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April. My further recommendation in that telegram, that payment should be made half at 1/9 and half at the rate of the day, was based upon a careful review of figures and accounts put forward by the local owners. I am satisfied that in the case of the ships now in question the grant of this additional remuneration is fully justified". A similar representation was made to Colonel Thomson, but the Shipping Controller could not see his way to accede to the request. Colonel Thomson had written on the 25th March, 1918-"you will observe that London lays great stress upon the fact that payments to owners out East should not be greater than those paid at home."
A revision of Blue Book rates for tramps enabled the Hongkong Government to increase its payments to owners with effect from the commencement of the local scheme, but about the same period notice was given that the arrangements as to owners' commission were being modified. It was urged that there should not be any reduction in the rate paid to owners under the Hongkong scheme, and, pending receipt of further instructions, the full commission was paid up to the end of the requisi- tion period. Some correspondence on the subject ended in May, 1920, with a letter from the Ministry of Shipping:-"I am to say that the Shipping Controller regrets the decision arrived at by the Government of Hongkong and feels bound to place on record his view that the reasons adduced for that decision do not seem to him to be altogether adequate".
This letter is quoted, and the matter of owners' remuneration has been dealt with in some detail, because there has been a wide-spread impression that the Hongkong Government had a free hand in the matter and had not been liberal in its treatment of the owners.
20. There were some who did not see eye to eye with the Hongkong Government on this question of remuneration. A complaint was made to the Shipping Controller in London regarding the alleged preferential treatment accorded to the Hongkong controlled ships, in their category of tramps, as compared with ships classified as liners. The Hongkong Government, being asked to report, expressed the opinion that the arguments, which had been advanced in support of the complaint, were untenable. The Hongkong ressels were old and of inferior class and they were not considered seaworthy enough for full requisition. For this reason the cost of upkeep was proportionally heavier and special concessions should be granted. The ages of the vessels varied from 27 to 43 years, and, as they were not in good condition, constant repairs were necessary, at enormously enhanced cost compared with pre-war rates. The Ministry of Shipping had pointed out that the revision of tramp rates in the United Kingdom was necessary largely on account of the cost of insurance. In the case of the Hongkong tramps marine risks could as a rule be insured against for "total loss only
total loss only" at rates between 10 and 15 per centum, it being impossible to insure "with average", whereas the insurance rate for the two cargo liners under the Scheme was 3 per centum for total loss only and 6 per centum "with average"; and those liners might be taken as representative of all the liners on the China Coast.
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21. The question of insurance against war risk was one of some difficulty. In a circular letter addressed on the 13th March, 1918, to all owners, they were informed that the Government would accept all war risks, and the question for decision was whether the Hongkong Government should insure or whether it should carry the risk itself. The risk was slight and insurance rates were high, but there was a possibility that vessels might be lost through the sudden appearance of a raider, or the placing of explosives in cargo, or other enemy action. On the advice of the Vital Requirements Committee the ships were insured for three months in the first instance. The Shipping Control Com- mittee obtained from Messrs. Goddard & Douglas a valuation of each ship at its then value, the total sum for the fourteen ships being £979,000, and upon this sum insurance premia amounting to $48,716.41 were paid. At the expiration of the three months the Government had a sufficient sum in hand to form the nucleus of a sinking fund, and it was decided, again on the advice of the Vital Requirements Committee, that the Govern- ment should thereafter carry the risk. At a meeting of the Legislative Council on the 17th October, 1918, the Colonial Secretary speaking of the Shipping Fund, said :--"The money is kept for insurance against war risk".
No claim arose at any time in respect of war risk.
22. Another problem which confronted the Government was the question of the policy to be adopted with regard to the running of the ships at a profit. Some figures