14
1
HONG KONG DAILY PRESS, MONDAY, FEBRUARY 25, 1935.
HONG KONG AND SHANGHAI BANKING CORPORATION
Decrease In Profits
Profits Of About Twenty Two Lacs
DISAPPOINTING PROGRESS IN TRADE: DIFFICULT TIMES AHEAD.
"This time last year your Chairman spoke in a fairly optimistic way of the conditions of trade throughout the world. I think, however, you will agree that the progress made had on the whole been disappointing. All that can be said, is that there has not been a serious retrograde step anywhere, while those countries most closely connected with Great Britain through currency alliance, have made moderate progress. It would appear that there are still difficult times ahead . We must, I fear, face the prospect of a long uphill struggle be- fore the world-wide clouds of depression are finally dissipated," said the Hon. Mr. C. G. S. Mac- kle, the Chairman of the Hong Kong & Shanghai Banking Corporation, in the course of his report for 1934 at the 119th annual meeting of the Corporation, which was held at the board room of Messrs. Jardine, Matheson & Co. Ltd., on Saturday morning.
After making full pro slon for losses and contingencies, the 'net profits for the year amounted to $13,004,697,36-a reduction; compared to 1933, of about $22 Lacs due to the higher rate of exchange prevalling on December 31 last. The rate of dividend, however was the same as in previous years.
CHAIRMAN'S "SPEECH
After deducting
The" actual large during 1934. figures relating to these movements must be regarded with caution, as
such problems. Unfortunately in of cotton, rice, silk and tea-the the earlier stages of the crists their building of roads, public health, advice was not asked and it is rural ⠀-co-operatives, conservaNCY most unjust to criticise them for and flood prevention; the last two what ensued. However, the post- are of course of vital importance tion has recently become much to the farmer. You will observe improved Through Mr A s. that all of these headings are Henchman, our Manager at Shang-closely inter-connected and that hal, there is constant consultation any improvement will be of great with the Chinese Authorities, our benefit to China's internal econo- Chier Manager has himself visited my. But more than this, the Shanghai, and needless to say we balance of International paymenta are exploring the remedies and are will also be favourably effected. anxious to co-operate in any mea, Already considerable progress has |sures which will have a beneficial been made in the growing, picking
Effect.
and marketing of cotton, and the record crop of the year is partly due to the activities of the Cotton Comratsalon of the National Economic Courset in Shenst pro- vince. There seems to be little doubt that in this particular com- modity. China may, with the ex- penditure of no great effort, in a few years be practically self-sup- porting and there is no good reason why the output of rice and wheat- should not also be very greatly expanded. As regards silk the pro- blem is not so straightforward, but
.
The sliver policy of the United States Government is of course of vital importance The price of stiver in terms of sterling and US dollars has already been pushed up considerably higher than other commodities and there is great danger for China in a further rapid rise while world commodity, prices lag behind. Nevertheless, there is much that China can do to help herself. Most important of all the balance of foreign "payments can be righted without undue difficulty as - may be scen from the 1934 figure when the excess of Sroports amomted to 493 million dollars Exports of treasure, taken from
small sum
China's Political Stuation Let us now turn to the political situation in China.
Sericulture Improvement Com- mittee has drawn up a three-year "year the silver party in the United States Congress were vigorously
plan and a little co-ordination of The Chairman, Hon. Mr. Mackle, agitating with a view to raising the
effort should effect great improve- the Customs returns and there- ments Unfortunately the present said: Since our last Annual Meet-price of liver, so much so that in on the one hand there were con- fore excluding smuggling, amount conditions in this industry are ing I regret we have to record the the spring China became seriously siderable Invisible imports of silvered to 311 million dollars, leaving deplorable. Raw silk exports in death of Mr. J. P. Warren who warmed and there was talk in counter-balancing the increased the visible adverse balance 184 1934 dropped over 50% compared served on the Board for a number Shanghai or devaluing the Chinese circulation of Hong Kong bank- of years. He was a man of charm- dollar as a counter-measure. The notes in South China, and on the millions, which is, a comparatively with 1933, and are less than one- under normal condi-tenth of the figures for 1929. This ing personality and will be greatly danger of this step was realised in other hand there was the smug-tions, that is to say when there is drop greatly affects the position of missed in the Colony.
