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the Government to take into consideration the fact that any attempt on its part to undercut rates on the China Coast by means of its controlled vessels would meet with bitter opposition from the Indo-China and China Navigation Comp mies, whose vessels were oper- -ated under the Imperial Scheme.

8.

It is then the case that vessels not required for special services were run at market rates, but it is in- -possible to accept the allegation of the Government of the Straits Settlements that this cource resulted in lack of Gevor- -ment control. Every run was watched most carefully by the Ship- -ping Control Committee, and no charter was let unless the trade was considered to be in essential Imperial or Colonial interests. Each charter was endorsed by the Committee, who reserved in each case the right to take the ship back at short notice; and sub- -chartering without the Committee's approval was forbidden. The Government of the Straits Settlements have been misinfo med in that respect. With reference to that Government's statement that it was impossible to place any reliance on the continuance of any veasel on any particular run, it must be pointed out that tha requirements of the Straite Settlements were unknown to the llongkong Government except in one instance which will be dealt with later, Any representations would have had most careful consideration, and all possible steps would have bem taken to render tonnage available.

9.

The Government of the Straits Settlements refer more particularly to certain vessels regarding which the following remarks may be made.

(s). The S. S. "Haimun" is the vessel that was referred to in the concluding paragraph of Mr. Severn's Confidential Despatch of the lst. llovember. It was doubtful whether the charter, entered upon shortly before the institution of the control, w65 genuine, and Mr. Long was consulted by telegram as to whether the Hongkong Government was bound thereby when the veagal wis not required for special purposes. The vessel was taken up in June to

carry

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