CO882-(6-8) — Page 475

PUBLIC RECORD OFFICE

Reference :-

TLC.O. 882

8

36

8. With a gross earning capacity of $1,200,000 a year it is, therefore, in a very sound financial position and will, of course, effect large savings in expenditure on repairs and depreciation by replacing its present wooden wharfage by a permanent structure. But, in present conditions, it will obviously be difficult for it to obtain, on anything like reasonable terms on the open market, the large sums required to carry out the proposals submitted by the Managing Director, even if it should succeed in renewing the debentures which fall due in the present and four following years.

9. In these circumstances, therefore, the probabilities are either that the work will not be undertaken and the present makeshift policy continued, or they will be proceeded with and, to meet the enhanced burden, the rates for the services performed will be largely increased. In either case the result to the Colony must be serious, and I am satisfied that it is a case in which Government assistance on suitable condi- tions is not only desirable but even essential in the interests of the Colony and the Federated Malay States.

10. The conditions to be imposed and the extent and nature of the assistance to be given would, of course, have to be arranged by negotiation, which, as the real control of the affairs of the Company rests at present with the London Committee, would have to take place in London. But I think that, as regards the conditions, it should be stipulated first of all that any increase of the rates now charged to shipping or for the warehousing and handling of goods and the amount of any dividend to be declared should be subject to the approval of the Governor, who should also have a veto on the appointment of all directors and members of the London Committee, and the right to nominate at least two members of the Board and at least one member of the London Committee. The Articles of Association should also be modified by expunging the condition in Section 124, that the previous approval of the London Committee is required before any expenditure of $50,000 can be undertaken by the Board, and by removing the restriction on the voting power of the large shareholders and making the voting power exactly proportionate to the amount of the holding.

11. As regards the assistance to be given, I have received privately from the Managing Director the enclosed financial scheme which he has prepared for submission to the Committee in London.

It will be seen that the total contemplated expenditure is $12,078,153, and that it proposed to raise $4,500,000 of this by an issue of debentures and the remainder by the sale of the Company's land and by contributions from revenue and reserves. The amount that the Company estimate that they will have to raise from debentures and new shares is over eight million dollars, but it will probably be not less than the ten million suggested by the late Chairman, and, in view of the actual and prospective commitments both of the Colony and the Federated Malay States, I do not think it would be prudent to undertake to find the whole of that sum from revenue or balances.

12. I would suggest, therefore, that, on the condition of the Company accepting the restrictions suggested, and agreeing to issue to the Government at a certain price the 18,000 new shares which it is proposed to create, the Governments of the Colony and the Federated Malay States should guarantee an issue of 4 per cent. debentures by the Company to an amount not exceeding, say, eight million dollars, to pay off existing debentures and meet the expenditure on the new works; such debentures to be for a period of 50 years, but subject to be paid off at par at any time after 25 years and by annual drawings of 4 per cent, of the issue.

13. The 18,000 shares should be issued, at a price to be agreed upon, to the Governments of the Federated Malay States and the Colony-twelve thousand to the former and six thousand to the latter with full voting power from the outset, to be paid for by instalments of 10 per cent. per annum, such instalments to bear interest at 4 per cent. until the whole of the agreed price shall have been paid up and there- after to receive dividend at the same rate as the other shares. If preferred by the Company, the instalments might be increased and the period of payment shortened.

14. The price to be paid for the shares will be a difficult matter to negotiate, but, looking to the fact that at the beginning of the present year the shares were selling at $300 each, and are at present quoted at $260, I do not think that $200 a share would be an excessive price.

15. I submit these figures and proposals only as suggestions, as, if you agree with me that negotiations should be entered upon with the Company, I would recom- mend that my predecessor, Sir F. A. Swettenham, should be asked to represent the

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Governments of the Colony and the Federated Malay States. The community here have perfect confidence in him and would accept without question the details of any bargain he might make on their behalf.

If the arrangement proposed should succeed, he would also be the fittest person to represent the Governments on the London Committee. I should add that the local holding of shares, including two thousand shares held by the Government of the Federated Malay States, amounts to some ten thousand, so that, with the 18,000 shares to be issued to the Government, the local holding would, unless the London shareholders were absolutely unanimous, command half the voting power.

16. The proposals which I have made are no doubt unusual, but so, I submit, are the circumstances. The destiny of Singapore rests at present in the hands of this Company, and it is too late for the Government to resume the absolute control of its harbour, which it ought never to have parted with. It is not too late, however, to obtain such control as will enable it to control the working of the Company in the interests of the Colony and the States, and I would earnestly urge that some arrangement such as I have indicated will secure this; the question of the price to be paid for the new shares should not be allowed to stand in the way.

I have, &c.,

JOHN

DERSON.

Enclosure in No. 6.

Schedule C, May 17, 1904.

SCHEME OF FINANCE Por Proposed NEW WORKS OF EXTENSION AND DEVELOPMENT.

Total with

Interest

Year,

Wharf.

New

Eastern Lagoon Graving Extension.

Dook.

Total.

Dock.

Reserves and Divi.

and dends per Premium.

cent, and

New De- bentures.

New Sharee.

Land,

12 per cent.

$

1st

2nd

3rd

4th

120,310 550,000

420,310 400,000 400,000

420,310 500,000 400,000

420,310 550,000 330,000

100,000

1,220,310 1,250,310 400,310

1,320,310 1,402,810 302,810 1,100,000

1,320,310 1,457,810 357,810 | 1,100,000

1,070,810 1,260,310 260,310 1,000,000

$ 850,000

Sch

$20,910

6th

D

420,310

7th

420,310

8th

**

420,310

9th

420,810

830,000 1,270,310

680,000 1,100,310

1uth

420,310

4,208,100 2,000,000

100,000 750,000 1,270,310 1,520,810 750,000

320,000 750,000 1,490,310 1,788,810 730,000

325,053 850,000 | 1,595,863 1,941,863 750,000

1,664,810 750,000

1,655,060

420,310 420,910 420,310

400,000

870,810

400,000

638,810

400,000

791,863

400,000

514,810

550,000 450,000

200,000

335,060

1,995,033

25511

3,880,000 12,078,153 |14,242,903 | 5,291,550 | 4,500,000 || 1,800,000 | 2,651,354

GOVERNOR SIR J. ANDERSON to MR. LYTTELTON.

(Confidential.)

No. 7.

(Received July 19, 1904.)

[Answered by No. 19.]

SIR,

Government House, Singapore, June 17, 1904. I HAVE the honour to acknowledge the receipt of your despatch, No. 99, of the 22nd of April last, respecting the draft Ordinance empowering the Tanjong Pagar Dock Company to improve their wharfage, &c.

• No. 4.

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