time and at the end of March the ging of gold caused by the 'im-
confidence in the currency and in China's exports in which silk has The Report and Statement of London Stiver Agreement was rati-position in May 1930 of the e- those institutions which have con- long held an outstanding position. Accounts having been in your fied by China with a provison to
bargo on gold exports other than
trol over it..
Decrease in Export handa for some days I will, with the effect that China did so on the by the Central Bank of China.
Taken as a whole the export your permission, take them as read, understanding that she reserved Nevertheless, this is undoubtedly a
After making full provision for the right to take such measures as
true picture of the general trend
trade of China in 1834 dropped some 13% as compared with 1933 lasses and contingencies, the net appeared to be advisable should of events. It can hardly be re-
The Fukien rebellion was on its
and 71% compared with 1931. It profits for the year amount to her economic position be endanger- garded as surprising then that
is not a cheerful picture. Agricul- $13,004,897 36-a reduction compared by a rise in the price of allver. gradually in 1934 the disparity be- last legs when the year started. ed to 1933 of about $22 lacs due to In April Professor J. H. Rogers was
tween the Shanghai Exchange on Since then the Government has.tural and wholesale prices in gen- the higher rate of exchange present to China by President Roose London and New York and the not had to face any serious revolt, cral have continued to fall, though vailing on 31st December last. velt to investigate the effects on price of silver should have widen though the Communist menace re- elsewhere they have been sing. the interim China of the London Silver Agree-ed, making it profitable to export majas a dangerous factor, but it is The effect on the purchasing power dividend paid at 1/53/4 and ment and of possible further silver silver from China, Large silver satisfactory that Kiangst and Fu- of the people is obvious. Enorts Directors' remuneration, there re- legislation. This seemed to pro-exports were inevitable and it was kien have been cleared of at any are, however, being made to better mains available for distribution mise well, but before his investiga- really only the very considerable rate the main red armies. Un the conditions up-country in rela- 38.914.213.50 which it is proposed tions went very far, the Silver Pur-speculative oversold position in fortunately, these armies have not tion to taxation and interference to deal with as follows:-
chase Bill was in May accepted by Shanghat which had delayed the been properly defeated owing to with trade. The revision of the To pay a final divi-
President, Roosevelt, and it was day of reckoning and acted as a lack of co-operation amongst the export tariff last June helped cer- dend of £3 per share
sigried on June 19th. Many hard check on the normal adjustment provincial forces, and the result is tain commodities, but it is most (subject to deduction
things have been said about this or the adverse balance. Right up that the Reds have made good desizable that the free list should of income tax) $5.619,512.20 Bill at home and out East. All I to the end of May the silver stocks progress towards their objective of be considerable extended
Imports Transfer to Bank Pre-
will say is that so far it has bene- in Shanghai had increased rather Szechuan--and by way of paren
As regards imports, the Customs mises Account 1,000,000.00 fited an insignificant number of than diminished, and about, then thesis I may remind you that two Carry forward to new
persons to an unconvincing extent, they reached the maximum figure unfortunate persons, a British sub-figures have dropped about 54% dollars.ject and a Swiss citizen, have compared with 1931 and about 23% Account
3,294,701.30 while it has caused serious dis-of close on 600 million
In view of location, which may yet prove dis- This included a fair amount of been in their hands ever since compared with 1933. $9,014,213.60 astrous, in a country which con- balances belonging to foreign hold early October. In Northern Sze- the adverse balance of payments
tains one-quarter of the world's
ers of which a good position had chuan the Communist situation is this is a tendency which can population. As was to be expected, undoubtedly been used to finance serious. Moreover, scattered han-hardly be avoided, and until the real estate transactions on the ditry often masquerading under time when the measures now being on the adoption of this bill the uneasy feeling which had existed rising prices of property in Shang- the flag of communism is still far taken to bring about a proper earlier in the year berame pre-hal. I may say that a similar too prevalent even in the provinces equilibrium succeed in their aim, valent again. Moreover, on August position existed in Hong Kong, but
it is to be feared that imports will 9th President Roosevelt suddenly it was not so pronounced and by
remain at their present low level issued an order nationalising all keeping our funds in a liquid posi-
if they do not, indeed, continue to stocks of silver in the United States tion we were able to meet large
dwindle. Eitherto the Customs at 50.01 cents an ounce. This once withdrawals and yet avoid any dis-
import duty has been increased more alarmed the Chinese Govern-location in exchange. It was not It is not for me to say much mainly with an eye to increasing ment and negotiations were open-until August that the cumulative
revenue and protecting certain ed with the US. Government with effect of all these causes, some
home industries. In the near fi a view to consideration being given unavoidable but some avoidable.
