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In particular connection with the Hongkong Control Scheme Mr. Moller mentioned three vessels only, the S.S. Manapouri, Castlefield, and Wollowra, and he stated that the audited figures covering the running of the steamers under control in most cases showed a severe loss.' The Government has received statements of alleged losses in respect of six of the seventeen steamers controlled.
LL
31. Mr. Moller's remarks were generally supported by Mr. C. R. Burkill, who said that he could confirm them from personal experience.
32. The Government has not accepted the audite figures, referred to by Mr. Moller, and it is its experience that expert opinion of the value of the subject matter of a claim varies very considerably according as the claim is made by or against the Government. The following figures may be quoted in this connection. The auditel accounts in respect of two vessels gave $10,188 and $36,320 as actual losses sustained, exclusive of interest, over the period 16th April, 1918, to 31st January, 1919. These vessels were owned by two one-ship Companies whose balance sheets in respect of the year 1st February, 1918, to 31st January, 1919, show; in the one case prolit for the year 381,045, remuneration to Directors and Auditor $38,424, and dividend of $378 per $50 share and in the other case profit for the year $214,265, remuneration to Directors and Auditor $21,446, and dividend of $100.50 per 850 share, the capital being $40,000 and the steamer being written down to $20,000 in each case.
With regard to Mr. Moller's ships, his audited accounts, which have not been accepted by the Government, show loss sustained by owner exclusive of interest, $42,350 in respect of the Manapouri, and $19,134 in respect of the Castlefield. Mr. Moller has not maile any claim for loss in respect of the Wollowra. The total of the two claims is $61,193, against which there is a debt lue by Mr. Moller to the Hongkong Govern- ment in the sum of $44,512, exclusive of interest. Almost the whole of this debt is due, not in respect of Mr. Moller's ships, but in respect of a sum paid in error by the Govern- ment to Messrs. Moller (Hongkong) Ltil. on account of cargo carried in the S.S. Patriot,
As regards the Castlefield, Messrs. Moller & Co. with the approval of the Shipping Control Committee let the ship on a most advantageous charter for twelve calendar months from December, 1918. The charterer failed to take the vessel up, the Attorney General of Hongkong joined with the Castlefield Steamship Company as plaintiffs in an action against the charterer, julgment was obtained in a very large sum, and it is under- stood that the matter was finally settled on payment of between $300,000 and $100,000. The Hongkong Government made no claim in respect of the sum which would have been due to it up to the end of January, when its control terminated, but it did rely upon Mr. Moller's debt being paid out of that money. Even if Mr. Moller hal discharged this debt, he would still have had a most substantial sum in hand.
The Government is unaware of the subsequent history of Mr. Moller's three ships; except that it is informed, though it cannot vouch for the fact, that the S.S. Wollowre was sold for a much larger sum than the original purchase price; but it is unable to find any evidence in support of the allegation that the winding up of Messrs. Moller & Co. (Shanghai) Limited is in any way lue to the Hongkong Control Scheme.
The S.S. Patriot was owned by Messrs. A. R. Burkill & Sons, and at the time when she came under the Hongkong Control Scheme she was on time charter for a period of live years ending in 1921, at a rate of $12,000 a month. With regard to this Messrs. Burkill's agents wrote to the Shipowners' Protection Association under date the 11th April, 1918-
S.S. Patriot. Owing to the above vessel coming under Government Control on or about the 15th April, 1918, according to the proposed control rates the steamer will be earning $15,010 per month, which in this particular case is an improvement in the earning capacity of the steamer ; and on this very same date, the 11th April, Messrs. Burkill's solicitors wrote to the Colonial Secretary stating:-
"We enclose herewith working accounts of the S.S. Telemachus, Pheumpenh, Haimun, Brisbane, Wollowra, Manapouri, Castlefield, and Patriot. From a perusal of such working accounts it will be seen that, when the remuneration proposed to be paid by the Government is placed against the working expenses, the result is a very substantial monthly loss. Unless the Government are prepared to very substantially increase the remuneration bank- ruptcy or liquidation will be the inevitable outcome
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The Government has not received the S.S. Patriot's audited figures, but, whatever results these show, Mr. C. R. Burkill has at least the consolation that his firm, received considerably more remuneration in respect of this ship when under Government Control than it had been receiving under the charter arranged by his firm. Messrs. A, R. Burkill and Sons have not presented any claim for losses incurred by the S.S. Patriot or Wollowra,
The Douglas Steamship Company's accounts show that that Company was able to pay a dividend of 12% and a bonus of 10% in respect of the year ending the 30th June, 1018, and a dividend of 12% and a bonus of 6% in respect of the following year, with due provision for depreciation, reserve, and nuderwriting in addition.
On the other hand there may be quoted the case of one vessel which was so crank that crews were reluctant to go to sea in her, and it was unlikely that her insurance would be renewed. New decks were required to obviate claims on account of sea water spoiling the cargo, and on every trip ballast had to be purchased, as the ship when light was liable to capsize, while the ballast had to be taken out to make room for cargo. In this case a considerable sum due to the Government was remitted ex gratia. other instances special circumstances led to a remission of certain payments due.
In two
The Hongkong Government has throughout maintained the position that the majority of its controlled vessels were old and out-of-date, with excessive coal consumption and heavy repair bills, and that therefore the owners, being remunerated at the same rate as competitors operating more modern and up-to-date ships, were in this respect at a decided disadvantage; although the owners of Hongkong controlled vessels did not pay income tax or excess profits duty. The Hongkong Government cannot however agree that the owners lost money, and it suggests that, in the minds of some owners at least, there has been a confusion of thought between losses supposedly incurred and profits anticipated from war conditions which were not received.
33. In a letter addressed to the North China Daily Neirs, unler late the 21st June, 1923, Mr. Burkill wrote:-
"The most amusing feature of this is that while the Hongkong Government were apparently carrying such war risk, they kept the secret so well that shipowners were not informed that war risk was covered, and I defy any Government servant in longkong to produce any document showing that the owners of the S.S. Wollowru were notified that the boat was covered for a specified sum under a Government war risk policy or any other war risk policy."
Mr. Burkill had previously said that we received no Government policy for war risk, and insuring this risk was no small cost even though our boats were not in the danger zone.
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The S.S. Wollourra was requisitioned on the 30th November, 1917, urier Admiralty Charter Party T. 99, in which it was stated that the Government assumed liability for war risk.
In a circular letter, aldressed under date the 13th March, 1918, to owners or agents of all the steamers, including the S.S. Wollowra, it was stated:----
"The Government will accept all war risks (ride clause 19 of Charter Party T. 99) but, where it has been your practice to incur this expense in the past, you are authorised, for the present, to continue this expenditure on Government account".
As in his letter to the North China Daily News Mr. Burkill quoted this circular letter, he bad presumably read it.
On the 18th May, 1918, Messrs. Moller & Company, representing the Wolloweru's owners, wrote:-
८५
re S.8. Manapouri, Castle field, Wollowera. The parties concerned are anxious to know if in case of any of these vessels are lost through submarine or war-like canse whilst under Government requisition or Control, whether they will be fully covered by the Government for the full value of the steamer".
The Government in reply quoted from Charter Party T. 99 the Government's undertaking to accept all war risks.
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