 
 the Board of Trade confined its action i 
 to the ordering of a formal inquiry into | 
 the state of the law of partnership. It ; 
 is remarkable also that in directing ! 
 this investigation the Board of Trade i 
 required s})ecial attention to be given to 
 the question '* whether it would be ex- 
 pedient to introduce a law authorizing 
 persons to become ]»artners in trade 
 with a limited responsibility similar to 
 the French law of j)artuersliij) en cum- 
 mnnditer The reason was that this 
 French partnership law, based on the 
 ])ublic registration of partners, and 
 exempting from responsibility dormant 
 partners, though receiving a fixed j)ro- 
 jiortion of the profits of a firm, was at 
 the time strongly recommended by the 
 public press for introduction in Eng- 
 land. The report of Mr Bellenden 
 Kerr, to whom the Board of Trade had 
 entrusted the conduct of the inquiry, 
 was however unfavourable to the in- 
 troduction of this Freuch s^'stem, though 
 it quoted, in favour of it, the opinions 
 of men like Lord Ashburton, Mr G. W. 
 Norman and the Hon. Francis Baring. 
 
 Herewith the matter rested for the 
 next thirteen years, though meanwhile 
 (in 1844) the principle of registration, 
 with the distinct aim to afford a check 
 
 against fraud, had been favourably re- 
 ported on by a Committee of the House 
 of Commons, and was accordingly em- 
 bodied in the Joint-stock C^ompanies 
 Act {7 & ^ Vict,, c. 1 10), which gave 
 power to all registered companies to sue 
 and to be sued in the name of their 
 officers. The other principle, also re- 
 presented by the French system, that 
 of limited responsibility, was, on the 
 motion of Mr Slaney, taken up by two 
 successive Committees of the House of 
 Commons in 1850 and 1801, and the 
 result was that a royal commission, aj)- 
 pointed in \^-)'2, was finally (in 1853) 
 instructed to inquire and report on the 
 question whether any and what altera- 
 tions and amendments should be made 
 in the law of partnership as regards the 
 subject of limited or unlimited respon- 
 sibility of partners. Co-operative in- 
 dustrial undertakings were then the rage 
 of the day. Whilst reporting, with 
 reference to large trading concerns, 
 possessed of marketable shares, that the 
 proposed limitation of res}>ousibility was 
 not culled for b}' any want of sufficient 
 capital for the requirements of trade, 
 anil that it would not operate benefici- 
 ally on the general trading interests of 
 the country as it w(juld encourage spe- 
 culation, the ro3'al commission reported 
 at the same t:me that it was desirable 
 to encourage smaller business under- 
 takings of a more limited character, 
 from which benefit to tlie humbler 
 classes of society might accrue, by 
 limiting the liability of those who em- 
 bark in them. A minority of the same 
 commission, however, headed by Mr 
 James Anderson Q.C., and Mr (since 
 Baron) Bramwell, dissented even from 
 the former of these two proj)i.sitions, anil 
 urged the experience of other countries 
 as well as the inconvenience that arose 
 from our law being difierent from that 
 of all other commercial countries. 
 
 These views were accordingly taken up 
 by Mr (now Sir) Robert P. Collier, who, 
 in 1854, moved a resolution in the House 
 of Commons to the efi'ect that "the law 
 of partnershij), which renders every 
 person, who, though not an ostensible 
 partner, shares the profits of a trading 
 concern, liable to the whole of its debts, 
 is unsatisfactory and should be so far 
 
( 32 ) 
 
 modified as to permit persons to contri- 
 bute to the capital of such concerns on 
 terms of sharing; their profits without 
 incurring liabihty beyond a limited 
 amount. The interests of co-operative 
 industrial societies being strong-lj re- 
 presented in the House, the above re- 
 solution was warmly supported on all 
 sides, and only withdrawn with the 
 understanding- that the Government 
 would introduce a bill in the sense of 
 that resolution. This was done in 1855, 
 but the bill had eventually to be with- 
 drawn, though another bill, limiting- 
 the liability of members of certain joint- 
 stock companies, was passed, and the 
 princij)le of it was henceforth generally 
 admitted as sound. It was not, however, 
 till ten years later, when the celebrated 
 case of Cox v. Hickmann was decided 
 by the House of Lords, in 1865, by the 
 application of this principle of limited 
 responsibility to questions of partnership, 
 that the subject of Sir Robert P. Col- 
 lier's motion came to be embodied in our 
 present Partnership Amendment Act 
 (28 and 29 Vict., c. 86) of 1865. 
 
 This Act, almost literally transcribed 
 in our local Ordinance 7 of 1867, lays 
 down that the advance of money on con- 
 tract to receive a share of profits does 
 not of itself constitute the lender a part- 
 ner and that the remuneration of agents 
 or servants, by share of profits, does not 
 of itself make them partners. The onl}^ 
 difference, a purely verbal one, between 
 our local Ordinance and the Imperial 
 Act consists in the former substituting-, 
 for the words " taking- the benefit of any 
 Act for the relief of insolvent debtors 
 or entering- into an arrangement to pay 
 his creditors less than twenty shillings 
 in the pound," the following- words, 
 " entering- into an arrang-ement to pay 
 his creditors less than the full amount of 
 their respective claims." Thus the Im- 
 perial Act, whose introduction had not 
 been called for by any necessities felt in 
 this Colony, and which had simply 
 arisen out of the peculiar wants felt in 
 England throug;h the extraordinary 
 spread of co-oj)erative industrial and 
 mercantile undertakings, was made 
 operative in Hongkong. That it would 
 be useful to the foreign commerce of 
 Hongkong; in bringing more capital 
 
 into the Colony, was of course foreseen 
 here, but we searched in vain among the 
 papers of the time for a trace of any 
 consideration given to the question how 
 this Act, in being made operative in 
 Hongkong, would affect Chinese trade 
 and Chinese commercial morality, by 
 exposing the Chinese to the temptation, 
 referred to in the report of the royal 
 commission, of indulging in reckless 
 speculation. Previous to the intro- 
 duction of this Act, the fact that 
 almost every local Chinese concern had 
 a considerable number of partners en 
 commandite, who were all responsible 
 for its liabilities, and who, being mostly 
 residents and settlers in the Colony, 
 could easily be got at in case of insol- 
 vency, gave special security to com- 
 mercial dealings between Chinese and 
 Foreigners and made the Chinese more 
 cautious. Yet itdoes not appear to have 
 occurred to any one at the time that the 
 necessary effect of this Ordinance, espe- 
 cially in connection with the provisions of 
 the preceding bankruptcy Ordinance, 
 would be, through limiting the responsi- 
 bility under which the Chinese previously 
 knew themselves, to encourage specula- 
 tion amongst the Chinese traders and 
 commandite partners, and to minimise 
 the security afforded to Foreigners in their 
 dealings with Chinese against such reck- 
 less speculation on the part of the latter. 
 What was even more unfortunate than 
 this oversight, was, however, the omis- 
 sion of an original feature in this li- 
 mited liability system, as borrowed 
 from the French code. In France 
 and on the Continent generally this 
 system is worked, and works well, on 
 the basis of compulsory official registra- 
 tion of all partners. In England, 
 and even as regards English and 
 other foreign merchants of Hongkong, 
 it was practically unnecessary to enforce 
 this registration in connection with that 
 Act, because as a matter of fact all En- 
 glish and foreign firms invariably ad- 
 vertise in the public papers the names 
 of their partners ar.d all changes occur- 
 ring in partnership connections. But 
 the omission of any provision for 
 advertizing or registering partners natu- 
 rally vitiated the good effects of the Act 
 so far as it was applied to a trading- 
 
( is ) 
 
 community like the Chinese here, who 
 do not advertise their partners but sys- 
 tematically conceal their existence. 
 
 When introducing^ the partnership 
 Ordinance in the Legislative Council of 
 Hong-kong-, in June 186?, the Gover- 
 nor, Sir Richard G. MacDonnell, said he 
 expected the Chief Justice to hold forth 
 thereupon, and added that it was " a 
 purely Imperial Ordinance," having 
 been transcribed from the Imperial Sta- 
 tute. It would, he expected, be of great 
 service to the Colony and would draw a 
 great addition of capital towards Hong- 
 kong, but as its provisions seemed 
 likely to affect the property of subjects 
 at home, he would suggest to add a 
 suspending cluuse and await its apj)roval 
 by the Home Authorities. The Chief Jus- 
 tice, Sir John Smale, thereu))on remarked 
 that he had thought over the Ordinance 
 the prpvisions of which certainly did 
 affect the rights and interests of proper- 
 ty at home, but that he tully apj)roved 
 of the measure and was glad to disrip- 
 point His Excellency by not holding 
 forth any further upon it. The Ordin- 
 ance was then passed without any fur- 
 ther discussion, and soon after became 
 law in the Colony. 
 
 When we consider that, as Sir Ri- 
 chard Graves MacDonnell a few months 
 afterwards (July 30, 1807) put it, *' the 
 commercial depression of the previous 
 year had been aggravated and the tra- 
 dal interests of the Colony were passing 
 through a crisis such as had never 
 before occurred in the history of Hong- 
 kong," we can well understand that 
 the non-official members of Council, and 
 the foreign community in general, were 
 so wrapt up in their own affairs and so 
 apprehensive of the good results to be 
 derived from the new Ordinance that 
 they omitted to consider the probable 
 etfect it would have on Chinese com- 
 mercial morality, unused as it was to 
 the tempting liberties of limited liability. 
 Had Sir Richard G. MacDoi-nell, how- 
 ever, foreseen it and accordingly im})osed 
 compulsory registration of partners on 
 Chinese trade, the old philanthropic bug- 
 bear of class legislation would no doubt 
 have thrown impediments in the way of a 
 measure which the peculiar circumstances 
 of this Colony actually demanded. 
 
 vir. 
 
 If our readers have followed the argu- 
 ment of our preceding inquiries, they 
 will have seen, that Chinese commercial 
 moralit}'^ and Chinese trade usages re- 
 mained, on the whole, unaffected by 
 transference to Hongkong and the con- 
 sequent contact with foreign laws, until 
 the time, 186i-1807, when the bank- 
 ruptcy and partnership Ordinances 
 opened the flood-gates of speculation 
 and fraudident declarations of bank- 
 ruj)tcy to such an extent, that, whilst in 
 1863 Chinese commerce was still dis- 
 tinguished by general probity and 
 soundness, and by an almost total ab- 
 sence of failures, the newly-opened 
 bankruptcy Court had, ten years later, 
 degenerated into "an easily-avaiied-of 
 means of unadulterated swindling." 
 Our readers will have further seen from 
 our detailed inquiry into the history of 
 those Ordinances,' that both of them 
 were simply the outgrowth of the pecu- 
 liar circumstances of England, and that 
 in both cases the Imperial Act was 
 introduced wholesale into this Colony 
 without any further consideration, but 
 that the Act would have a beneficial 
 effect on the foreign commerce of Hong- 
 kong. The idea that one man's food 
 might be another man's poison, and that 
 these well-meant pieces of English legis- 
 lation might, in view of the peculinr 
 circumstances of the Chinese commercial 
 community, be the source of serious mis- 
 chief in Hongkong, does not appear, as 
 far as our information goes, to have oc- 
 curred at the time to any one in autho- 
 rity. But the eyes of all were soon 
 opened to the serious character of the 
 evils which resulted from this commer- 
 cial legislation. In 1873 the whole 
 community, including native and foreign 
 merchants, the Bench and the Press, 
 were unanimous in deploring the sudden 
 demoralisation of Chinese commerce, and 
 began to cast about for remedies. 
 
