February 5, 1906.]
Hon. Mr. POLLOCK—I should like a definite, specific answer now.
The CHAIRMAN-I will agdia read yon what I said
Hon. Mr. POLLOCK-I don't understand what you mean when you state "profits of sale of property still to be completed."
The CHAIRMAN--I mean that the property is sold, but the sale is not completed.
Hon. Mr. POLLOCK-Do you mean to say we have not got this amount in hand?
The CHAIRMAN-That is 80. Hon. Mr. POLLOCK-How much is it? The CHAIRMAN $50,526. Hon. Mr. PULLOCK-And that is put down as profit when we have not received it yet?
Mr. CHAIRMAN-It is a profit, and it is quite a reasonable and proper thing to assess one's assets at the price at which they have already been sold.
Hon Mr. POLLOCK-There are plenty of gentlemen in this room who know the ordinary priociples of bookkeeping, and I will leare them to discuss that question. The next item I should like to inquire about is managing directors' fees, $29,329.20. How is that item made up
The CHAIRMAN-It is made up in accordance with article 95 of the Articles of Association of the Company.
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Hon. Mr. POLLOCK-Have you taken it on a 3 or s five per cent. basis?
The CHAIRMAN-On a 3§ per cent. Hon. Mr. POLLOCK-Now, sir, do I under. sland you to consider this amount a net profit on which the managing directors are entitled to this percentage, although the company has not actually got the money in hand?.
The CHAIRMAN-My idea of net profits is as shown by the accounts before you.
Hon. Mr. POLLOCK-That is no answer to my question. Is the sum of $5,000 included in the managing directors' account of net profits?
The CHAIRMAN—Yes.
Hon. Mr. PULLOCK-I see you have included in net profits the amount brought forward of $37.580.70, which is surely not net profits.
The CHAIRMAN-You are perfectly correct. It is not net profit, and commission has not been reckoned on that.
Hon. Mr. POLLOCK—I don't see how the sum of $29,829.20 can be possibly arrived at on a basis of 3 per cent. It is obvious that this system of payment to the managing directors is very detrimental to the ordinary body of shareholders. If you refer to the figures of previous years when we received 12 instead of seven per cent, as for the year 1905, you will see that the managing directors' fees were less, being $27,003.60 for 1904 and $25,915.74 for 1903. Therefore, of three years, the managing diree. tors have taken most in respect of the year 1905, in which year the shareholders only receive a seven per cent. as against a twelve per cent. dividend.
Mr. GERSHOM STEWART said he was induced to speak on the position of the Company as expressed by the report for two reasons. The first because the Company's management of certain property in Wanchai was the cause of protest in the public press, which had the result of special legislation being passed to put the matter in order, He thought that when the press and the police of their own initiative and with entire justification felt called upon to teach the Company how to manage any of its proper- ties it was time for the ordinary shareholder to stir himself and say something. He trusted that no one would ever again be able to point the finger of scorn at the Company as the proprietor of any houses used for disorderly and immoral purposes, and he earnestly hoped that nothing similar to the deplorable business which disgraced Wanchai during the early part of last year need over be again referred to at any future meeting of the Company. The second reason he had for speaking was that he had received letters from shareholders at home asking him how it was that the dividend had dropped from $12 to $7. They probably -looked on the Company as a steady going concern and spent their dividends as they were received without bothering as to details. He was at a loss to give reasons for a fall in the dividend of nearly 50 per cent. If they were in a sinking Colony it would be explainable; but they were not. They had suffered from no devastating earthquake or typhoon, and they
CHINA OVERLAND TRADE RÉPORT.
pany
It WAS
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The CHAIRMAN-I think it would be more in order if I at first proposed the adoption of the report and accounts. I have ascertained meanwhile that the property in question was bought at auction by Mr. Orange as agent for the Reclamation Co., Mr. Shelton Hooper being at home at the time.
Mr. MICHAEL-I have a question to ask. Mr. Pollock asked about the writing up of the $200,000 worth of shares in the Reclamation Co. I see you have written up from $75 to $100.
The CHAIRMAN-That is so.
