Shanghai Commercial and Savings Bank in the closure of Justice controversy

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					Shanghai Commercial and Savings Bank in the closure of Justice controversy
Shanghai Commercial and Savings Bank in the closure of Justice controversy




    2007-11-02 Li Yixiang Source: Economic Information Daily


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Shanghai twenties and thirties of last century, the development of new banks were
big.

Shanghai Commercial and Savings Bank is located just downtown area and studied.
Abstract: In the twenties and thirties of the 20th century, China's new
banking business was a great development. Cities in the country's financial
center Shanghai, many banks have created to bring an abundant financial life. Most
banks in the business of thriving, developing quite well; but there are a number of
banks due to various causes of failure and collapse. In these failing banks, there is a
savings bank named just a small commercial bank deposits due to liquidity problems
have been caused by a storm, and finally lead to a lawsuit, was resolved by court
decisions. Although the storm died down, but this triggered a series of business
organizations and legal systems the question is thought-provoking.
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Shanghai famous Ye Hongying small financial sector
Something needs to begin at the beginning, the old calendar the first month of 1927, is
located in downtown Shanghai, China industry and studied the area, there is a listing
of new banks opened in the name of justice, called the Commercial and Savings Bank,
is small, only equity 250,000 yuan, by Ye Hongying as chairman, Zhu Jiarui as a
manager.
Filed Ye Hongying its people, the financial sector in Shanghai is a minor celebrity
after he co-founded the China has a large commercial and savings banks are profit
commercial savings bank, also owns shares in several banks. Take him with Vang Pao
Lun Lee, who founded the now commercial savings banks, the bank opened in 1920,
with a share capital 500,000 yuan, the head office located in and studied, and the other
located in the Taipei branch, franchised business dealings and Diyafangkuan, business
doing booming. To 1925, but somehow, suddenly unwilling to continue to operate
outside the closed claims received break. After all shown with all the lenders out of
business recovery, all deposits are shown with the return of the shareholders than
equity, but also one-third share of dividends. This treatment results in the aftermath of
a failed bank was closed down is rare, being commended the community.
Since Ye Hongying silence for some time, two years after his previous profession,
defeat, continues to be dry and operating bank line of work to.
Reappear but lost in the cotton futures trading on
However, once again coming out of Ye Hongying who is now the situation has
changed, the past performance has long been a thing of the past glory. Commercial
Savings Bank, opened just a few years after, the operation is quite ring true, the
business slowly. After 30 years, funds began to nose around the country together in
Shanghai, the majority of bank deposits increased substantially, while the bank is still
not seen to pick up the year 1930, total deposits reached only barely more than 50
million, only twice the amount of capital ; other various loans to the investment
business is not satisfactory, banks have been a loss, shareholders, dividends will
probably come to nothing. Seeing that the majority of their colleagues to carry on
banking business is booming, pocketed the money, Ye Hongying is not willing,
thinking very hard to reverse the situation of business distress good way.
He saw that there were a number of banks by investing in the securities industry, for
government bond trading and access to a lot of profits, envy, and I want to stroke
among some in the bond market. Despite his management style has always been
strong, despite a big bond issue in the period of the Beijing government has not
involved, but the bank's management to change the status quo was at it a
gamble.
So he ignored manager Zhu Jiarui and discourage other shareholders and against the
higher interest rate for the interbank money into more than 100 million, all thrown
into the stock exchange speculation. The initial victory, earned a first transaction, then
the second document, the third document was a series succeed, banks quickly any
change in operating conditions.
Ye Hongying thoroughly enjoyed the sensation at the moment, the advice of others
even less seriously, on a larger scale to continue bond speculation, and speculation
began to shift the focus of futures market. At that time, speculation rife in the
Shanghai Futures Exchange is the largest profit is also the highest risk of a speculative
ventures.
Six months later he finally missed, and in a cotton trading down in defeat, causing
huge losses, involving justice Commercial and Savings Bank, had announced in
November 1931 closure, bankruptcy liquidation.
Litigation by other firms to seize the flaw
In the cleaning process, because of Ye Hongying too speculative losses, financed
almost half of the banks run out of power, not to mention return of shareholders equity,
is shown with the return of firms and individuals with deposits in question. However,
just consider this commercial savings bank may lead to social fluctuations had a
negative impact, with remaining funds quickly and return all the deposits of ordinary
citizens, while the other firm's deposits in accordance with shares of
limited liability company be part of the bankruptcy provisions of the relevant return.
According to the usual practice, the bankruptcy can also clean up this end. Part of the
failure to deposit the full recovery of the firm had nothing with this, the end of trouble;
but there are also some smart traders unwilling to lose, and afterwards they are still
various efforts to try to recover their lost deposits. Soon after, justice has finally found
a business savings bank registered in the company have a big flaw.