 It is noteworthy that the Chinese 
 were the first to propose a remedy, and 
 that the remedy they proposed in 1873 
 (and 1874) is identically the same with 
 that which they now urge upon the Go- 
 vernment in 1882, viz., the compulsory 
 registration of partners in Chinese 
 Hongs. Under date of 10th March, 
 
( 21. ) 
 
 1873, the Editor of the iMna Mail 
 mentions the fact in the following- words : 
 — "A recommendation uiade tons — and 
 which, we^may add, comes from a native, 
 not a fbreiu;n, source — sug-g-ests that all 
 Chinese Hongs he required to register, 
 at the Registrar General's office, the full 
 names of their partners and employes." 
 The writer, who concurs in their sug- 
 g'estion, then continues to make some 
 remarks which deserve rei)eating as they, 
 no doubt, expressed the views held at 
 the time by at least a large section of 
 the foreign community. " Doubtless," 
 he says, " an Ordinance comjielling- this 
 action would be ' class legislation,' but 
 it would be so because the foreign com- 
 munity voluntarily furnish in several 
 different ways the information such an 
 Ordinance would be designed to obtain. 
 "We do not in reality see any very srrong 
 reason why foreign firms should not 
 equally register themselves, except that 
 all leg-islation not desig;ni*d to meet a 
 known want or to ])rovide against a 
 known abuse is objectionable. What- 
 ever be the view taken regarding for- 
 eig-ners, however, the desirability of 
 native registration cannot be g'ninsaid." 
 
 These words were penned, in March 
 1873, by Dr. Dennys, then Editor of the 
 China Mail. The Editor of the Daily 
 Press, Mr, Dulcken, also referred, in 
 October 1873, in writing his " Notes on 
 Commercial Law," to the general ob- 
 scurity existing as to the Chinese laws 
 and modes of partnership, in the follow- 
 ing* words : — " So much inconvenience 
 has resulted from this causn, that Mr 
 Smale, Chief Justice of Hongkong, re- 
 cently called attention to the subjpct, and 
 it is understood that an attempt will be 
 made in this Colony to introduce an Or- 
 dinance providing- for the registration of 
 the partners in Chinese firms, under 
 some system analog-ous to that which 
 exists in France at the present day." 
 
 Here we have therefore a remarkable 
 consensus of both the public Press and 
 the Bench reg-arding- the proposition 
 which first emanated from the Chinese 
 commuDity, to make the registration of 
 partners in Chinese firms compulsory. 
 As to the particular mode to be followed 
 in introducing this registration of part- 
 ners, the opinion of the foreig-n com- 
 
 munity would seem to have been divided 
 at the time, some advocating- the intro- 
 duction of a new reg-istratiou Ordinance, 
 whilst others thoug^ht all that was re- 
 quired was to extend the provisions of 
 the Companies' Ordinance (No. 1 of 
 1865) to all private firms having part- 
 ners. In referring to this subject the 
 China Mail of 12th December 1873 
 says, "' Europeans publish the names of 
 all res[)onsible parties in a House, as a 
 matter of course, while the Chinese keep 
 them as secret as possible; to meet the 
 latter fact, legislation of some sort seems 
 to be urgently required." 
 
 The Government also appears to have 
 shared the views of the community and 
 the Bench regarding the need for fresh 
 lenislation, for in January 1871 the 
 China 3fail announces, that " the pro- 
 visions of a proposed Ordinance for the 
 registration of partners in Chinese firms 
 are now under consideration," ' Cor- 
 res])on(lence with Downing- Street, as 
 usual, delayed matters and it was not 
 till the close of the year that the draft 
 of the ])roposed Ordinance was made 
 publicly known. 
 
 Meanwhile, however, the Chinese 
 Communit}^ bestirred themselves in the 
 matter, and the very same men who, in 
 18G6, objected to all interference, by 
 way of registration of householders and 
 servants, with Chinese affairs, and argued 
 their views before Sir Richard Mac- 
 Donnell on the occasion of the passing- 
 of the Victoria Registration Ordinance 
 (No. 7 of 1866), the incorrect Chinese 
 version of which had misled them, came 
 forward now, in autumn 1874, of their 
 own accord. They declared that they 
 had practically seen the good effects of 
 the principle of reg-istration, and ex- 
 ])ressed themselves convinced that the 
 registration of partners, if made com- 
 pulsory, would go a long way to check 
 the existiug" abuses of the bankruptcy 
 Ordinance. A most influentially-sig-ned. 
 petition of the whole Chinese mercantile 
 community was presented to the Go- 
 vernment. It described the lax state 
 of trade morality into which their coun- 
 trymen had drifted in Hong-kong, and 
 referred specially to the prevalence of 
 fraudulent declarations of bankruptcy, 
 to the trick of denying- partnership 
 
( 25 ) 
 
 liability and to the unrestrained spirit 
 of overtradinn- which had taken posses- 
 sion of Chinese traders. The prayer of 
 the petition was to the effect that the 
 Ciov'erninont should endeavour to mend 
 the mischief and to check the abuses 
 which existed and which were facilitated, 
 if not caused, by leg-ishition utterly in- 
 appropriate and foreig-n to Chinese ways 
 and thoughts, by requiring, under com- 
 ])ulsion of penalties, the public disclosure 
 of the names of all active partners* in 
 Chinese trading firms. This was, in- 
 deed, the only practical way the Chinese 
 could think of, in which somethings like 
 tiie restraint which the Chinese Govern- 
 ment systematically puts on trade, might 
 be secured on the part of the English 
 Government for a mercantile community 
 like that of the Chinese here, which 
 had, for centuries past, thriven and 
 flourished amid and by dint of similar 
 restraints. 
 
 Whether this sensible and manly ac- 
 tion of the Cliinese Community had any 
 eflect or not, we cannot say ; but under 
 date of 12th December 1874 the Govern- 
 ment, at last, published in the Gazette 
 a draft bill " for the better reg-istration 
 of householders and Chinese traders and 
 servants in the Colony." It was, in 
 fact, a new Chinese Reg-istration Ordin- 
 ance, intended to be substituted for 
 that of J 866. The following sections 
 of this draft bill refer more particularly 
 to our subject and we bespeak the at- 
 tention of our readers fur the.se im- 
 portant provisions, which we think 
 necessary to quote in full. 
 
 Section XXII. A register of all Chi- 
 nese shops, hong^, and other places of 
 business in the Colony shall be kept at 
 the Keg^istrar General's office in such 
 manner as the Registrar General shall 
 think most convenient for easy refer- 
 ence. 
 
 Section XXIIT. Within thirty days 
 after the commencement of this Ordin- 
 ance, the master or manager of every 
 Chinese shop, hong; or place of business 
 in the Colony shall furnish to the Re- 
 g-istrar General the following^ particulars 
 for entry in the register : — 
 
 (1) The name under which the busi- 
 ness is to be conducted. 
 
 (2) The locality, with the name of 
 
 I the street and number of the house 
 ' where the business is to be conducted. 
 
 (3) The full names and native places 
 ' of all partners in the business, with 
 
 their several places of residence in the 
 ! Colony and elsewhere. 
 
 (4) The full names and native place 
 ; of the manager, if any, of the business 
 I and his place of residence. 
 
 i Upon any new Chinese shop, hong,. 
 I or place of business being opened, and 
 j upon the re-opening of any shop, hong 
 or place of business by a new firm or 
 partnership, the master or manager of 
 the business shall, within thirty days 
 thereafter, furnish to the Registrar 
 General the foregoing particulars for 
 entr}' in the reo:ister. 
 
 Section XXIV. Upon any change 
 taking place in the partners or their 
 residence, or in the manager or his re- 
 sidence, or in any other of the foregoing 
 matters, the master or manager of the 
 business shall, within foiu-teen days 
 thereafter, furnish the Registrar Ge- 
 neral with full particulars of such change 
 for entry in the register. 
 
 Section XXVI. The register shall be 
 open for inspection to the public on pay- 
 ment of the fees specified in the second 
 Schedule. 
 
 The fees referred to are as follow : — 
 
 Registration fee for shop, hong, or 
 
 place of business, ^'3 (not to be paid 
 
 if the registered householder is sole 
 
 owner of the business.) 
 
 Fees for inspection of Trade Register, 
 
 to be paid : — 
 By any person desiring to see the 
 entry relating to his own place of 
 business, — nil. 
 By any person desiring to see the 
 entry relating to one particular 
 place of business, — $\. 
 By any person desiring to make a 
 
 general search, — ^'5. 
 This new-born babe of the Colonial 
 Legislature, though long looked for and 
 promising as it appeared, expired, how- 
 ever, contrary to all expectations, almost 
 as soon as it had seen the light of day. 
 The new draft bill, though published in 
 the Government Gazette, was not even 
 brought before the Legislative Council for 
 public discussion, but the whole subject 
 was quietly buried by the Government out 
 
( '26 ) 
 
 of sight, as if they had been ashamed of 
 it, for no other reason, as far as we 
 could learn, but that a local barrister 
 addressed a smartly-written, scathing- 
 letter to the Colonial Secretary, in 
 which he, whilst admitting the existence 
 of the evil with which the proposed 
 Ordinance was intended to co[)e, drove 
 the proverbial coach-and-four through 
 the provisions of this bill as pubUshed 
 in the Gazette, and pointed out that 
 the root ot the evil was to be found in 
 the mischievous character of our Bank- 
 ruptcy Ordinance and not in the absence 
 of registration enactments. 
 
 The letter, which had such a remarkable 
 eflect in putting almost instantaneously 
 the extinguisher on the well-meant pro- 
 posal of the Chinese community to make 
 registration of partners in Chinese firms 
 compulsory, deserves the patient atten- 
 tion of our readers, and we give it there- 
 fore a careful anal3'^sis. 
 
