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regarding certain profits which were being made at the time may be of interest in this connection. The balance sheets of a public company controlling one of the requisitioned steamers show the following figures:-
Capital $40,000 in 800 shares of $50 each. Value of steamer written down to $20,000. Profit for the years ending in February 1916, 1917, and 1918 respectively $163,762, $245,041, $534,339; Dividend per share of $50 in respect of these years, $183 $275.50 $598 and remuneration to Directors and Auditor $16,396: $24,524: $53,453. This may have been an extreme case, but there were other instances of very large gains. The Government had to decide to what extent it should take advantage of the extraordinary earning powers which the war had given to the steamers.
CC
The Shipping Controller's instructions seemed to be clear. The ships which were not required for special Government work were to be run by the owners in their customary manner vessels will be left to owners to run as if for themselves but actually for Indian or Colonial Governments". The Hongkong Control Scheme was to be based on the Liner Requisition Scheme, the instructions regarding which were: - "It is not the desire of the Government to interfere either with the nature of the busi- ness of the Established Line or the method of conducting it which would have been followed had the controlled vessels not been requisitioned, except in so far as the National interest may require. Each Established Line shall continue therefore to manage its business and to run the controlled vessels with as much zeal and shall have the same discretion in such management as if its own interest alone were involved".
It was decided that the Government had no option but to charge the then market rates. It was true that high freights meant inflated prices, but market rates were being charged in respect of vessels under Imperial control, and the Commodore had advised that full freight rates should be maintained in respect of Liner Requisition vessels; and, if the Hongkong Government had offered its ships below prevailing prices, instructions would no doubt have been received from the Shipping Controller that competitors, for example the Indo-China and China Navigation vessels, must not be undercut. In any event freight remitted to a shipper would not have gone into the consumer's pocket. There was the further point that the owners were getting 5% upon the earnings of their ships and they naturally did not want those earnings to be reduced. It may be mention- ed that in the case of a ship such as the Patriot, carrying coal for Government account in respect of which no freight was payable, the Government allowed the owners to draw commission on the sum which would have been paid for freight in the open market.
The Government strictly adhered to the policy that, in deciding upon the various uses for which ships were required, any consideration of profit making must be kept entirely in the back-ground.
23. Late in the year 1918 instructions were received from the Admiralty that a number of vessels, which had been on Imperial requisition, were to be transferred to the Hongkong Control Scheme, but after some telegraphic correspondence these instructions were cancelled and in a telegram dated the 23rd January, 1919, the Hongkong Govern- ment was authorised to use its discretion as to continuance of control, which it accordingly discontinued as from the 31st January, 1919.
24. The Hongkong Control Scheme resulted financially in a net profit of $2,231,204. The total expenditure, exclusive of war risk insurance, amounted to $6,387, a some- what striking figure when it is remembered that it represents the entire cost of controlling seventeen ships, with detailed examination of all their trading accounts, for the best part of a year. Many a brokerage fee for negotiating a single charter amounted to a vastly greater sum, and, if the immense amount of work done had been charged for according to the spacious ideas as to remuneration in the shipping business then prevalent, the profits would have been most materially reduced. The opportunity may be taken to record the very great obligation which the Colony is under to Mr. Sutherland, Mr. Young, and Mr. Cary for their devoted work on its behalf. Mr. Sutherland and Mr. Young received no remuneration of any kind, and Mr. Cary, who was responsible for the control and checking of all ship's accounts, was paid at a rate which from a business point of view was merely nominal. Each member of the Control Committee had to find time for the shipping work in addition to his own work, which was in itself abnormal owing to depletion of staffs, and, having regard to all the circumstances, it is perhaps noteworthy that the critics have found such scanty material on which to base their denunciations. Mention may also be made of the good work performed by Commander Beckwith, R.N.,