The whole story is this: Ye Hongying, who founded the first commercial savings bank,
justice, Shanghai, China industry is still in control of the Beijing government, they
Bianxiang was governor of Shanghai County Administration Office and the Ministry
of Finance registration registration, to determine the nature of the Corporation Bank,
opened for business after receiving license. National Government will soon replace
the Beijing government and the establishment of the Ministry of Industry, Trade and
Industry is responsible for all matters relating to business license issuance. Later, the
National Government promulgated the "Law" explicitly from
July 1, 1931 implementation at the national level. According to the
"Company Law" the relevant provisions of the original of all
kinds of companies should re-apply to the local community registered with the
competent department, and then forwarded to the Ministry of Industry Qude the issue
of limited or unlimited license. The Commercial and Savings Bank just before the
closure has not been re-registration is not eligible for new business license. Whether
they are intentional or not, this is clearly a crucial issue fatal.
As a result, these firms will use this as a reasonable basis, to just re-settlement of
outstanding commercial bank savings deposit requirements. Respond to the creditors
of the bank, has repeatedly stressed that the nature of the bank is really Ltd., the
shareholders do not have joint and several liability for repayment, and therefore can
not be reimbursed. In this case, these firms Bian Lian He other Zhaiquan Ren, Zu
Cheng justice Commercial and Savings Bank Association of creditors, not to Gai
Bank Industrial Bu Zhucelingqu Zhi Zhao Xiang, causing Gu Dong Wei liability
reasons, choose hardware Shang Ren Qian Xuan Qing as representatives to District
Court Justice to prosecute the first SAR Shanghai Commercial and Savings Bank
Chairman Ye Hongying, and others, requesting their outstanding deposits. At the same
time, they have to the National Government Ministry of Industry and the Shanghai
Municipal Social Bureau advice and complaints.
Petition was accepted by the Court of First Instance, and soon began investigating the
case, and was at 14 o'clock on the June 14, 1932 the trial of the case. In
fact, the case is not large, but involves quite extensive, there are many people coming
to attend, also attracted media attention.
Utah wins despite defeat case there are three lessons
In the fierce debate in court, the plaintiff lawyer Hu, a well-thought, to seize Justice
Commercial and Savings Bank registered in the company's flaws, argue,
and request made for the following reasons: "the Ministry of Industry and
the Shanghai Bureau of Social Affairs instructions are detailed The defendant stated in
the Ministry of Justice to obtain banking business license, has not lawfully obtained
the Ministry of Industry Co., Ltd. license, of course, the nature of the partnership.
Charles Law limited the distinction between infinite, should be in accordance with the
Republic of China two decades (ie 1931) in July day implementation of the
Companies Act is based. The defendant has neither the Company Law in accordance
with the provisions of Article 1, to obtain the Ministry of Industry Limited licenses,
and by the competent government offices were registered with the social, forwarded
to the Ministry of Industry issued license. this defendant to illegal for the county
governor Shanghai Office and the Ministry of Finance according to the Financial
Supervisory Authority of the grant, are in sub-legal regulations, are obviously no
reason. to the business license, that limited unlimited, can be operating. plaintiff
mentioned, the law of evidence sufficient to prove both the nature of the defendant is
a partnership, should be held jointly and severally, to repay the outstanding foreign
plaintiff 33,635 yuan second half and the negative angle of delay of the legal interest.
"
Approximation in the prosecution, the defense even though the defensive, but without
weakness, defense lawyers supporting John Wei, Ng Kuok Cheong historical facts,
repeatedly stated: "The defendant is a limited company, Shanghai has been
the Ministry of Finance Financial Supervisory Authority, County Office license for
the data, should be invited to refute the plaintiff of the complaint.
"continually to the prosecution to retaliate.
As the plaintiff and defendant's position very different approach, leading
the debate bogged down the court. The case finally made by the Shanghai No. 1 SAR
final district court ruling, and was at 13 o'clock on the June 20 formal
sentencing judge just commercial savings bank creditors, the plaintiff will always win,
but the issue of repayment of the deposit, the original defendant to each of the parties
compromise. Verdict said: "The defendant should pay the plaintiff Bank
19,140 321 points to just cover the bank property, less than the amount from the
defendants jointly and severally liable to repay the responsibility together, and
naturally years (ie 1931 ) from November 19 to delay the implementation of the end
of only the remaining statutory interest and plaintiff rejected the request, the burden of
costs by the defendant. "
The final outcome of the lawsuit is Ye Hongying and other bank shareholders pay for
their debt trouble. Thus, the Shanghai Commercial and Savings Bank in the closure of
just storm be over.
This incident left people with a profound lesson three: first, the market economy, rely
on speculation it is extremely dangerous and will inevitably lead to economic losses.
Ye Hongying as keen as bonds, futures market speculation, although they would
succeed temporarily, but was able to escape defeat, to the enterprise caused
irreversible consequences; second, corporation system building is a vital business ring,
can not be ignored, all have the rules, otherwise, would result in an unexpected
economic disputes; Third, the rule of law in society, people of all economic activities
must be permitted by the law within, a sound legal system protect the normal order of
market economy play a decisive role.