 The letter was published in pamphlet 
 form and bears the following title, 
 " Letter to tlie Hon. J. Gardiner Austin, 
 Colonial Secretary, upon the subject of 
 the Victoria Registration Ordinance, 
 1874." It is dated Hongkong, Decem- 
 ber 1874, and signed by Thos, C. Hayllar. 
 The author, who has since then had the 
 honour of Q.C. conferred on him, ad- 
 dresses here the Colonial Secretary " as 
 a practising lawyer, having a profes- 
 sional interest in the subject." Unfor- 
 tunately, however, he appears to have 
 been unable to rid his mind of the 
 professional notion that, having taken 
 one side regarding the subject, it was 
 now his business only to present the 
 matter from that point of view, i.e. to say 
 the worst he could say of the other side 
 of the question, and to leave it to the 
 advocates of that side to make the 
 best they could of whatever good points 
 the other side of the question might 
 really have. As the Chinese had no 
 practising lawyer to speak up for them, 
 and no one on the side of the general 
 public took up the cudgels for the draft 
 Ordinance published in the Gazette, 
 the Government naturally concluded 
 that the Colony was not yet ripe for the 
 proposed legislation, and Mr Hayllar 
 walked over the course in unchallenged 
 triumph. 
 
 That this pamphlet does take a one- 
 sided view^ of the question then at issue, 
 appears from its own statements, but at 
 the same time we give the author full 
 credit for bis honest conviction that his 
 view of the case was the right one, a 
 conviction which he subsequently also 
 (in 1878) displayed in the Legislative 
 Council when he advocated reform in 
 the direction of the bankruptcy law only. 
 One quotation will suffice to show that 
 the point of view from which Mr 
 Hayllar approached his sulyect was 
 the foregone conclusion that, as the evil 
 really existing had chiefly been caused 
 by our bankruptcy law, the remedy, 
 required by the state of affairs under 
 which Chinese trade was apparently suf- 
 fering, consisted in an amendment of the 
 bankruptcy law and not in the registra- 
 tion of partners in Chinese firms. " Now, 
 it may sound somewhat strange," Mr 
 Hayllar writes (p. 15), " but I think it 
 might be easily shown that if there be ^^ 
 any factor among others likely to have 
 been specially active in producing this 
 state of things, it should be sought for 
 in a measure of English legislation. I 
 allude to the application of the bank- 
 ruptcy laws to Chinese traders. Their 
 trade had not reached a stage of deve- 
 lopment suitable to such application, 
 and these laws thus proved mischievous, 
 not only directly as regards the interests 
 of creditors, but indirectly by offering 
 temptations to over-speculation. If any 
 legislative remedy were then required, 
 it would perhaps be better to seek it 
 rather in the direction of some modifica- 
 tion of these laws than in this (Regis- 
 tration) Bill." 
 
 It seems to us perfectly clear from 
 these words of Mr Hayllar, that he had 
 before his mind only one alternative, viz. 
 registration or bankruptcy law amend- 
 ment, and that he took up the discussion 
 of the value of the Registration Bill 
 precisely as if he held a retainer against 
 it in the case of Bankruptcy Amendment 
 versus Registration, Ordinance, dealing 
 with it, not as an impartial jud^e 
 summing up and weighing the evi- 
 dence of both sides, but as a prejudiced 
 advocate engaged in demoHshing 
 one side of the question. Let any 
 I one impartially but carefully read 
 
( 27 ) 
 
 through this extremely well written 
 pamphlet, and he will find many more 
 instances proving the truth of our state- 
 ment as regards the one-sidedness of 
 this only too successful onslaught on the 
 Victoria Reg-istration Ordinance of 18?4. 
 
 Mr Hayllar divides his subject under 
 three heads. His first point is that the 
 Legislature, before passing the Ordin- 
 ance concerning- the registration of 
 partners in Chinese firms, should be 
 satisfied "■ that sufficient need for it has 
 been made manifest." 
 
 This is the weakest portion of the 
 whole pamphlet, though this section 
 refers to a really most essential feature 
 of the question at issue. But let the 
 reader observe how neatly the point of 
 the (juestion is blunted for the special 
 purpose of the advocate. What was 
 obviously essential for the Legislature, 
 in the first instance, was to be satisfied 
 whether or not any need existed to 
 legislate in the direction proposed. But 
 instead of saying this, the adroit ad- 
 vocate puts it that the first question is 
 whether any such need had been " made 
 manifest." Thereby he turned the ques- 
 tion, avoided the difficulty which would 
 have told against his views and convic- 
 tions, and gave the matter an aspect 
 favourable to his side. In other words, 
 he tacitly and covertly throws the onus 
 prohandi on the other side which was 
 represented, according to his statement, 
 by a Chinese petition. Very deftly 
 also he dwells but briefly on this 
 first question and dismisses the 
 whole subject in three short sen- 
 tences, in which he says (p. 2), that 
 certain influential Chinese presented a 
 petition the representations of which 
 refer to " the lax state of trnde morality 
 into which their countrymen have 
 drifted " ; that he has perused the jjcti- 
 tion but scarcely thinks that the peti- 
 tioners have either made out a case for 
 the exceptional legislation they demand 
 or that they would have asked tor it 
 bad they fully understood its probable 
 effects; and finally that he does not 
 think that, even if an exceptional remedy 
 is • necessary, the right one has been 
 adopted. 
 
 It is manifest that in these words we 
 hear but the special pleader arg'uing for 
 
 his own side and not the impartial judge 
 or onlooker. The question before him 
 was not whether the Chinese petitioners 
 had been able to make out a case for 
 the draft Ordinance published in the 
 Gazette, which was prepared and con- 
 sidered by the Government long before 
 the Chinese drafted or presented their 
 petition. The question was altogether 
 not a purely Chinese question^ but one 
 concerning the whole mercantile com- 
 munity, foreign merchants and bankers 
 as well as Cuinese hongs. Had the 
 question been taken up from this point 
 of view, the need for legislation would 
 have asserted itself. 
 
 There is, however, yet another sub- 
 tlety of argument underlying this portion 
 of the pamphlet, and indeed tbe whole 
 document, and it is one which tended to 
 prejudice, against the proposed legisla- 
 tion, the mind of every careless or 
 superficial reader. The first of the 
 above-quoted three sentences slips in 
 the assumption, though it does not 
 actually express it here but later on, that 
 the chief concern of that Chinese petition 
 and of the legislation assumed to be 
 based thereon, was " the lax state of 
 trade ntorality " (p. 4) and " the unre- 
 strained spirit of over-trading " (p. 10). 
 Indeed the whole pamphlet tacitly 
 imbues the reader's mind with this most 
 unwarranted notion that the proposed 
 Ordinance was intended to cope with 
 and to improve the depraved condition 
 of Chinese commercial morality. By 
 this subtlety the author placed the 
 whole question on a false and rotten 
 foundation, being' one which was laid 
 down with the, no doubt unconscious, 
 intent to demolish it again with a 
 flourish calculated to blind the eyes of 
 the reader with the dust of its downfall 
 and to prejudice his mind against any 
 legislation in the direction proposed, for 
 any attempt to improve public morals 
 by registration or legislation would 
 indeed be manifestly absurd. But thtit 
 we are justified in the foregoing- asser- 
 tion regurding- this subtle tendency of 
 the pamphlet, to make out that the 
 proposed Ordinance had for its main 
 object an improvement of Chinese mora- 
 lity, the following quotation, being; the 
 concluding sentences of Mr Hayllar's 
 
(28 ) 
 
 pamphlet, will sufficiently show : " No 
 statute," he writes (p. 15), " can form a 
 substitute for business prudence and 
 foresiglit on the one side, or on the 
 other do much that is effectual to stem 
 the current of fraudulent ingenuity. 
 But it is only a truism to say, that 
 legislation may do a great deal to 
 produce confusion and unforeseen mis- 
 chiefs. Had I not, after consideration, 
 seen too much reason to fear that such 
 would be the probable result of the 
 present Bill, if passed into law, I 
 would not have troubled you with this 
 letter, which has indeed reached an 
 undue length." 
 
 The second portion of Mr Hayllar's 
 argument against partnership registra- 
 tion is formulated in these words, that 
 the Legislature should first be amply 
 justified that there is a reasonable pros- 
 pect of the proposed law fulfilling its 
 object. 
 
 Under this head he argues (p. 6), 
 that "■ if the evidence of the re- 
 gister is meant to be only prima 
 facie, i.e. susceptible of contradiction, 
 the main object of registration must 
 fail," and that on the other hand, 
 " to make such evidence conclusive 
 is to place it within the power of 
 any ' master or manager' fraudulently 
 or mistakenly to register persons as 
 partners without giving them any op- 
 portunity of being heard in their de- 
 fence." This raises a difficulty, which 
 the pamphlet designates " an enormous 
 injustice," but which might easily and 
 would naturally be obviated by the Re- 
 gistrar General communicating with the 
 partners registered in their absence to 
 test the value of the information given. 
 Mr Hayllar next points out an alleged 
 "inherent weakness" of the scheme 
 (p. 7), consisting in this that " in carry- 
 ing it out, you have to rely on the in- 
 tegrity of some at least of the very 
 persons against whose assumed lack of 
 integrity the Ordinance is directed," 
 and that " in other words, you must 
 needs assume that persons will faithfully 
 register themselves or allow themselves 
 to be faithfully registered, who, if not 
 so registered, might hereafter fraudu- 
 lently seek to evade their liabilities." 
 There is no reason Avhy the Registrar 
 
 General could not meet this objection 
 by inquiries instituted by him regarding 
 all details registered in his books. 
 Finally Mr Hayllar suggests (p. 8) that, 
 as the register must be subject to per- 
 petual changes impairing the trust- 
 worthiness of the record and requiring 
 frequent consultation, registration fails 
 to fulfil its object. This is, however, 
 an objection which obviously applies to 
 all registration whatsoever. 
 
 The main strength of Mr Hayllar's 
 argumentation is devoted to the dis- 
 cussion of his third point, viz. that the 
 Legislature should first be amply satis- 
 fied that the juoposed law does not in 
 itself tend to originate mischiefs. Mr 
 Hayllar here labours to show that both 
 in its application to the law of partner- 
 ship and by its criminal aspect the pro- 
 posed Ordinance is likely to produce 
 serious mischief. 
 
