CO882-(6-8) — Page 496

PUBLIC RECORD OFFICE

Reference :-

PLEC.O. 882

8

PUBLIC RECORD OFFICE, LONDON

| ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

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13. Again, the Colony and the Federated Malay States might consent to pro- vide the money required by the Company on the conditions which are now offered by the latter, subject to such improved terms as might be secured by prolonging the negotiations. This would secure one of our objects, but the objections to the

pro- posal to which I have already referred, as regards both its financial aspect and its placing on the Government responsibility without effective control, would make it very difficult to defend.

14. A third course would be to make a counter-proposal to the Company, based on the principle that the Colonial Government, in return for giving such large pecu- niary assistance, should have a controlling voice in the Company's affairs. This con- trol might be effected in one of two ways, (a) by the Government holding a majority of shares and thereby securing (under revised Articles of Association) a preponderant voting power, and having one or more representatives on each of the two Boards to advise as to the necessity of exercising such power, or (b) by the Government advancing the money on the best security the Company can give, and having a Director on the local Board with a power of veto. The objections to the first proposal are that it would entail a large issue of new shares beyond what is authorised by the present constitu- tion of the Company, and also that questions of policy might arise in the administration of the Company which it would be difficult to bring under the cognizance of a general meeting where alone the voting power of the Government could be used. And another objection, fatal to both proposals, is that the London Committee (who doubtless express the opinions of the majority of the shareholders in the matter) would not con- sent to either, and we have no power to compel them to do so.

15. In view of these difficulties I have been obliged to consider the feasibility of the only other course which appears to be open to us, namely, the expropriation of the Company and the administration of its undertaking under Government control.

16. In your despatch you state that you regard such a proposal as wholly im- practicable, and undesirable in the interests of the port even if it were practicable, and Sir F. Swettenham (whom, in accordance with the suggestion in paragraph 15 of your despatch, I have freely consulted throughout the negotiations) at first ex- pressed himself to the same effect. But on learning the conditions under which I should be prepared to sanction expropriation, he, as I am informed, has considerably modified his earlier opinion; and, though I am not aware of the grounds on which you arrived at the conclusion that it would be undesirable and impracticable to take such a step, I think it probable that you were influenced by the same considerations as those present to the mind of the late Governor, and that after being placed in possession of my views you will see cause to reconsider your objections.

17. Sir F. Swettenham urged that the business of the Company was one which it would be impossible to conduct as a branch of the Civil Service of the Colony, and in this I entirely concur. The proposal which, as at present advised, I incline to favour is that the Company should be expropriated at a price to be determined by mutual agreement, or, failing agreement, by arbitration, and its assets vested in the Colonial Government. The management of the Company's business would then be conducted by a Board on strictly commercial principles, and every person employed by the Board, from the General Manager downwards, would stand to the Board in the ordinary business relation of employed to employer. The Board would be appointed by the Governor for a fixed period, its members retiring in rotation, but being eligible for re-appointment, and its actions would be subject to his control; but his interference in the ordinary administration of the port management would be neither necessary nor desirable. There would be on the Board one or possibly two official members whose duty it would be to bring to the notice of the Governor any important question of policy, and through whom any necessary instructions would be communicated to the Board.

18. In considering this proposal, it is my desire that you should put before me fully and frankly any objections to it that may present themselves to you. I have not been able to discover any insuperable difficulties in the way of its adoption. On the contrary the experience of some of our most important home and continental ports proves that mercantile and commercial interests of the most varied nature and of the greatest magnitude can be entrusted to similar organisations with complete safety. I can see no reason why equally good results should not follow from its intelligent adaptation to the requirements and circumstances of Singapore. It is true that the scheme would entail a considerable addition to the nominal debt of the Colony,

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especially after making provision for the contemplated improvements, but I appre- hend that the revenues of the undertaking would from the first be sufficient, and possibly more than sufficient, to provide the necessary interest, while by the operation of the sinking fund the Colony would possess an asset increasing yearly in value.

19. A more serious question presents itself in considering whether such a Board, under Government control, could and would successfully manage such a varied busi- ness in the best interests of the Colony. I understand that no dissatisfaction is ex- pressed with the present Board, due allowance being made for the control exercised by the London Committee, and it appears to me that it would be necessary to make little, if any, change in its composition. Equally I am of opinion that it should not be difficult to induce the present members, or the majority of them, to continue to serve under the new conditions. The position would be a dignified one; adequate fees could be attached to it; and it appears to me that the present members, who are all prominent local merchants and whose fortunes are bound up with those of the port, would have every inducement to retain the direction of affairs.

19. I am fully sensible of the arduous duties which at present devolve on the Governor and High Commissioner, and while I have no doubt that you would cheer- fully undertake whatever further duties imposed on you, I should feel that it was a serious objection to the scheme if it involved any heavy addition to your present labours. But I do not think that this would be the case. I should strongly desire -and indeed I should regard it as essential to the permanent success of the scheme- that there should be no interference with the Board in their ordinary business. The Governor's power of control should only be exercised, if exercised at all, when some question of public policy was involved, and such questions should be of very rare occurrence. The case would be similar with regard to the official members of the Board. I doubt if it would even be necessary for them to attend Board meetings when the agenda paper showed that only questions of business routine would come up for discussion. And I need hardly emphasise the fact that, in my opinion, the work of the Board should be conducted on the ordinary principles of sound mercan- tile administration.

20. The advantage of the scheme from other points of view hardly needs demon- strating. There will no longer be the possibility that the private interests of the shareholders may be in conflict with the welfare of the port, and there is the certainty that this very important business will henceforth be conducted in the best interests of the Peninsula. Moreover, while I am far from wishing to make any imputations on those responsible for this enterprise, it cannot be denied that the power and influence of the Company in the general affairs of the Colony are already sufficiently great, and that they are likely to be largely increased in the near future. It is not difficult

to imagine circumstances in which that power might be a cause of considerable em- barrassment to the Government, and the expropriation, on grounds of high policy, of a Company occupying such an exceptional position and dominating such great public interests stands in no need of justification,

21.

Finally, I would add that it is clear that expropriation at the present time will be easier and more economical than hereafter when the Company, by largely in- creasing its capital, has placed its commercial future on a thoroughly stable basis.

I shall be glad if you will give this despatch your immediate and earnest consideration. If you see cause to differ from the views which I have stated, I shall, of course, await a reasoned statement of your opinions. But if you concur in them, I request that you will inform me by telegraph in order that I may give the necessary notice to the Company, for it is very desirable that they should be made aware of the intentions of the Government before taking steps to invite further capital or to incur further expenditure on their proposed improvements.

I have, &c.,

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SIR,

No. 20.

ALFRED LYTTELTON.

COLONIAL OFFICE to THE TANJONG PAGAR DOCK COMPANY.

Downing Street, November 7, 1904. I AM directed by Mr. Secretary Lyttelton to acknowledge the receipt of letter of the 14th ultimo,* setting forth the conditions on which the Tanjong Pagar

• No. 16.

your