must, therefore, look within and not to reasons | being in the obair he accepted the risk of without for some explanation of this unpleasaut being heckled by discontented shareholders. phenomenon. Since 1891 there had been an The amount accorded to the managing direc- advance in the rateable value of the Colony tors, $29,000 with a 87 dividend seemed ont from $3,649,121 to $10,472,278. Admitting of all proportion to services rendered, and some extension of area, it would still appear it occurred to him to ask, Did the company that money well invested in 1891 would belong to the managing directors, with the be giving a very handsome return to-day, shareholders sad and forgotten children looking The published details as to the late Mr.with bungry eyes for any crumbs which might Graaville Sharp's estate also went to show fall from their masters table ? or, Did the that when his estate was duly assessed by com- company belong to the shareholders with the. petent and reliable authorities at the time of managing directors as their highly remunerated his death a few years ago, it was valued at officers ? He would ask them for a ruling on $1,000,000, and a lawsuit later proved that the that point., If the latter were the osse, it seemed estate had increased in value more than 100 per odd that $15,000 should be paid to two directora cent. Allowing for a safe valuation in the first and somewhere about $1,000 each to others who case, there had been, and was now, a very great had remained staunch to the company through- augmentation in the estate referred to which out. It was better, he was sure the Chairman did not seem to be shown in the figures they had would agree, that if there was discontent it before them. Another interesting comparison should be openly ventilated than secretly whis was the Shanghai Land Company, whose shares pered. By that course remedies might be stood at 140 per cent. premiam against a suggested and perhaps a cure effected. He premium of 25 per cent. in the case of offered those remarks in the hope that misgiv the Land Investment Company. Granting ing might be removed and the future outlook that Shanghai Was perhaps exceptionally improved. If the present policy of floating favoured he did not think any one would say new land companies and managing them with that the figures of relative prosperity were officials of that company was to pass unchal fairly represented by 140 per cent. as compared lenged, it might be continued indeffuitely to to 25 per cent. They had always hoped that their injury. Divided allegiance and hálf. the Land Investment Company marched hand hearted service could lead only to disappoint- in hand with the Colony both in prosperity and ment. By single-minded and devoted service adversity. It was now some time ago since the alone could the company become great, and he newspapers reported the purchase of a large protested against their officers and directors property at Tsimohatsoi by the secretary of serving rival land companies as an injustice to of this Company. Provided that the Govern- the shareholders of the company. ment were desirous of selling the site, it seemed natural enough that the Land Com- should desire to secure a substantial interest in a place from which anyone could see that railways might radiate all over China, with feelings of disappointment approaching to dismay that they eventually realised that this purchase was not for them but for a rival company brought out under the auspices of the managing director of the Land Investment Co. He used the word rival com. pany advisedly, for to reclaim meant that it did so with the object of obtaining land to sell or rent, and therefore dealt in the same article as the Land Company did. Shareholders in the Land Investment Company naturally asked the question, why did they not do that business. If they had no loose money at the moment they could have easily borrowed it. Or if not, aud it was advisable to increase the capital, it appared to him that it would have been a graceful act and sound policy to have floated the new company as an infant to the Land Investment Company, by offering pro ruta to the shareholders 50,000 shares at, say, $20 each. It appeared to him it would be a sounder course if a system of associated and affiliated companies over which they had control were inaugurated than to outside company over which they would have DO control. Some on the rival board might be friendly to them, but the para- mount consideration at their meetings was their own Company's interests. Sharehold- ers would have appreciated such considera- tion, and the most valuable asset in any company's accounts-mutual confidence and good-will between manager and managed- would have been increased. He trusted that they would not have dealings, as with the unexplainable preference which parents have for their younger offspring it might be, if the interests of little Jacob of Tsimchat soi com. peted with those of their dilapidated old Esau of the Queen's Road, they would not get the better of the bargain. If those directors- thank godness, there were some--who did not be- long to both companies argued in their interests, some protection was afforded them; but the know-it ledge and influence of their managing directors was lost and in fact might be used against them. Anyone buying shares in the company was in the position of a man buying a property with a flaw in the title; he knew that the full fruit of his money would, in certain cases not be re- turned to him, as after a certain point the managing directors divided the profits with them Shareholders accepted that position in the hope that the special knowledge and ex- perience of the managing directors would be assured to them. He was aware that the Chairman was not a director of either company when the Reclamation Company started, but
invest in an
Mr. MICHAEL-How did you arrive at that price? You remarked in your speech that they had gone up 50 per cent. beyond book value.
The CHAIRMAN-If you mean that the shares may long "zesses "hly be written up to a higher figure, I agree wig But the directors decided that $100 was a sale and reasonable figure to put them at; leaving's further margin for a futuro rainy day,
Mr. MICHAEL-So that, even when business has been done at $150, you put them down at $100.
The CHAIRMAN-They stand at $100. Mr. MICHAEL-And on that writing up you charge your commission ?
The CHAIRMAN-That is, of course,
unquestioned.
Mr. MICHAEL-We have got property to the value of about $6,000,000. What proportion in value is still undeveloped and unproductive to us?
The CHAIRMAN-About half a lakh of dollars.
Mr. MICHAEL-What is the percentage ! The CHAIRMAN—You can figure it out for yourself.
Mr. MICHAEL-Less than one per cent. ? The CHAIRMAN—Yes,
Mr. MICHAEL-Well, I have a suggestion. to make.-
The CHAIRMAN-I think we had better get on with the business of the meeting.
Mr. MICHAEL-It might be an important suggestion.
The CHAIRMAN-I shall be pleased to hear after the business of the meeting.
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The CHAIRMAN-I am in accord with very many of the remarks which have fallen from my friend, Mr. Gershom Stewart, and, reply to what he has said, I think it might be useful if I indicated how the Reclamation Company came to be formed. That company was formed in April, 1902, four years ago, the directors of this company having in view the then contemplated Praya East reclamation, which you will all recall, and in which the Land Investment Company by reason of its owner- ship of many marine lots in that district would have had a considerable interest, and the necessity that would occasion for a large capital
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