 As to the mischief which Mr Hayllar 
 sees lurking in the a})plication of the 
 proposed Ordinance to the law of part- 
 nership, he manages to make mischief 
 visible only by quietly ignoring here 
 the fact that the term " partners " 
 stands sufficiently defined, for all 
 practical pnri)0ses, by our Local Part- 
 nership Ordinance No. 7 of 18G7. But 
 the author of this pamphlet assumes . 
 that the term " partners, ' as used 
 in the proposed Ordinance, is doubt- 
 ful ; and he raises the question 
 (p. 9), whether the Colonial Courts, in 
 construing the word '' })artners " should 
 assume that it is rigidly used in its 
 English sense, or, in view of the com- 
 plication of Chinese partnership forms, 
 in accordance with the reasonable rules 
 laid down by the Privy Council in a 
 decision given in an apjieal case (Mol- 
 lers and March v. the Courts of Awards, 
 Law Reports, 4, Privy Council, 433) 
 which arose in India in 1872, and in 
 which their Lordships ruled that, in the 
 absence of any law or well-established 
 custom existing in India on the subject, 
 English law may properly be resorted 
 to in mercantile affairs for principles 
 and rules to guide the Courts, but that, 
 in applying them, the usages of trade 
 and habits of business of the people of 
 India, so far as they may be peculiar, 
 and dirter from those of England, ought 
 
( 29 ) 
 
 to be borne in mind." We must confess 
 we do not see the relevancy of this quo- 
 tation from the Privy Council decision, 
 which makes the distinct reservation of 
 " the absence of any law." The uncer- 
 tainty of which Mr Hayllar complains, 
 might have been settled by the proposed 
 law, and might have been settled in 
 harmony with any " well-established 
 custom" existing among the Chinese 
 who unanimously petitioned for the 
 passing of such a law. But instead of 
 considering that in the case before him 
 the natives themselves, after having had 
 for eight years practical exprrience of 
 English registration of householders, 
 applied of their own free will for regis- 
 tration of partners, and that the indeed 
 peculiar status and privileges of Chinese 
 dormant or commandite partnerships are 
 already defined and guaranteed by Or- 
 dinance 7 of 1867, Mr Hayllar needless- 
 ly argues further (p. 10) that "compel- 
 ling these who are drawing profits from 
 a firm, but who would not but for pub- 
 lication of their names be ranked as 
 partners, to register themselves," would, 
 by reason of the general subdivision of 
 shares in Chinese firms, be " incautious 
 registration" (p. 11), and "obviously 
 lead to immense injustice." 
 
 As to the penal aspect of the proposed 
 Ordinance and the alleged mischief aris- 
 ing from it, Mr Hayllar argues (p. 12), 
 that in the case of the proposed Ordin- 
 ance " for the purpose of detecting and 
 punishing a small fraudulent miuonty, 
 it is intended to bring the whole body 
 of Chinese traders within the grasp of 
 the Criminal Law for conduct which in 
 itself is neither criminal nor vicious ;" 
 that the Ordinance further lies open to 
 the charge of great inequality in its pos- 
 sible pressure upon poor and rich ; that 
 (p. 13) it is compelled to resort to the 
 harsh expedient of vicarious responsibili- 
 ty by enacting that " upon non-payment 
 of the fine inflicted, it may be recovered 
 by distress and sale of the goods and 
 chattels of the partnership as well as o. 
 the person convicted." These objec- 
 tions, whatever value they may have, 
 are such as might have been easily re- 
 medied by some modification of the 
 proposed Ordinance, and do not concern 
 the essential principle in question. As 
 
 regards the further objection (p. 13) 
 that the Ordinance opens a new door to 
 extortion by the lower Government 
 employes, and that an issue ot " partner- 
 ship or not" is scarcely a fit one for 
 trial in a Police Court, we leave the 
 cogency of this argument to our readers 
 to judge of. 
 
 But, although we have thus shown 
 up many weak points and a general 
 ohe-sidedness pervading the whole line 
 of argument embodied in this letter, we 
 must confess that on a first perusal of 
 this captivating plea we were fairly 
 taken in and in a maze, and it was only 
 after studying the history of the whole 
 movement in which it originated and 
 after scrutinizing its detailed allegations, 
 that we came to see the weakness 
 of this, ex parte statement of the 
 case. We specially mention this to 
 warn our readers against the mislead- 
 ing character of the pamphlet. For 
 the special plea against registration 
 of partners, which this pamphlet con- 
 tains, is so neatly concealed and its 
 open argumentation so plausibly con- 
 ducted and so deftly worded, with a truly 
 artistic conception of ef!ect, whilst the 
 author secretly poses in the attitude of 
 a practising lawyer giving his opinion 
 gratis to a benighted Colonial Secretiiry 
 for the benefit of an ignorant commu- 
 nit}"^, that it is not to be wondered at 
 that he succeeded to his heart's content. 
 Neither the public press nor the Cham- 
 ber of Commerce cared to enter the lists 
 against such an able advocate who, in 
 his admission of the necessity of legisla- 
 tion in the direction of the bankruptcy 
 law, anyhow had much truth on his side, 
 and thereupon the Government quietly 
 withdrew the Bill. 
 
 The Government having, early in 
 1875, abandoned all intention to move 
 any further for the present in the direc- 
 tion of making the registration of part- 
 ners in Chinese firms compulsory, it was 
 generally supposed that an attempt 
 would be made by the Government to 
 counteract the evils regarding the seri- 
 ousness of which the general mercantile 
 public was unanimous, by modifying, in 
 some form or other, the existing bank- 
 ruptcy law. But nothing was done in 
 the matter by the Government. The 
 
( 30 ) 
 
 evils which had attracted public atten- 
 tion for many years past were allowed 
 free course and became more and more 
 rampant from year to year, manifesting- 
 themselves in a growing taste for over- 
 trading", in a gradually widening sphere 
 of speculations in quicksilver, opium 
 and house property, in a mania for 
 gambling in public lotteries, and finally 
 in an annually increasing crop of bank- 
 ruptcies which were evidently fraudulent 
 but arranged with such a knowledge of 
 the defects of our bankruptcy law and 
 of the loopholes left by our Supreme 
 Court organization, that the fraud, 
 though patent, could not be brought 
 home to the perpetrators of it. 
 
 At last, aroused in 1877 to a sense of 
 the impending danger by tlie general 
 want of security and coufidenae which 
 now pervaded all dealings with Chinese 
 firms, the Hongkong General Chamber 
 of Commerce moved in the matter. In 
 a letter addressed to the Government 
 under date of 2nd November 1877, the 
 Chairman, Mr W. Keswick, with charac- 
 teristic precision, states the grievance in 
 a few words, and sweeps away at the 
 same time the arguments which Mr 
 Hay liar had elaborated against the pro- 
 posed remedy by way of registration of 
 partners in Chinese firms. Without 
 entering into any arguments, Mr Kes- 
 wick here briefly states, in a succinct 
 business-like manner, and in the name 
 of the Committee of the Chamber, that 
 the registration of the members of Chi- 
 nese firms trading- in Hongkong is a 
 want which has long- been felt by the 
 European mercantile community, that if 
 this want were supplied, general security 
 and confidence would result therefrom, 
 and that in the opinion of the (Jommittee 
 there do not appear to be any valid ob- 
 jections to the Ordinance being pro- 
 mulgated compelling- all Chinese firms 
 to register the names of their partners. 
 The weight which should have attached, 
 in view of the whole history of this 
 movement, to this deliberate expression 
 of opinion on the part of a Chamber of 
 Commerce composed of experienced 
 merchants and bankers, was utterly dis- 
 regarded by the Government, then un- 
 happily administered by Mr Pope Hen- 
 nessy, who took no notice of this weighty 
 
 suggestion nor of the note of warning it 
 contained. I'he whole subject was ac- 
 cordingly shelved for another year. 
 
 Under date of 26th August 1878, the 
 Chamber of Commerce moved once more 
 in the matter and pressed for a decision 
 on the suggestion, made by the Cham- 
 ber regarding- the registration of part- 
 ners in Chinese firms. The official reply 
 which was thereby elicited simply 
 amounts to the announcement of the 
 previous decision of the Governor to 
 leave the whole question shelved for the 
 present. This letter, dated 28th August 
 1878, contains however two noteworthy 
 statements. In the first instance it con- 
 tains the allegation — whether true or 
 false, we cannot tell — that " Sir Arthur 
 Kennedy had given the matter careful 
 consideration, but thought it would be 
 very inexpedient to carry out such re- 
 gistration." In the second instance, it 
 was stated in this official letter, that 
 " Governor Pope Hennessy is disposed 
 to take the same view of the matter," 
 but that he wishes first of all to 
 have " some further opportunity of 
 studying the details of Chinese trade in 
 the Colony." As the Governor was 
 then already possessed of the fixed idea 
 that English commerce in Hongkong- 
 was doomed to be driven out of the 
 field by Chinese enterprise, an idea 
 which he thenceforth embodied in 
 almost every speech he delivered in 
 public, as in his two Blue Book Reports 
 on the trade of the Colony, the prob- 
 ability is that he meant simply to give 
 a hint to the Chamber of Commerce 
 that their advice was wasted on hira and 
 that the question of registration of Chi- 
 nese partnerships must remain shelved 
 during- his term of administration. The 
 Governor was, indeed, ever since that 
 time as pertinacious in his perorations 
 and vaticinations against the English 
 commerce of the Colony, as Cato was 
 in the Senate of Rome who closed every 
 speech of his with the standing refrain, 
 caeterum censeo Curthaginem esse de- 
 lendam. Substitute the words " Eng- 
 lish commerce of Hongkong" for the 
 word CartJiago and you have the burden 
 of every public speech alluding to com- 
 mercial afiairs, of the redoubtable Sir 
 John Pope Hennessy, who even in his 
 
( 31 ) 
 
 histrionic attitude on such occasions 
 imitated the exact way in which the 
 famous Roman orator put his hand 
 under his g-own in the direction of his 
 heart to g'ive tragic force and cha- 
 racter to his denunciations- 
 Nothing daunted by this rebuff, the 
 Committee of the Chamber of Commerce 
 returned to the charge once more in 
 18?8, being stimulated also by the 
 general wish of the membei-s of the 
 Chamber, expressed at the annual meet- 
 ing. A letter was accordingly addressed 
 to the Government under date of 23rd 
 September 1878, on the previous subject. 
 But a sligh^t concession was now made 
 to the known antipathy of the Governor 
 by suggesting that the names of the 
 members of Chinese hongs in the 
 Colony should at least be published — 
 as those of foreign firms are published 
 — if not registered. At the same time 
 this letter of the Chamber of Commerce 
 plainly though briefly intimates that 
 the interests of the mercantile public 
 generally are involved in this question, 
 and that a feeling of security would be 
 the result if the desired information were 
 given by " publication or registration " 
 of the names of partners in Chinese 
 hongs. In this action the Chamber of 
 Commerce was manifestly prompted by 
 a desire to avert the catastrophe which 
 every clear-headed business man then 
 saw impending over the local trade of 
 the Chinese, inflated as it was with the 
 passion of reckless sj)eculation and 
 general gambling. But, unfortunately 
 for the Chinese, the Governor fancied 
 that the Chamber of Commerce, totter- 
 ing on its last leg as he supposed, was 
 by this action vainly attempting to 
 interfere with Chinese modes of partner- 
 ship in order to avert the catastrophe 
 which he had persuaded himself was 
 impending over the trade of all English 
 and other foreign merchants of Hong- 
 kong. Consequently his mythical 
 " studies in the details of Chinese trade" 
 amounted to no more than that he, with 
 fatal perverseness, lent all his power 
 and influence, oflicially and socially, to 
 discountenance every enterprise of the 
 doomed British trader to whom he loved 
 to ascribe anti-Chinese procliviti* s which 
 had no existence, whilst he used the 
 
 same means to encou'-age and bolster 
 up, publicly and privately, the leading 
 Chinese gamblers in house-property 
 whom it pleased him to adorn with the 
 enigmatic title of " leading Chinese 
 bankers and others." 
 