ture we may see the imposition of to the effect of a rapid rise of began to make themselves serious
duties with a restrictive intent. silver on China. At the same time lv felt. In that month 79 million rumours that China would devalue dollars of silver deft the country or place an embargo on the export followed by 59 million dollars in
1
The Balance Sheet With regard to the figures of the Balance Sheet, you will notice an increase under the heading of Bank Premises, which is of course due to a considerable part of the cost of our new Head Office being charged to the account. It has also had to bear the cost of new offices in Yokohama and Saigon, both of which were completed in the past year. You will all have noticed the rapid, growth of our new office here, which we hope will be ready for occupation in October next if nothing unforeseen happens.
surrounding the capital, and it is to be feared that this sort of trouble will continue until the con- dition of the farmers improves and their standard of living is higher
about international relations in the Far East, but I will just remind you that in a weighty and much quoted speech made in London last
There have been substantial de- November General Smuts referred
creases in the importations or cer to the cloud in the Easta "which. might have the most far-reach-tain foodstuffs such as rice, wheat, The principal changes in the rest of silver became widespread. The September and 57 million dollars ing effects on the fortunes of peace flour and sugar during the past of the Balance Sheet are shown in Minister of Finance at once denied in October. It became in fact a and indeed "or our civilisation." year. This would on the face of the dollar, and the He appealed to Japan to give the it seem to show that the attempts a reduction to Current Accounts, that any such steps were contemn-flight from
no most serious reflection before being made to put China on a with a similar reduction in Cash plated, but three weeks later he Chinese Government seeing and Bills Receivable on the other issued an order which had the hope of practical help from Ameri- weakening any further that col- more self-supporting basis are al- side; this is mainly due to the ostensible object of preventing ea thereupon threw-discretion to lective system built up by the ready having some effect, but other
causes have to be taken into con situation in Shanghai which I will speculative exchange transactions, the wind, and, as you all know, Washington Treaties in the East refer to later.
but which effected no more than on October 15th imposed a 10% ex- just as by the Geneva League insideration, and it would be, dan- This time last year your Chair- an increase in the tension in port duty on silver plus an equali- the West. It would be unwise to gerous to be too optimistic, though "man spoke in a fairly optimistic Shanghai. This was the turning sation charge to bring the total close one's eyes to the potential no doubt we shall see this move- way of the conditions of trade point, and in August heavy ship-levy up to the exchange parity dangers of the complex problems ment to reduce imports of food- difference. We are unable to which the whole world-not only stuffs become permanent in time. throughout the world. I think, ments of silver, commenced..
