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In 1878, a new condition, No. 5, having been added to the licence, which limited the sale of spirits manufactured under it to quantities of not less than thirty-six (36) gallons at a time, the licence form, containing such new condition, was reprinted in the Government Gazette of the 25th May of that year.
It is to be found at page 200, and it is to be noticed that the words "One hundred Dollars" were still allowed to remain among its printed matter.
We believe that the new condition had its origin in certain complaints which had been addressed to the Government by the military authorities about the retailing of spirits to soldiers and others by our predecessors in the Hongkong Distillery.
In February last, the purchase of the Distillery premises being then under consideration, the vendor, at our request, applied to the Government for permission to carry on distilling operations there temporarily, for the purpose of testing the capabilities of the establishment, and his application was granted upon the payment of a licence fee calculated at the rate of Dollars One hundred ($100) per annum, for the period over which the experiments lasted. These were completed in about two months, and the purchase of the property having been concluded by us, we, on the 12th August, wrote to the Acting Colonial Secretary applying for a licence to enable us to carry on our operations there.
On 19th August, having received no reply to our application, we ventured to request that it might receive the Governor's early attention. On the same day, the Acting Colonial Secretary informed us that it was under consideration. On the next day we again pressed the matter, and, on the 24th of the month, we were, by direction of His Excellency, informed "that a new licence would be granted, subject to the payment of a fee of $2,000 for the ensuing twelve months, as fixed by the Governor in Council.”
The Governor's decision to increase the fee twenty times over, thus curtly expressed, took us completely by surprise: nor has that surprise been lessened by His Excellency's subsequent refusal to reconsider the matter, on the ground that the decision had been arrived at "after very careful consideration of all the circumstances."
His Excellency's reasons for his action are, owing to his reticence on the subject, only matter for conjecture. Whatever they may be, however, it seems difficult to believe that they can outweigh the following manifest objections to his policy.
In the first place, the course which had hitherto been adopted by the Government, of levying a uniform rate for such licences, since the Ordinance came into force, and which had been followed by Governor HENNESSY himself in our own case and in that of Mr. Jack, led us to infer that the rate, if not finally settled, was certainly not subject to violent or sudden fluctuations. The fact of the amount having been actually placed in print, in the form of licence, lent strength to this conclusion, and consequently it never occurred to us, before purchasing the premises, that the Governor had it in contemplation to effect so important a change; else our intention to purchase might have been abandoned. On the other hand, although His Excellency had been made aware of the object with which the experiments for which he granted the temporary licence were being conducted, he carefully concealed his intention of raising the fee until too late to prevent the completion of the contract.
In so doing, we think His Excellency showed a want of that good faith which his high office demands.
In the next place, this material change was carried into effect without any previous notice to us, or our being afforded any opportunity of being heard. We regard this as a palpable injustice. The grounds for the Governor's decision we do not know, but from a hint let fall by him at the table of the Legislative Council, to which we shall again refer, it would seem probable that it was mainly based on the prosperity of the Company. But the prosperity of the China Sugar Refining Company is due to Sugar Refining and not to Distilling, as we should have shown His Excellency had he allowed us a hearing, and the Refining of Sugar is not an industry which the laws of the Colony permit the Governor to tax. We believe it, moreover, to be a novelty in fiscal administration to tax the prosperity of any manufacturing concern in a lump sum, without regard to details, and the Governor, when he fixed $2,000 as the licence fee, never having applied to us or to any other legitimate source for information touching the affairs of the Company, must necessarily have been in complete ignorance of the part which Distilling has borne, or is likely in the future to bear, in the prosperity of the Company. What figures, or what basis of calculation, His Excellency has been proceeding on, we do not pretend to guess, but whatever they were, they must have been untrustworthy if they led to the result arrived at by the Executive.
As a matter of fact, the history of the Distillery has, as already pointed out, been hitherto invariably disastrous, and it is beyond all question that the distillation of spirits in this Colony has never been profitably conducted as an independent industry. It is only our position as Sugar Refiners, with a constant supply of surplus molasses, which enables us, or makes it worth while, to carry on the manufacture at all. The profit formerly made at our own works by distillation we are unable to state, as our operations were conducted on comparatively so small a scale that the necessity for special and accurate calculations never arose; nor can we give the results of the two months' experimental working at the Distillery, as much of the produce was shipped to foreign ports, and we have not yet received accounts sales.
In the next place, we have to point out that the producing power of this manufactory has not been increased since the former owners ceased working it.
Again, nearly the whole of the manufactured spirit is intended for exportation, and it is greatly to the benefit of the Colony to increase its foreign trade and connexions. An industry of this kind is capable of supporting a considerable number of Chinese workmen, and the revenue of the Colony directly benefits by the occupation of a building which but for the Company's enterprise would have stood empty, and probably have fallen into decay.
It is also further to be observed that the amount of the fee as now fixed, represents nearly 7 per cent of the capital invested, and that the finances of the Colony, which are, according to the Governor's latest utterances, in a specially flourishing condition, do not demand the imposition of so serious a tax on a concern which already bears its due share of the public burdens. It may be here noted that the ground rent on the Distillery premises is $763.62 per annum, and that the annual police, lighting and water rates amount to $300.
Finally, it is very doubtful whether our operations at the Distillery can be carried on under the burden of so heavy a tax.
For the foregoing reasons, which might be easily multiplied, we respectfully submit that the Governor has no grounds of justice, policy, expediency, or public necessity, to support his decision: and if our case ended there, we think we should have made out one sufficiently strong to demand your Lordship's interference. But we feel bound, in the interests of the Company we represent, to go a step further, and we venture to direct your Lordship's attention to certain remarks which fell from the Governor, in the course of his addresses, at a recent meeting of the Legislative Council, as they appear in the report contained in the Daily Press newspaper, which accompanies this letter, and especially to those portions marked in red ink. We do not enclose the Government Gazette, as this report was a good deal mutilated in the process of transcription into that organ, and much of the matter we refer to, being obviously unfit for a sober official record, was suppressed. The accuracy, however, of the newspaper report is beyond impeachment.
We do not pretend to lay much stress on the Governor's threat, ill-timed as, under the circumstances, it was, “to add a naught to the amount," and thus increase the fee payable by the Distillery to Dollars Twenty thousand ($20,000), because, difficult as we admit it to be to tell whether His Excellency's public utterances represent a settled conviction, or merely reflect a passing feeling, we do not think His Excellency would care to venture on a policy of direct confiscation; but we cannot resist the conviction that the animus against Mr. KESWICK, the senior partner of our firm in China, as evidenced by his remarks, more especially that portion of them in which he referred to the Public meeting of 1873 as having been got up by Mr. KESWICK, a statement altogether untrue, unhappily prevents His Excellency from giving to any business in which we are interested, impartial consideration, and that His Excellency's feelings have, in the present case, dominated his judgment.
We now leave the matter in your Lordship's hands, with a respectful request that your Lordship will afford us such redress as the circumstances seem to require.
This letter, in triplicate, has been forwarded to the Acting Colonial Secretary, in accordance with the Official regulations, but, to guard against the possibility of delay, we have thought it prudent to send a fourth copy to your Lordship direct.
We have the honour to be,
To the Right Honourable
THE EARL OF KIMBERLEY,
(Signed)
Her Majesty's Principal Secretary of State for the Colonies,
LONDON.
Your Lordship's most humble and obedient Servants,
JARDINE, MATHESON & Co.,
General Agents.
CHINA SUGAR REFINING COMPANY, LIMITED.