 Nevertheless, public feeling, both 
 among the Chinese and the Luropean 
 communities, was too uneasy in view 
 of the accumulating evils of Chinese 
 overtrading aud collateral decay of 
 Chinese commercial morality, to be 
 blinded by these tirades of the Go- 
 vernor. At a meeting of the Legisla- 
 tive Council, on 11th November 1878, 
 the feelings of the European community, 
 found some expression. Mr Ilayllar, 
 then the Governor's own proteg^, found 
 himself im])elled to take the liberty to 
 thwart the Governor's roseate policy 
 regarding Chinese affairs, and boldly 
 supplemented at last the negative posi- 
 tion he had in 1874 taken in his 
 pamj)hlet by a positive statement to 
 the effect that " some reform is neces- 
 sary in the bankruj)tcy Ordinance." 
 He proposed accordingly that " there 
 should be some special inquiry into the 
 circumstances of the Colony and how 
 far the English law (of bankrui)tcy) is 
 adapted to them." The words which 
 Mr Hayllar then added in support of 
 his recommendation are well worth 
 quoting. " The bankruptcy laws," Mr 
 Ilayllar said, " are totally unfitted to 
 meet the case of the Chinese. They 
 have nothing of the kind themselves. 
 It is quite a revelation to them. 
 Chinese traders who fall in'o diffi- 
 culties never think of going into bank- 
 ruptcy (in China) J they wind up their 
 estates themselves, and (in Hongkong) 
 very few respectable traders take the 
 trouble to prove in bankruptcies at all. 
 The consequence is that the estates that 
 have come into our Courts have really 
 been estates in which there has been 
 nothing or very little to administer and 
 where it has been for the ])urpose of 
 something very like fraud. When 
 persons intend to evade their debts, 
 they very carefully remove everything 
 they have from this Colony, and when 
 the estate comes to be wound up, 
 although they have a great deal of 
 property in their own country, the 
 
( 32 ) 
 
 Court cannot touch it." The Acting; 
 Chief Justice, Mr Snowden, supported 
 Mr Ilajllar's proposition by saying-, 
 that " the bankrujitt^y Ordinance was 
 entirely unsuited to the requirements of 
 the Colony," and he proposed, " that 
 His Excellency should suspend the 
 Ordinance until one more suited to the 
 requirements of the Colony could be 
 introduced." 
 
 But, although here the representa- 
 tives of both the Bench and the Bar 
 publicly pointed out and attacked, from 
 but another point cVappui, the same evil 
 which formerly the Press and lately the 
 Chamber of Commerce had resolutely 
 attacked, the Governor was so full of his 
 own conception of the mercantile situa- 
 tion and so triumphant in his pi'ophetic 
 vision of the speedy downfall of all 
 Eug'lish commerce in Hongkong, that 
 he turned a deaf ear to these accumulat- 
 ing- voices of warning-. The proposed 
 inquiry into the situation of affairs was 
 not held, and the proposed suspension 
 of the bankruptcy Ordinance was scouted 
 by him as. madness. Thus it came about 
 that things were left to take their 
 course, and the evils which existed had 
 to work out their own cure which they 
 did with a veng-eance and which they 
 will effect, in time, through the present 
 ruin which has overtaken the local com- 
 merce of the Chinese. 
 
 Before this happened, however, the 
 Governor received yet one more warn- 
 ing-. The Report of the Commissioners, 
 appointed by Sir John Pope Hennessy, 
 through an order from Downing- Street, 
 to inquire into certain offices of the 
 Supreme Court, was presented to him 
 in 1879, pervaded by allusions to 
 the depraved state of Chinese com- 
 mercial morality. We have above 
 quoted the words of one of the Com- 
 missioners, a leading- Eng-lish banker, 
 referring- to the havoc the bank- 
 ruptcy laws had caused in Chinese 
 morals. Speaking- of the state of things 
 in 1879, the same Commissioner saj'S 
 (Evidence, p. 18), " Things are very 
 bad. If rice falls twenty cents a picul, 
 they (the Chinese) either compound witli 
 their creditors or go throug-h the Court. 
 Certainly, since we came to Hong-kong-, 
 things have not been so bad as they arc 
 
 now. They fthe Chinese) are just 
 beginning- to realize that they can slip 
 through (the Bankruptcy Court)." 
 
 This last warning-, however, our in- 
 fatuated Governor left likewise un- 
 heeded, and the whole question of reform, 
 whether in the direction of registration 
 of partners or in the direction of amen- 
 ding the bankruptcy Ordinance, was 
 sunk by the Government in intentional 
 oblivion and studiously avoided for 
 nearly two years. At last, in June 
 1881, the tragic irony of fate prompted 
 the Governor, within a few months 
 before the crash commenced with the 
 downfall of credit and solvency in 
 Chinese commerce, to bestride the stag-e 
 of the Legislative Council with the 
 following- peroration, to which the lie 
 has now been g-iveu — since the curtain 
 has dropped over the political tragedian 
 retiring amid the hisses of the audience 
 — by the facts of the present position 
 of Chinese commerce, as well as by the 
 petition lately presented by the Chinese 
 mercantile comunity. 
 
 " I also," said Sir J. Pope Hennessy 
 at the Legislative Council meeting- of 
 3rd June, 1881, " had the opportunity of 
 consulting the Chinese on another pro- 
 posal. There came to me a resolution 
 from the Chamber of Commerce, in 
 which the Chamber proposed that the 
 Government should adopt a system of 
 registering all the sleeping partners in 
 Chinese houses of business. They 
 showed that it was exceedingly difficult 
 to find out who had money in a Chinese 
 trading concern, and recommended that 
 the natives should be compelled by law, 
 and under adequate penalties, to register 
 every person who had a share, no matter 
 how small, in a Chinese business. The 
 Chamber of Commerce added that th^y 
 had no desire to apply this system to 
 the European houses, but wished it to 
 be confined solely to the Chinese. Act- 
 ing on my iisual principle, I mentioned 
 it to some of the leading- Chinese ban- 
 kers and othei's, but they pointed out 
 that the Chinese system of trading 
 would be completely upset by it — that 
 there is an extraordinary net-work of 
 investments in this Colony, as in any 
 other community of Chinese, and that 
 it would interfere seriouslv with Chi- 
 
( 33 ) 
 
 nese trade, aud, in fact-, tend to prevent 
 the influx ot Chinese into the Colony. 
 Accordingly, I declined to accede to the 
 proposal of the Chamber of Commerce." 
 At the time when the Governor 
 delivered this oration, the principal aim 
 of which was to make people here and 
 abroad believe that the Chinese com- 
 merce of lIonp:kong' was in the most 
 healthy and flourishing- condition and 
 that the notorious gambling in house- 
 property was no g-ambling at all, it was 
 really immaterial whether or not the 
 Governor favoured the remedy, proposed 
 in previous years, in the form of regis- 
 tration of partners. It was already too 
 late for any merely remedial measures. 
 The Governor left the Colony in March 
 188:3, when the crash, which the sup- 
 port he lent to the leading Chinese 
 gamblers had imperfectly served to stave 
 ofl for a while, had already commenced. 
 Tlie ruin is now complete, and the only 
 tjuestion for the community and the 
 uovernment of Hongkong now is, in 
 this respect, lo draw the lessons of the 
 past whilst looking hopefully to the 
 future. 
 
 viir. 
 
 In bringing our researches into the 
 commercial law affecting the Chinese, 
 and especially into the partnership re- 
 gistration and bankruptcy laws of 
 llongkong to a conclusion, we may state 
 that we do not claim to have brought 
 to light anything fresh or new to those 
 who have had practical experience of 
 the course which the Chinese commerce 
 of Hongkong has run during the last 
 fifteen or twenty years. Nevertheless 
 we think that the above sketch of the 
 various features of Chinese commerce, 
 from the point of view of the com- 
 mercial law, brings together many 
 ])oint.s frequentl}'' overlooked. Even 
 those of our readers who by personal 
 experience are well acquainted with the 
 subject which we took some ])ains to in- 
 vestigate in detail, will have had their 
 memory refreshed on sundry points and I 
 their mental grasp of the whole situa- \ 
 tion of affairs streno-thened by the i 
 above systematic combination of their \ 
 own scattered experiences. But what- 
 ever be the merits or demerits of our 
 
 treatment of the vast and important 
 subject which we have been studying, 
 we believe to have established to the 
 satisfaction of our readers this much, 
 that there are certain historical facts in 
 connection with the development of 
 Chinese trade in Hongkong, which, in- 
 controvertible as facts, have a peculiar 
 ! significance in view of the present com- 
 mercial crisis in which our local Chinese 
 trade is now struggling. We will 
 briefly recapitulate them. 
 
 It is, in the first instance, historically 
 certain, that the Chinese commerce of 
 Hongkong prospered and flourished, 
 di.ring tiie first twenty years of the 
 history of our Colony, without any 
 bankruptcy law whatsoever. Next, it is 
 equally certain that during these twenty 
 years, whilst the Chinese here knew 
 neither bankruptcy law nor exemption 
 of commandite partners from full liabi- 
 lity, Chinese trade and Chinese com- 
 mercial morality preserved in Hongkong 
 all the leading features which charac-. 
 terize trade as conducted in the Empire 
 of China, where it is placed tmder a 
 system of severe restraints and where 
 commercial morality is kept at a high 
 level by laws about the really deterrent 
 character of which there can be no 
 doubt. Further, although post hoc is 
 not necessarily propter hoc, it is an 
 indisputable fact, that the time when 
 the Bankruptcy Ordinance (1864) and 
 the Partnership Amendment Ordinance 
 (18G7) were introduced in Hongkong, 
 significantly coincides with the time 
 from which date the principal factors of 
 the present commercial crisis, viz. that 
 manifest decay of Chinese commercial 
 morality, that general passion for spe- 
 culation and over-trading now so rampant 
 among the Chinese here, and finally 
 that ruinous loss of credit and con- 
 fidence which, having at last come to a 
 head at the present time, has paralysed 
 the circulation of capital in the com- 
 mercial intercourse between Chinese 
 and Foreigners. Again, there can be 
 no doubt but that our bankruptcy law 
 has practically proved itself unsuited in 
 principle to the inherited tendencies 
 and usages of the commerce of the Chi- 
 nese people residing in this Colony, that 
 the machinery of our Bankruptcy Court 
 
( 31 ) 
 
 has shown itself lamentably defective 
 and quite unable to cope with fraudulent 
 declarations of bankruptcy on the part 
 of Chinese defaulters, and that practical 
 experience has demonstrated that credi- 
 tors, as a rule, cannot be depended on 
 to exert themselves, in the case of doubt- 
 ful assets, to assist the Court in recover- 
 ing' for them what generally proves to 
 be a small percentage of a great loss. 
 Next, as to our Partnership Amendment 
 Ordinance (18G7), it is undeniable that, 
 owing to the omission of compulsory 
 registration of partners, this Ordinance 
 has operated unequnUy as between Chi- 
 nese, who studiously conceal their part- 
 nership arrangements, and Foreigners 
 who invariably publish the names of 
 their partners. Finally, we think it is a 
 fact beyond all controversy, that ever 
 since 1873 public opinion, expressed by 
 the Chinese Community, the Press, the 
 Bench, the Bar and the General Chamber 
 of Commerce, has pointed, with gradually 
 increasing clearness and decision/ to 
 radical defects of our bankruptcy law 
 and to the absence of registration or 
 publication of partners in Chinese linns 
 as the chief sources from which the ruin 
 has sprung which at the present day 
 has overtaken the Chinese commerce of 
 Hongkong. 
 