subscribe to the opinion expressed the Far East-faces to-day. There The tendency to build factories however you will agree that the "China and the Depression” so commonly in the home papers is much inflammable material and mills. In many parts of China progress made, has on the whole-But it must not be thought that that these restrictive measures ving about everywhere and cau to avoid the heavy import duties been disappointing All that can the silver policy of the United were either necessary, advisable or
continues, but foreign firms are be satt, is that there has not been states Government had up to this successful. In fact, the best in-
afraid of committing themselves a serious retrograde step any time been the only disturbing fac formed opinion in China is almost
very far owing to recent legislation where, while those countries most
tor. A great deal had been due unanimous in agreeing that this
discriminating against foreign fac- closely connected with dreat Bri- to the fallure of China to recognise acting was a serious mistake and
tories. Moreover, another undesir tain through currency alliance and take measures to meet the Increased the lack of confidence
able feature is the keenness now have made moderate progress." It situation. The facts, were clear, while conducting to smuggling of that generally speaking China and being shown by Central and Pro- would appear that there are still and only last May Sir Arthur silver out of the country. At the Tapan are on better terms now vincial Government departments difficult times ahead. It is in par- Salter set them forth in black and end of the year the outflow of than this time last year, though to establish their own factories and ticular the unstabilised condition white in his report to the National silver by legitimate or illegitimate there have been anxious moments to monopolise particular industries, of currencies which causes the Economie Council, issued under means was to a certain extent Consider ble progress can be re- Under such conditions the luvest- prevailing feeling of insecurity. We the title of "China and the De-automatically checked in conse- corced towards a formal settlement of foreign capital in China, must, I fear, face the prospect of a long uphill struggle before the pression" There was the serious quence of the shortage of currency ment of the outstanding questions which she so badly needs. will only
adverse balance of trade which in Shanghai and the excessive to the North Through railway be discouraged. world-wide clouds of depression showed that in 1932 and 1933 Im-high rates of interest which ensu trafic from. Tientsin, to Manchuria are finally dissipated. Periods of optimism are likely to be followed Ports more than doubled exports; ed. The deflationary effect on the la an accomplished fact, and
there were also the Treasure country was and is of course ser- through postal services vis, Siberia the financial position of the Cui by periods of pessiming for some figures, covering gold and silver tous, and the banks in Shanghel have recently been re-estab time to come, and the best that we mavements, showing that imports are forced to concentrate on the The Chinese Government are to be nase Government because little is can hope for is that the latte of treasure dropped from 162 mil preservation of their cash to the commended on their sene and in fact know and no up-to-date
Kon dollars in 1929 to 21 million detriment of trade.
dollars in 1931, and turned into
an export of 120 million dollars in
The Future of Currency,
tion allied with wise statesmanship is needed, particularly in the capt tais of the countries surrounding the Parinc Ocean the name of which we trust will long remain a good omen. It is a hopeful. sign
China's Finance
There is little to be said about
or reliable figures are published ex- cept in respect of the Customs re- venue. The slight drop of 4 million
periods will get shorter and shorter
realistic policy in a situation fan 24-time goes on. If this view Is
of dangers and complexities, correct a policy of cautious conser-
The League of Nations is sunt vatism would seem wiser than one 1932, mainly due to large gold As to the future of the currency playing a useful part in providing dollars here shown has been com of a more spectacular nature shipments, while in 1933 in addi- positim in China, I hesitate to China with technical experts who pensated for by an increase in the What we need is a form of 19tion to gold a net export "of silver make any forecast. It is essential on their arrival are attached to Salt Revenue. Last year the Cus covery which will give increased was recorded for the Arst time that the greatest cantion should the
purchasing power and a more rapid turnover of stocks rather than artificial rises in price.
The 8uver Position
You will expect me to state the views of the Bank with regard to the silver position which has once again been such a prepor
factor in China's economy the past year. This time
since 1917. It was further known be observed and that no stop that the country's international should be taken without the most balance of payments, after being careful consideration and favourable for many years, had insulation with those
it was to 1932 turned unfavourable also known that Chinese remit tances from abroad, were day that stocks of gold were small, an that silver exports to balance pay
It obvi would the
Inst menta would almost certainly be carries great
that the
mic Council
eir work
only cost 75 million toms loans dollars as ngamist 188 mill 1931 The annual dencit of the
obably
about!
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