BRITISH AND CHINESE CORPORATION
ADVANCES TO THE CHINESE GOVERNMENT
INTEREST PAYMENTS IN
ARREAR
POSITION OF THE RAILWAYS
The THIRTY-FIRST ANNUAL ORDINARY GENERAL MEETING of the British and Chinese Corporation, Limited, was held yesterday at the registered office of the company, 3, Lom bard-street, E.C.
Mr. SIDNEY FRANCIS MAYERS, the chairman of the company, presided.
The SECRETARY. (Mr. E. R. Morriss) having read the notice convening the meeting and the report of the auditors,
The CHAIRMAN said:-Gentlemen,-The report and accounts presented to this meeting deal with the financial year which ended on June 30 last. As compared with the previous year, the profit and loss account shows a slight improvement in our position. Commission, interest, and other profits are £2,436 13s. more than in 1928, and, after deducting expenses, which are some £780 less than in 1928, there is a credit balance of £1,907 2s. 8d., which has been added to the credit of profit and loss account in the balance-sheet. As regards the balance-sheet, our liabilities to creditors are reduced by £19,362 10s. 10d., and our invest- ment account is increased by £5,634 12s. 7d. On the other hand, interest payments which should have been met by the Chinese Govern- ment during the year under review are in arrear to the extent of £34,599 19s. 4d., which brings the total under this heading of interest in default up to £104,672 0s. 2d.
FULFILMENT OF OBJECT IMPEDED
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SHANGHAI NANKING RAILWAY
The railway which connects the present seat of government in China, Nanking, with the commercial capital of the country, Shanghai, the Shanghai Nanking line, affords proof of what can be done by the Ministry of Railways when its control is not interfered with by provincial authorities. The earnings of 1929 exceeded all records and were sufficient to meet loan service, as well as to pay dividends due to net profit certificate-holders for the years 1926, 1927, and 1928. During the current calendar year loan service has been fully met, including the first instalment of amortization, and up to the date of the recent interruption of traffic earnings have exceeded considerably those of the corresponding period in 1928.
SHANGHAI HANGCHOW NINGPO RAILWAY. The adjoining line to Haugchow and Ningpo. which is under the same administration and staff as the Shanghai Nanking Railway, has also done fairly well, and loan service has been duly met.
CANTON KOWLOON RAILWAY
Control over the Canton Kowloon line was re-established by the Ministry of Railways early this year, and this short railway has done as well as can be expected after its long period bf disruption. Its physical condition has been improved with the assistance of funds con tributed by the Provincial Government for sleeper renewals and through traffic with the British section has been maintained by means of additional engine power provided by the Hong-kong Government. The earnings, however, are still barely sufficient to cover working and maintenance expenses, with no balance for loan service. The defaults on the Sterling Loan of 1907 remain, therefore, with- out any provision for payment.
TIENTSIN PUKOW RAILWAY
I now wish to say something on the subject of the Tientsin Pukow Railway.
Though this corporation is not titularly a party to the loan agreements in terms of which the Tientsin Pukow Railway was constructed, we are, as you know, closely associated with Chinese Central Railways, Limited, and the duties of our representative in China include attention to the affairs of this important railway.
Of all the railways in which we have interests, the Tientsin Pukow Railway has perhaps suffered most in recent years from mismanagement, coupled with military inter- ference. This
The continued inability of the Chinese Government to devise means of meeting these payments has the effect not merely of depriving us of funds which are due to members of this corporation, but of impeding us most seriously in the fulfilment of the object for which our company was formed 30 years ago. object, as you are well aware, is to afford; means, in association with the Hongkong and Shanghai Banking Corporation and Messrs. Jardine Matheson and Co., Limited, for the investment of British capital in Chinese Government railway enterprises. In pursuit of this object, during periods when the issue of loans has, for one reason or another, been impracticable, we have made advances to the Chinese Government for railway purposes. The repayment of these advances with accrued interest has fallen gravely into default, and the result is that our power of rendering assistance to the Chinese Government in the task of rehabilitating its railways, after years of internal strife, is reduced.
It is with a sense of deep disappointment that I have again to allude to these defaults, which could have been wiped off rapidly if the Chinese Government had gained more effective control of the railways in which we are inter- ested. At our last annual meeting the National Government had been established at Nanking for barely six months. It was confidently hoped at that time that prompt steps would be taken to deal with railway debts, but 12 more months have elapsed with but little pro- gress in that direction. At the same time we recognize that some progress has been made, though it has consisted for the most part in academic study of the subject rather than in efforts to make payments.