 So far, we think, all practical men 
 acquainted with the past history of the 
 Chinese commerce of Hongkong are 
 agreed. Proceeding, however, now from 
 this firm basis on to the debatable 
 ground of lessons to be drawn from the 
 past and of remedies which would assist 
 the vital forces of commerce in eliminat- 
 ing the evils under which Chinese 
 trade is suffering at the present 
 moment, we are at once confronted by 
 the preliminary question, what are the 
 real causes which generated those evils. 
 This is a crucial question, for the nature 
 of the remedies which we may have to 
 suggest must necessarily depend upon 
 our solution of that question. Now we 
 think we have above given abundant 
 reason for the opinion, which has forced 
 itself upon us in the course of our in- 
 quiries, that the primary cause of the 
 evils under which the Chinese trade of 
 Hongkong has been suffering for years 
 past is to be found in our commercial 
 
 legislation, in the fact that we ap])lie(i 
 to Chinese commerce in Hongkong laws 
 which were devised for the peculiar 
 circumstances of English commerce as 
 it is in England. The same incongruity 
 which marks the supposition, which we 
 ask our readers to ponder over for a 
 moment, that bankruptcy law like that 
 of the Act of 18(51 had been introduced 
 in England in the time of Henry VIII, 
 marks also the actual introduction of the 
 same Act in Hongkong and its applica- 
 tion to modern Chinese trade. This law 
 would not have been any more incon- 
 gruous and mischievous in England at 
 the time of Henry VJII than it now is 
 in Hongkong. What made things even 
 worse in Hongkong was the introduc- 
 tion of the amended partnership law of 
 England and most especially the omis- 
 sion to compel registration of partners 
 in Chinese firms when we introduced 
 that law. Hence flowed the present 
 deo-eneracy of Chinese commerce as a 
 natural consequence. 
 
 Returning now to the question of 
 remedies to be applied in order to check 
 the mischief caused by our commercial 
 legislation, we assume that our readers 
 observed that remedies were suggested 
 at various times, and no doubt other 
 remedial measures suggested themselves 
 to our readers. We would, however, 
 point out that, before advocating any 
 attempt to mend the evil effects of legis- 
 lation confessedly bad by fresh legisla- 
 tion, necessarily liable to lay the founda- 
 tion of new troubles, it would be but 
 prudent to consider first of all what 
 measures might be set on foot at once, 
 calculated to check, the worst of the 
 existing evils without the need of 
 legislation and to resort to the latter 
 expedient only if the former is found 
 ineffectual. 
 
 In reply, then, to the question what 
 can be done, without immediate legisla- 
 tion, to improve matters under our pre- 
 sent laws, there are three suggestions 
 which may deserve consideration. 
 
 We would sug-gest, in the first in- 
 stance, that the Chinese mercantile com- 
 munity who petitioned the Government 
 to make the registration of partners in 
 Chinese firms compulsory, should first 
 of all endeavour to come to a general 
 
( 35 ) 
 
 resolution voluntarily, and without wait- 
 ing for compulsory legislation, to adopt 
 the practice of English merchants by 
 advertising in the public papers the 
 names of the active partners of every 
 Chinese firm in the Colony dealing with 
 Foreigners. Such a measure would 
 tend to improve matters somewhat as 
 regards the present want of confidence 
 in the honesty of Chinese merchants. 
 
 In the second instance we would sug- 
 gest that the defective organization and 
 working of the Bankruptcy Court be 
 amended without delay in the direction 
 indicated by the Commissioners who re- 
 ported on Supreme Court affairs in 
 1879. This might be done without any 
 legislation by simply carrying into ef- 
 fect the suggestions contained in the 
 following passage, which we literally 
 extract from the published Report (Evid. 
 p. 70 and 71) :— 
 
 The Attorney General. — In British 
 Guiana, which is a comparatively small 
 colony, they had an Accountant in the 
 Court and an Official Administrator as well, 
 with a regular staff of about eight clerks. 
 As soon aa a bankruptcy was declared, one 
 of the clerks was placed in possession of the 
 stock immediately. He took possession of 
 the books and sealed up everything. There 
 was not five minutes lost. 
 
 The Chairman. — That would astonish 
 some of our bankrupts. 
 
 The Attorney General. — I know one man 
 sent in his petition hoping the Official 
 Administrator would not get wind of it till 
 next day, but he went in and took posses- 
 sion actually of his household effects, and 
 in a bureau in his bedroom he found 
 actually more cash than would have paid 
 all Ids creditors in full. 
 
 The Chairman. — I think any sudden 
 movement of that kind would be beneficial. 
 
 The Attorney General. — It would surprise 
 some of the Chinamen. 
 
 The Chairman. — Nothing of that kind is 
 done here? 
 
 Mr. Wotton. — No; often the books are 
 not brought in for weeks afterwards. 
 
 Tlie Attorney General. — Then the 
 Accountant's business was to keep the books 
 and generally report on all accounts. It 
 was most useful. 
 
 Mr. Toller. — Yes ; for the Judges to have 
 power to refer to the Accountant on matters 
 of account. 
 
 The Attorney General. — Lots of things 
 used to be settled by the Accountant. He 
 made his report, and if the sohcitors on 
 
 either side objected to his report, the matter 
 would go to Court. In that way he had a 
 lot of work. 
 
 Mr. Wotton. — I am quite sure of this, 
 that if you had a proper Accountant, his 
 work would increase rapidly until all his 
 time would be occupied. 
 
 The Chan-man. — Well, there is the 
 advantage the Government would see of 
 getting aJl they ought to get, and they are 
 certainly very reluctant to part with one 
 cash that ought to be in the Government 
 Treasury. I think also, by the bye, that 
 if it was necessary the Accountant should 
 have one or two bull dogs at his heels, he 
 ought to have men of capacity. 
 
 The Attorney General. — I think in every 
 case a man ought to be put in charge and 
 all receipts and payments made by the Offi- 
 cial Administrator immediately. 
 
 Mr Toller.— At present there is no pro- 
 tection whatever. 
 
 Mr Jackson. — No j it is dreadful, and by 
 the time you come to deal with bankrupt 
 estates there is a counter there ; everything 
 else has all gone. They make away with 
 everything they have in the world. If a 
 Chinese hong here, perfectly solvent, loses 
 a quarter of its capital, it becomes insolvent, 
 and by the time the Court takes possession, 
 there won't be ^10. 
 
 The Attorney General. — What is the re- 
 sult ? There is not a single case in which a 
 man is not made a bankrupt on his own 
 petition. If any one else applies and he is 
 inclined to be dishonest, he has every op- 
 portunity. 
 
 Mr Jackson refers to a certain Chinese 
 bankruptcy, giving particulars, and says 
 that if the man were put in gaol for twelve 
 hours, his friends would pay all the credi- 
 tors out of his own money. 
 
 The Attorney GenersU. — Unless the Ac- 
 countant has a Chmese Accomitant able to 
 take the accounts under his supervision, I 
 don't see how you are to do that. 
 
 The Chairniim.— You have the shroff, but 
 I think the Registrar ought to have one or 
 two officers at his command to take posses- 
 sion at once of shops and books, and every- 
 thing else. 
 
 The Attorney General. — Well, certainly 
 in British Guiana no office was better ad- 
 ministered than that. He took possession 
 of all insolvent and unrepresented estates. 
 It paid "remarkably well. He had to deal 
 with Chinese and Portuguese, all small 
 shopkeepers, and the only loay in which lie 
 could dsal with them was to go at once and 
 take the things. 
 
 Mr Jackson.— If the Government get a 
 tirst-rate man to act here, under the advice 
 of the Chief Justice, ho will have to be al- 
 lowed a certain amount of latitude. 
 
( 36 ) 
 
 The Attorney General. — The result was 
 that the Administrator was appointed in 
 wills to be Executor, and where an estate 
 was not working well, they used to allow 
 judgment to go against them in order to al- 
 low him to work it, and he would return it 
 to them in a few years free from debt. 
 
 One could hardly imagine a more 
 complete expose, and a more thorough 
 condemnation of the defective org-aniza- 
 tion and working- of our Bankruptcy 
 Court, than the above extract reveals, 
 which, moreover, not only points out 
 the defects but at the same time suggests 
 the remedy. Nevertheless nearly three 
 years have passed since the above was 
 written, printed and published, and yet 
 the Executive has left the Bankruptcy 
 Court to the present day without a 
 professional Accountant, without a 
 Chinese Assistant Accountant, without, 
 in short, a proper staff, and things are 
 therefore now in 1882 pretty much as 
 they were in 1879. It was hardly to be 
 expected, indeed, of Sir John Pope 
 Hennessy, to move in the direction in- 
 dicated in the above extract, but under 
 the present administration and with Sir 
 George Phillippo as Chief Justice, it 
 may be hoped that the views which the 
 latter expressed when he was, as 
 Attorney General, a member of the 
 Supreme Court Commission, may at last 
 be carried out. 
 
 There is a third suggestion which 
 might be carried out, if it be thought 
 necessary, previous to attempting any 
 fresh legislation. We refer to the 
 proposal made by Mr Ilayllar, when a 
 member of the Legislative Council, in 
 1878, viz., that there should be some 
 special inquiry into the circumstances of 
 the Colony and how far the English law 
 is adapted to them. 
 
