PUBLIC RECORD OFFICE
Reference
TC.O.
882
2 PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO
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explanation on the subject. Before doing so, however, it may be convenient to see how far the specific exactions of which they complain, account for the loss of their capital.
30. Recapitulating, therefore, the specific items of which they complain (except the item in which their mistake was immediately detected) and assuming for a moment their allegations were perfectly correct, instead of being mistaken, the account against the Government would stand thus:-
Rent for a single jetty, say for two years
Police charges for four years
Alleged overcharge for hospital services Alleged road to Government House
::::
£ .. d.
200 0 0
785 15 4
292 10 0
441 16 2
1,720 1 6
This account, even if it were true, would not go far to explain to the shareholders the total loss of their 40,0001., to say nothing of the "rapid exhaustion of the preference stock," which the Directors admitted in their letter to Mr. Walcott, on the 7th of December, 1871.
31. As far as I am concerned, there remains only the question whether the alleged overcharges for convict labour can explain the very serious loss the shareholders have sustained? But as their average annual outlay for convict labour for four years was little more than 6001. a year, no exorbitant rate of convict wages can account for the 40,0001. 32. In truth, however, the total sum paid to the Government during the four years for convict labour by the Company, 2,4301, was very reasonable and moderate.
33. For ordinary overground labour, I charged the Company 25 cents per man per day. For underground work in the mines, 30 to 35 cents a day. For loading ships with coal, 25 cents a ton. For convict carpenters and blacksmiths, a little more than for ordinary workmen.
34. This scale of wages met the entire approval of the Directors, and was sanctioned by Lord Granville.
35. After the Directors had experienced the advantage of this scale of wages for more than a year, they did me the honour of transmitting to me a very flattering resolution of thinks. Not satisfied with this expression of their approval and gratitude, they sent me a formal letter of the Board requesting my permission to call the third steamer they were about to build, the "John Pope Hennessy," as a recognition of the benefits I conferred on the Company.
36. One of the three gentlemen who waited on your Lordship on the 25th of last July, wrote to me on the 5th of October, 1870, a short time before my promotion from Labuan, in these words :-"We have, from time to time, had much pleasure in hearing of the kind interest you have taken in the development of our undertaking." At that date the Directors had more than two years' experience of the convict wages I was charging them; and up to the day I left Labuan, they never hinted to me that they considered the charges excessive.
37. In addition to their own acknowledgments, your Lordship will see that my charges were moderate from the following facts:---
(a.) Capitan Mahsao, and Mr. Leechang Ho, two sago manufacturers, and Chinese merchants, applied, in 1870, to Mr. Howard for gangs of convicts on the same terms as the Coal Company. I instructed Mr. Howard to reply that the consent of Her Majesty's Government had given to the private employment of convicts was exceptional and intended as a special boon to the Coal Company; that until more convicts came from Singapore, and Mr. Lumsden had more hands than he could employ, I could not recommend your Lordship to allow any of them to be used in making the stone jetty Mr. Chang Ho wanted, or the new road to his sago works Capitan Mahsao bad projected. But, as an occasional boon to the Chinese merchants, I allowed the convicts at the Victoria Harbour end to be employed now and then in loading and unloading ships when rapid despatch was necessary, charging them the same rates I charged the Coal Company. Mr. Howard reported that no money was ever paid more cheerfully by the Chinese traders than these reimbursements for convict labour.
(b.) A little voluntary municipality I established in the town of Victoria, composed of Chinese and Mahomedan shopkeepers, had to make a solid roadway running along between the houses and the sea-beach. They also applied to Mr. Howard for convicts on the same terms as those on which they were employed by the Coal Company. As the road in question was really a public work, I consented, and the municipality did the work admiralty, paying over 4001. for the gang of convicts they were permitted to employ. Capitan Malsao and Mr. Leechang Ho were members of the municipality, and it was
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after they saw how good and cheap the convict labour was that they desired to get it on the same terms for their private undertaking.
(c) The Deputy Commissary at Labuan, Mr. Baker, was a zealous and economic control officer. Whenever he had occasion to employ hired labour, he always asked for convicts on the Coal Company's terms. Every month he paid something for wages to the Superintendent of Convicts, and he always acknowledged that these wages were extremely moderate.
(d) Mr. Howard, who was for many years Assistant-Manager and Superintendent of Labour to two successive Coal Companies in Labuan, has frequently told me, and has reported officially, that the convict labour I supplied to the present Company was the best and cheapest labour that any coal company had ever got in Labuan.
38. Nevertheless, when I saw that the present Company announced their intention of making a railway from the mines to Victoria Harbour, and believing they would carry out the sensible views of their thoroughly trustworthy manager, Mr. Lumsden, I contemplated giving them convict labour on still more favourable terms. In a despatch I wrote in November 1870, I suggested the expediency of reducing the charge for convict labour to the Ccal Company to the bare cost of the maintenance of the convicts, that is, from 25 cents a day to 18 cents a day.
39. As well as I can now remember, your Lordship did not approve of the reduction, and expressed the opinion that the charges to the Coal Company were reasonable.
40. That the Directors should have gone to your Lordship to charge me and Mr. Lumsden with indifference to their pecuniary interests in this matter is inexplicable, for, on the 23rd of November, 1870, the Manager wrote an official report to Mr. Wood, the Secretary of the Oriental Coal Company, which concludes with the following paragraph:-" During the two and a-half years I have been here, the system of convict labour has been gradually developed and with complete success. Since the convicts have been employed at the mines not a single complaint has been made of them. The most important matter of all is, that the Governor has volunteered to reduce the charges of all convict labour at the mines to the simple cost of maintenance, which I understand will not exceed 18 cents per man per day. This will, of course, effect a reduction in every department of labour at the mines where convicts are employed."
41. So far, your Lordship will be able to see that the Directors are as inaccurate in their statements about my charges for convict labour as they were in their allegations about the "exactions" for lighters, jetty rent, police, hospital, and the fictitious road to Government House.
42. I have thus dealt with every specific charge they have made, and I might stop here, but there are two questions on which probably your Lordship will expect me to touch-First, what has really become of the shareholders' 40,0001.? Secondly, can the Oriental Coal Company, with its present capital and present management, succeed in developing the mines?
43. According to their own statements, my supposed exactions amounted to less than 5001. a-year on an average of the four years, whereas they confess their losses amounted to over 10,000l. a-year. Beyond my imaginary exactions, they do not say how this large sum was expended. I can, however, inform your Lordship—
Labuan.
7
44. It was my duty, under the lease, to inspect their books every six months in Labuan, and I did so regularly. This official inspection, and other means I had of ascertaining the conditions of their business, enables me to state that the shareholders" money was expended not by Mr. Lumsden in Labuan, but by the Directors out of 45. In answer to a letter from Mr. Meade, of the 30th of December, 1871, I stated on the 25th of last January,† that the want of commercial succes of the Company and the waste of capital must be attributed to causes for which the Directors were themselves responsible. I gave some instances of useless expenditure and mismanagement of which the Directors had been guilty.
46. The Directors saddled the Labuan coal mines with many expenses connected with their steamers the "Vine" and the " William Miller." These steamers which were nominally sent out for conveying Labuan coal to the centres of coal, consumption in the East, were really used to carry rice from Saigon to Singapore, to take general cargo from Singapore to Hong Kong, and to convey coolies from Amoy to Singapore.
The shareholders and the government had both been informed that these steamers would run between Labuan, Singapore, and Hong Kong, taking the fresh cut coal in the most expeditious manner to these great coal depots. Instead however of serving.
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