PEKING MUKDEN RAILWAY
The crux of the railway position, so far as our financial interests are concerned, is to be found in the Peking Mukden Railway, for the reason that this line is pre-eminent in its capacity to provide the surplus earnings which should be made available to us in liquidation of obligations secured on those surplus earnings. The usurpation of control of this railway by the provincial authorities of Mukden has, I am glad to inform you, been relinquished to some extent since September last. I say advisedly "to some extent," as we have no evidence yet to show that control of this railway has been effectively assumed by the Ministry of Railways at Nanking. That evidence will not be complete until we learn that the surplus earnings of the railway are applied by the Ministry of Railways to the purposes for which they are hypothecated. In the meanwhile we have learnt recently with satisfaction that the rolling stock and engines of the railway, removed to the Manchurian section of the line outside the Great Wall of China, are at length being surrendered. When they have passed through the workshops for repairs it is to be hoped that earnings will soon be restored to normal figures.
Other lines, even when disorganized by the effects of civil war, have maintained to some degree their character as public utilities, but for several years past through traffic on the Tientsin Pukow Railway has been suspended and such sectional traffic as has been carried on has shown no balance over operating expenses. The Ministry of Railways has not yet succeeded in assuming direct con- trol of this line, which is still subject to political and military influence. Its debts for salaries and wages in arrear, for equipment and stores, and for defaults on loan service present a formidable problem.
NEGOTIATIONS WITH MINISTRY OF RAILWAYS.
Indeed, gentlemen, this whole question of what is to be done-what can be done--about Chinese railways, in which British capital has so large a stake, is a formidable problem. An opportunity for its discussion here in London has been recently accorded to us by the Chinese Ministry of Railways. A special repre- sentative of that Ministry, Mr. J. K. Choy, has been in London for the past two months, and we have had the benefit of the presence here also of Mr. B. T. B. Boothby, our representa- tive in China. In conferences with Mr. Choy, we have examined a number of great difficul- ties awaiting solution, and I wish to pay tri- bute to the energy which has been shown by Mr. Choy in his contribution to our discussions and to his sympathetic recognition of the
point of view of disappointed creditors Whether anything can eventuate from our dis cussions in the shape of a remedy for the un- fortunate position of Chinese railways and their creditors I do not yet know. The nature plain. It is, to put it briefly, the resumption of the remedy which is needed is perfectly of complete control of railway revenues by the Ministry of Railways and their exclusive appli- cation to railway purposes, of which provision for the payment of debts is an indispensable preliminary to the restoration of railway credit. Concurrently the remedy must include the restoration of the railways themselves to good physical condition, which involves further capital expenditure.
NEW BUSINESS
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That we still have confidence in the ability of Chinese Railways to meet their obligations when reasonably managed is shown by the only new business contracted by us during the current year. By an agreement concluded last June we have undertaken to provide the Shanghai Nanking Railway with eight addi- tional engines, 100 steel goods wagons, and 24 passenger coach underframes on a system of hire purchase. We have been able to do this. for the Shanghai Nanking Railway be- cause the terms of the loan agreement regard- ing the disposition of the earnings have been duly observed by the Ministry of Railways. We ought to be in a similar position with re- spect to the Peking Mukden line, but in the case of that railway the conditions regarding earnings, which are defined by the loan agree- ment and subsidiary agreements, have not been observed by the provincial authorities in con- trol of the line.
The possibility of providing further financial assistance in the great task of restoring pro- sperity to railways in which our interests are already so deeply involved must depend, there- fore, upon effective steps being taken by the Chinese Government to restore confidence.
This, clearly, can only be done by scrupulous respect for existing obligations, and by carry- ing out suitable measures for the protection and efficient administration of their railways. RECENT NEWS FROM CHINA Unfortunately the news from China during the past few days dispels the view entertained by many observers of the situation in thas country, that the National Government was firmly enough established to undertake the work of setting its domestic affairs in order without further upheavals. In the circum- stances of the moment we can only hope that a reorganized authority, capable of exercising the functions of government throughout the country, may soon emerge from the struggle which is now going on.
I beg to move: "That the directors' report and accounts, now presented, be and they are hereby received and adopted."
SIR CHARLES ADDIS, K.C.M.G., seconded the resolution and, there being no questions or comments, it was put to the meeting and carried unanimously.
The retiring director-Sir Edmund Wyld- bore Smith-was unanimously re-elected, and Messrs. Broads, Paterson and Co., chartered accountants, having been reappointed audi- tors, the proceedings terminated.
Tinies 12-12-29