 Assuming, however, that the above 
 measures were carried out, that the Chi- 
 nese resolved voluntarily to publish the 
 names of their partners as Chinese do 
 in California, in Saigon and elsewhere, 
 and that the organisation and working 
 of the Bankruptcy Court were perfected 
 by the Executive in the direction in- 
 dicated above, we think it" would, most 
 probably, be found that even these im- 
 portant measures, though no doubt hav-. 
 mg some good effect; could do no more 
 
 than touch the surface of the evils. For 
 if it be true that the real source of those 
 evils lies in our laws, as above stated, 
 these laws would naturally, in spite of 
 those remedial measures, continue to 
 breed evil until the laws themselves are 
 amended or revoked. 
 
 It appears, therefore, to us necessary 
 to supplement those preliminary mea- 
 sures by legislative action. Such ac- 
 tion would naturally refer to bankruptcy 
 law and to partnership registration. On 
 these subjects there are various sug- 
 gestions ready at hand. 
 
 As regards legislative action in the 
 direction of bankruptcy law amendment, 
 there is, as our readers will remember, 
 the suggestion made by the Acting 
 Chief Justice, Mr Snovvden, at the Le- 
 gislative meeting of 11th November 
 1878, when he recommended to suspend 
 the Bankruptcy Ordinance until one 
 more suited to the reciuirements of the 
 Colony could be framed and intro- 
 duced. This seems, at first sight, an 
 extreme measure, but it is evidently a 
 suggestion promj)ted by personal insight 
 into the serious character of the evils 
 caused by our present bankruptcy law 
 in its application to Chinese commerce. 
 Whatever temporary inconveniences 
 might arise from such decisive action, 
 they would usefully serve as stimulants 
 to keep the Legislature alive to the ne- 
 cessity of prompt action in dealing with 
 the defects of our barikiuptcy law. 
 
 The question would naturally arise, 
 in. this connection, whether it would not 
 be better, under all the surrounding cir- 
 cumstances, to have no bankruptcy law 
 at all. This is a subject which will 
 most likely be discussed in Parliament, 
 when the present Bankruptcy Bill is at 
 last taken in hand. Meanwhile we 
 would recommend to the attention of 
 our readers the weighty arguments 
 which Lord Sherbrooke has advanced 
 (see Nineteenth Century, August 1881) 
 in support of his proposition to abolish 
 the Bankruptcy Court altogether. 
 , As regards legislative action in the 
 direction of partnership registration, 
 our readers will remember that the 
 Chinese Community twice petitioned 
 the Government for such a measure; 
 that the Government, in 1871:, actually 
 
( 37 ) 
 
 published the draft of an Ordinance em- 
 bodyino; the principle of compulsory 
 registration of partners in Chinese firms ; 
 and that the General Chamber of Com- 
 merce in 1877 and 1878 strongly sup- 
 ported the principle of that draft Ordin- 
 ance. This remarkable consensus of 
 the Chinese and English mercantile 
 communities of Hongkong ought to 
 have its weight in considering the ad- 
 visability of such a measure. We 
 would, in this connection, also draw 
 the attention of our readers to the 
 significant fact, that, parallel with the 
 dissatisfoction felt in Hongkong with 
 our partnership amendment law as ap- 
 plied to the Chinese without its being 
 8upj)lemented by publication or registra- 
 tion of partners in Chinese firms, the 
 amended partnership law has aroused 
 in England also considerable dissatisfac- 
 tion in mercantile circles. Among the 
 resolutions of the Associated Chambers 
 of Commerce we find the following two 
 resolutions, which deserve the fullest 
 consideration of our Legislature. The 
 Associated Chambers of Commerce re- 
 solved, some years ago, " that the Act 
 28 and 29 Vict. c. 80, be amended, so 
 as to remove the existing uncertainty 
 as to the liabilities incurred and rights 
 acquired by a law which enacts ' that 
 a participation in the profits of a trading 
 concern in remuneration of capital ail- 
 vanced or services rendered shall not of 
 itfii'lf be deemed to constitute partner- 
 ship,' and that, in the opinion of the 
 Association, the evident intention of the 
 Legislature, in framing that Act, will 
 be attained, while the interests of the 
 public will be secured, by the enactment 
 of a law enforcing perfect publicity as 
 to the terms on which such caj)ital shall 
 be advanced, or such services rendered, 
 and by provisions for the difierent 
 liabilities of acting or unlimited partners 
 and those of limited or commandite 
 partners." 
 
 If the above suggestions help to 
 arouse public attention to the necessity 
 of some action to be taken by the 
 Executive and the Legislature with a 
 view to remedy the injuries inflicted on 
 Chinese commerce by inapjiropriate and 
 imperfect legislation, and if we have 
 contributed, by our preceding inquiries, 
 
 a mite towards ventilating this most 
 important subject, our aim will have 
 been fully attained, though the subject 
 may yet be found to have further bear- 
 ings which escaped our attention. 
 
 PETITION OF CHINESE MERCHANTS 
 IN FAVOUR OF COMPULSORY RE- 
 GISTRATION OF PARTNERS. 
 
 We give below a translation of a Petition 
 sent in to the local Government some days 
 ago, in favour of the compulsory registra- 
 tion of partners in Chinese tirms. The pe- 
 tition was signed, we believe, by a very 
 large number of bankers, merchants and 
 couipradores, embracing nearly all, if not 
 all, of those whom it has been the custom 
 of late to style "the leading Chinese." 
 As we are now discussing in these columns 
 the very important question here raised 
 by the Chinese merchants themselves, it 
 will be unnecessary to do more than to 
 remark that the Chinese aj^pear to be 
 thoroughly convinced of the necessity for 
 some definite action being taken by the 
 Government to meet their wishes. Some 
 eight suggestions to the Government, in 
 the form of an Appendix, accompanied the 
 Petition ; but we have not as yet obtained 
 a translation of this portion of the docu- 
 ment. The Petition is as follows : — 
 
 "The petition of the undersigned mer- 
 chants, being subjects of the Government 
 of Hongkong, with reference to the prac- 
 tice of joining ni partnerehip under false 
 names, and to the injury which trade and 
 commerce suffer in consequence, conjointly 
 presented with the humble prayer for tlie 
 issue of a stringent prohibition whereVty 
 the minds of merchants and traders would 
 be set at rest, to wit : — 
 
 Among the various hongs and shops in 
 thia Colony which do business by joint 
 partnership, there are many which licti- 
 tiously use the designation of associations, 
 or the names or literary style of in- 
 dividuals. If such persons, being rich 
 and prosperous, fear and seek to avoid be- 
 ing involved and unplicated thei-eby, they 
 forthwith use the name of some elder or 
 younger uncle, or of some elder or younger 
 brother, son or nephew, and so forth, in 
 making a (partnership) agreement, which 
 they get recorded in the official register. 
 But in communicating or conversing with 
 outsiders, or in deahng with any hong, or 
 in any market, they put themselves openly 
 forward without concealment, with a view 
 to produce mutual confidence. When, 
 however, losses and failures occur, then, in 
 the event of bankruptcy, they use forth- 
 
( 38 ) 
 
 with their (partnership) agreement and 
 registration certificate, and fall back upon 
 that in order to place themselves beyond 
 personal responsibility in the matter. But 
 the most serious thing is this, that they 
 manage beforehand to draw out their shares, 
 substituting a dummy in such a manner 
 that outsiders cannot find any clue to take 
 «p in investigating the case. A hundred 
 crafty weapons are devised and beforehand 
 arranged in order to assume a safe position, 
 whereby at any future day they might shift 
 off from themselves all personal responsi- 
 bility. Thus it is that the reason why we 
 see of late so many cases of bankruptcy 
 cropping up, is really to be found in the 
 above practices. The evil effect of these 
 and certain other circumstances has been 
 to cause the most disastrous injury to the 
 main portion of the trade of the whole 
 Colony. Business has of late become daily 
 more and more critical, for the reason that 
 such mischievous hoodwinking and stabbing 
 in the dark caused the irretrievable loss of 
 hard-earned capital in cases too numerous 
 to recount. 
 
 The undersigned merchants, having with 
 their own eyes observed this state of things, 
 which is the hardship of the present day, 
 and feeling bound to help and save, held 
 meetings, at which they discussed the mat- 
 ter again and again, but found that nothing 
 could be done, except conjointly to petition 
 (the Government) to devise some means in 
 order to prohibit and abolish those practices, 
 and thereby to protect the interests of 
 trade. For it occurred (to the undersigned) 
 that, whenever a hong or sliop is first open- 
 ed, (the Registration) Ordinance requires 
 the registration of certain particulars which 
 are kept on record with a view to facilitate 
 inquiry and search. But the various shous 
 use, in many cases, false namesj which it is 
 impossible to depend on for any inquiry or 
 investigation. 
 
 The undersigned, therefore, venture to 
 pray (the Government) that instructions be 
 given to the subordinate Registration Office 
 to issue an ofticial notification to the effect 
 that, within a certain fixed jJeriod of time, 
 all hongs and shops be ordered and enjoin- 
 ed to make haste and register the real 
 and true surname, name, domicile and 
 lineage of their masters (chief partners), 
 and to forward these details for record, 
 whereby (the previous entries) may be ex- 
 amined, conqiared, and carefully revised, 
 and that, if henceforth, on the opening of 
 any new hong or shop, any false names 
 are reported for registry, such persons will 
 forthwith be prosecuted and punished by 
 law, in order that people may learn to fear 
 and obey prohibitit)ns and injunctions 
 which shall be maintained for ever. 
 
 Such a measure would be a real boon to 
 commerce. It would prevent influential 
 and wealthy men, whether Chinese or 
 Foreigners, being occasionally involved 
 (by those practices), for henceforth, if any 
 of them, wishing to do business with any 
 one hong or shop, desires to know the 
 real and true surname and name of the 
 masters (chief-partners) concerned, he 
 might, perhaps on payment of a more or 
 less trifling fee, be permitted to search and 
 inquire at the registry office, and the fees 
 so collected might be paid into the public 
 exchequer to prevent purposeless worry 
 and trouble. The effect of this would be 
 that the general credit would be con- 
 solidated and mutual confidence restored, 
 and commerce in general would then work 
 harmoniously. Let any business then 
 prosper or fail, both pain and pleasure 
 will then be borne equitably. 
 
 For the above reasons the undersigned 
 urgently appeal to His Excellency who may 
 be pleased to take steps accordingly in the 
 matter of tliis petition. " 
 
 Referring to this subject — which, as we 
 have said, is greatly exercising the minds of 
 the Chinese at the present time — it is curious 
 to note the tremendous and almost in con- 
 ceivable change which must have come over 
 " the leading Chinese bankers and others " 
 since last year, concerning this important 
 question. In Governor Hennessy's cele- 
 brated statement " on the Census Returns 
 and the Progress of the Colony," delivered 
 on 3rd June 1881 —a document which was 
 translated into Chinese, printed separately, 
 circulated far and wide, and even sold for 
 so much per copy — these " leading bankers 
 and others " were represented as utterly 
 oi^posed to any measure of the kind to 
 obtain which they have now petitioned the 
 Executive. The European Chaiuber of 
 Commerce was arrayed against the " lead- 
 ing Chinese bankers and others " by the 
 Gftvernor who feigned such a horror of 
 class distinctions ; and the cause of the 
 down -trodden Chinese was once more tri- 
 umphantly advocated against the cruel and 
 crafty European. As the Governor said, 
 "The Clxamber of Commerce added that 
 they had no desire to apply this system to 
 tlie European houses, but wished it to be 
 confined solely to the Chinese," there- 
 fore, the European proposal was not 
 acceded to. The paragraph in Governor 
 Hennessy's speech referring to this matter 
 is as follows : — 
 
 ' ' I also had the oppoi'tunity of consulting 
 the Chinese on another proposal. There 
 came to me a resolution from the Chamber 
 of Commerce, in which the Chamber pro- 
 posed that the Government should adopt a 
 system of registering all the sleeping part- 
 
( 30 ) 
 
 tiers in Chinese houses of business. They 
 showed that it was exceedingly difficult to 
 find out who had money m a Chinese trading 
 concern, and recommended that the natives 
 should be compelled by law, and under 
 adequate penalties, to register every person 
 ■who had a share, no matter how small, in 
 a Chinese business. The Chamber of 
 Commerce added that they had no desire to 
 apply this system to the European houses, 
 but wished it to be confined solely to the 
 Chinese, Acting on my usual principle, I 
 mentioned it to some of the leading Chinese 
 bankers and others, but they pointed out 
 that the Chinese system of trading would 
 be completely upset by it — that there is an 
 extraordinary net-work of investments in 
 this Colony, as in any other community of 
 Chinese, and that it would interfere seriously 
 with Chinese trade, and, in fact, tend to 
 prevent the influx of Chinese into the 
 Colony. Accordingly, I declined to accede 
 to the proposal of the Clianiber of Com- 
 merce." 
 
 He who runs may read, but let him 
 peruse the Petition and the above paragraph 
 together, and then pronounce upon Sir John 
 Pope Hennessy's deliberate attempts to set 
 class against class. 
 
 REGISTRATION OF PARTNERS IN 
 CHINESE HONGS. 
 
 We have already published the Petition 
 presented to the Government by the Chi- 
 nese bankers, merchants and others, in 
 favour of compulsory registration of partners 
 in Chinese hongs, shops, &c. ; and we now 
 reproduce a translation of the eight pro- 
 positions or suggestions appended by the 
 petitioners to the memorial referred to. 
 These suggestions enter pretty fully into 
 the modes of dealing among Chinese mer- 
 chants and tradesmen ; but it will doubtless 
 require careful and serious consideration, 
 whether these native usages can be dealt 
 with in the manner suggested, however 
 desirable it may be locally to arrive at softie 
 reform in this connection. We shall re- 
 mark more fully upon these eight proposi- 
 tions later on. In the meantime we may 
 say that every right-thinking man must be 
 pleased to see the strong protest which is 
 there contained against dishonest trading, 
 and fraudulent banki-tiptcy. The eight 
 suggestions are as follow ; — 
 
 The subjoined propositions consisting of 
 eight articles have been written out and are 
 herewith most respectfully presented. 
 
 1. Chinese partnership concerns in the 
 interior always use the real names of each 
 person in drawing up their partnership 
 agreements. Now whereas according to 
 
 Chinese usage, whenever a shop becomes 
 insolvent, in all cases the full amount of 
 deficit has to be made good jrro rata by the 
 partners according to the amount of capital 
 represented by their shares, there is there- 
 fore (in the interior) no such practice as em- 
 ploying fictitious names. But as in tliis 
 Colony the regulations, paying no regard to 
 the number of shares held in each shop, 
 throw, the moment when bankruptcy occurs, 
 the blame invariably on those who are men 
 of substance and require them to make full 
 reparation on behalf of the whole (of the 
 partners), the consequence is that many 
 use the name of some association or the 
 personal name or literary style of an uncle 
 or nephew or any other individual in signing 
 the partnership agreement with a view to 
 prevent being involved themselves. In 
 sase (the Government) desire that each 
 party should report the true surnames 
 and personal names of their chief-partners, 
 the undersigned pray that, the matter 
 b© dealt with by an alteration of the 
 laws now in force. If there is a case of 
 1 real insolvency, the amount of liabilities 
 j ohould be reciuired to be made good by the 
 partners of the shop concerned distributing 
 the amount pro rata according to the 
 amount of capital represented by their re- 
 spective shares and thus repaying the 
 creditors. In that case each party would 
 be glad to supply and rep«jrt their true and 
 real sumames and personal names. 
 ! 2. The variouii hongs and »hoi)S having 
 once reported and registered the true and 
 real surnames and personal names of tlieir 
 ', partners, the persons (so registered) should 
 then be considered the chief -partners in 
 \ each case of the business in question, and 
 if then banlcruptcy occurs, they should l>o 
 I bound to re|>ay and make go'xl the amount 
 ' of its liabilities. If any of such chief- 
 i partners have no real property in this 
 Colony, in that case, whether (the cre- 
 tlitors) bo foreign or Chinese merchants, 
 the Government should consent to send an 
 official communication to the Chinese Au- 
 thorities re(}uesting that the family property, 
 , which the persons concerned may have in 
 the countiy, be 'ascertained, sequestrated 
 I and sold, to provide the due portion of 
 the amount to be repaitL By this means 
 I the deceitful schemes of reckless and crafty 
 men will be foiled. 
 I 3. The law of this Colony permits people 
 I to declare themselves bankrupt. Therefore 
 i wicked and deceitful fellows, as soon as they 
 j know their business tf) be insrvlvent, trans- 
 fer in atlvance what chattels and i)ri)perty 
 they had acquired to other names or take 
 I their goods and remove them beforehand 
 ! to some other place, and after having done 
 so, they go into Court and file a declara- 
 
(40) 
 
 tion of bankruptcy. The consequence is 
 that the creditoi's, having no clue to take 
 up for any inquiry or prosecution, lose the 
 whole of their hard-earned capital. This 
 is the most serious impediment in the 
 arena of commercial life. The undersigned 
 earnestly beg that henceforth, in the event 
 of any case of bankruptcy aa-ising, a Com.- 
 mittee be selected and appointed, consist- 
 ing of respectable foreign and Chinese 
 merchants to the total number of 32, and 
 that in the case of each person declaring 
 himself henceforth as bankrupt eight mem- 
 bers of that Committee be selected to 
 report and inquire minutely into the matter, 
 and if it is really ascertained that it is a case 
 of genuine insolvency, then he should be 
 permitted to file a declaration of bank- 
 ruptcy. By such a measure the evils of 
 false and fictitious pretences could be 
 avoided. 
 
 4. As regards those hongs or shops in 
 this Colony, which may not yet have re- 
 gistered the true and real surnames and 
 personal names of theirpartners, it should be 
 arranged that, within a period of 3 months 
 or 5 months after the issue of a notification 
 to that eftect, those concerned should be 
 required to come in person to the registra- 
 tion office to alter the entries and rectify 
 them completely, recording their true sur- 
 name, domicile, lineage and home, and if the 
 partner in question resides in tlie country 
 or has gone to some other port and has no 
 time to come to Hongkong, it should be 
 required that he Avrite a letter with his own 
 hand and authorize soTne respectable and 
 trustworthy relative or friend to act for him, 
 his original letter being filed in the Re- 
 gistrar General's office to be held in proof. 
 As to those who may have formerly re- 
 gistered under fictitious names, the Govern- 
 ment should in all such cases forego pro- 
 secution. By such a measure the unplea- 
 sant consequences arising from the fact that 
 those who have to alter the register are a- 
 fraid of being punished, will probably be 
 avoided. 
 
 5. If any of the chief-partners of each 
 shop draw out their shares, they should be 
 required to come in person to the registry 
 office to cancel their names. If such per- 
 sons have no time to come in person, they 
 should be required to send a letter in their 
 own hand- writing and authorize a respectable 
 and trustworthy relative or friend to sign 
 for them, the original letter being likewise 
 filed in the Registrar General's office to 
 afford proof in time hereafter. Further, 
 on the day when the shares are drawn out, 
 an advertisement should be inserted in the 
 daily papers to inform tlie public with a view 
 to prevent any misplacement of confidence. 
 If any person thus cancels his registration 
 
 certificate, but omits to insert an advertise- 
 ment in the papers, he shall, in the event 
 of bankruptcy, not be allowed to be treated 
 as if he had retired from the partnership. 
 The reason is that in the arena of com- 
 mercial life there is buying and selling going 
 on from day to day, and if such a matter 
 is not clearly announced on the very day, 
 it is impossible to avoid subsequent mutual 
 recriminations. 
 
 6. If any of the share-partners of any 
 shop then wishes to retire from the con- 
 cern, it should be required that an agreement 
 be come to with the person who takes his 
 place, and that both parties sign a 
 document on the strength of which 
 the advertisement can be inserted in 
 the papers. As regards any debts incurr- 
 ed by any shop before inserting the ad- 
 vertisement, it is requisite that the creditor 
 should consent to transfer the responsibility 
 to the person taking the outgoing partner's 
 place, and then only shall the change 
 be considered final as regards the whole 
 of the past. If no such agreement 
 can be come to, the outgoing partner 
 sb.all remain liable to prosecution and 
 not be allowed to use the fact of an 
 advertisement having been inserted in order 
 to place himself beyond personal responsi- 
 bility in the matter. It should be requisite 
 that the advertisement be inserted for 3 
 months running, so that all near and far 
 may becom-e aware of it. 
 
 7. In the case of any hongs or shops in 
 this Colony having an Agent of some outside 
 firm lodging or residing on their premises, 
 the manager of such hong or shop should 
 also be required to come in person to the 
 registry office to report in detail regarding 
 the Agent in question, stating of which 
 concern he is the chief-partner, and to 
 which ports he sends goods in a business 
 way. If then it iiappens that that Agent 
 suspends business, he should again come 
 to the registry office and cancel his re- 
 gistration. 
 
 8. If any person wishes to ascertain re- 
 garding any hong or shop who the chief 
 partners are and who the manager is, he 
 should be permitted to apply to the registry 
 office and make the needful search and 
 inquiry, a charge of 20 cents or 26 cents 
 being made for each search, and this fee 
 might be paid into the public exchequer 
 so that perchance purposeless worry and 
 ti-ouble be prevented. Also, each person 
 wlio comes to make a search should be 
 required to present a petition stating in 
 detail the address of the person or firm on 
 whose behalf he wishes to ascertain any 
 given shop's chief -partners, and this petition 
 should be stamped with the chop of the 
 applicant's firm to afibrd jiroof. 
 
14 DAY USE 
 
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 LOAN DEPT. 
 
 This book is due on the last date stamped below, or 
 
 on the date to which renewed. 
 
 Renewed books are subject to immediate recall. 
 
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