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PUBLIC RECORD OFFICE

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C.O. 882

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8 PUBLIC RECORD OFFICE, LONDON

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take it much longer, possibly 30 years. But it has never for one moment been con- templated to do this special work otherwise than with special financial arrangements enabling its completion in 10 years or less. The Company were too deeply interested in the reproductive benefit to be derived from the completed work not to want to strain every nerve to accelerate its completion.

23. The copy of the despatch has thrown a much needed light upon the reason why the Government found the Committee's offer of 14th October so incapable of further negotiation. I am completely mystified as to how it has arisen, but it is clear that a mistake has been made in providing the Secretary of State with facts of the first importance. The Secretary of State writes of the 10,000 shares of which it was suggested the two Governments should become possessed as carrying votes of only 500, whilst I had represented that the voting power they would carry would give the Government "effective control." Had it really been as the Secretary of State understood, I should certainly have been open to the grave censure implied by him in his remark that the voting power offered him was illusory. But I submit that að such trifling with the Secretary of State was scarcely conceivable, a more thorough investigation should have been instituted. The fact is that by an alteration of the Articles of Association, dated 11th June, 1904, the suggested holding carried a voting power, not of 500 only, but of 10,000, and it is difficult to imagine circumstances in that case wherein the Government vote would not have been effective whenever it was desirable to exercise it. The intention of the Committee was strictly to give the Government practically as absolute control as it will have under the new Ordinance. The subject of price is perhaps a delicate one to refer to now, but in their calcu- lations it seems to me that both the Governor and the Secretary of State have omitted to take into sufficient consideration the high premia of former issues of capital and the years upon years of accumulated reserves in which new shareholders necessarily now become participators.

24. I have now touched upon such points of the Secretary of State's despatch as seem to me, as the representative of the great body of the proprietors to be affected by the expropriation, to call for my animadversion. I can well understand the motives of high Imperial and Colonial policy which animate the Government in their desire to acquire so magnificent a property-none the less that I shall deplore, as many others will with me, our severance from an enterprise to the building up of which the longest and best part of our lives have been devoted-but I repeat my regret that the Secretary of State, in instructing the necessary legislation, did not more rigorously guard himself against the dissemination of opinions tending to jeopardise the later question of adequate compensation, to which I bave felt it my duty to draw his attention.

25. As I have already notified to you, the utter inadequacy of the Government conception of the value of the property leaves no hope of any settlement but through the tedious and costly means of arbitration. Fortunately, no subtlety of argument can avail against the indisputably great value of the property, and the proprietors, if they have the feeling that they are being dispossessed of their great estate with scant consideration for their interests, are left with the consolation that no umpire can possibly view their mile and half of wharfed foreshore, their graving docks, work- shops and godowns, and their 628 acres of townland, which in a few years must become the busiest part of Singapore, their considerable wharfage at Prye River and their interest at Tanjong Rhoo, giving at the same time due heed to the magnificent returns of the Company for the past 30 years, without an award which must be a near approach to their legitimate expectations.

As the Secretary of State's despatch has been published in Singapore, I feel sure that he will see no impropriety in my intention immediately to publish this letter bere.

I am, &c.,

W. G. GULLAND, Chairman to the London Consulting Committee of the

Tanjong Pagar Dock Company, Limited.

4724

103

No. 48.

GOVERNOR SIR J. ANDERSON to MR. LYTTELTON.

(Confidential.)

(Received February 13, 1905.)

[Answered by No. 50a.]

SIR,

Government House, Singapore, January 19, 1905. I HAVE the honour to acquaint you that I returned here from Penang on Monday morning, the 16th of January current.

2. Immediately on the receipt of your despatch of the 16th of December," enclosing the draft Ordinance for the expropriation of the Tanjong Pagar Dock Company, I asked the Solicitor-General to go through the draft with me, and the result of our conference was the additions to the measure of which I informed you in my telegram of the 18th instant,f d I enclose copies of the draft as settled

by us.t

3. I had this put into type without delay, and had it circulated to the Members of the Executive Council for consideration at a meeting held immediately after my

return.

Some minor alterations were made by the Council, and before the next mail is despatched I shall be able to furnish you with copies of the measure as it will be introduced into Council.§

4. On the 17th instant, in the company of the Colonial Secretary, I had an interview with Mr. Rumney Nicholson, the Chairman and Managing Director of the Company, and Mr. Waddell, who represents the firm of Boustead and Company, and Mr. Shelford, who represents Messrs. Paterson, Simons and Company, who are the principal proprietors of the shares of the Company.

5.

No note was taken of the proceedings, but substantially the following was what took place.

I explained to them that it was desirable to press the Bill through as soon as possible and that, as it was founded on the Metropolis Water Act, I presumed there would be no objection to the principles on the part of the Company, and that, unless for strong reasons, I could not agree to delay. They would not commit themselves to any expression of opinion pending the receipt of instructions from London.

6. I then went on to say that as they were representatives of the most important shipping and commercial interests in the community, they would agree that it was very desirable that we should, if possible, avoid the enormous expense of an arbitra- tion, the cost of which would, under the Ordinance, fall ultimately on those shipping and commercial interests in which they were concerned.

But

The ordinary rate of interest here was 7 per cent., and the expropriation on that basis would mean fourteen years' purchase of their ordinary dividend. there were also the prospects of increased dividends-though they were remote-- and the cost of re-investment and other matters, mentioned in the Ordinance, to be considered; and, in view of these and other considerations, I was prepared to offer them twenty years' purchase, say, two hundred and forty dollars per share.

They replied that their annual net income was 1,200,000 dollars, and that they placed very large sums to reserve and also wrote off more than was required for depreciation.

I pointed out that what we were purchasing was a going concern, that the whole of the so-called reserve fund was invested in the business, and that, as the part of their business in which the so-called reserve fund was invested was a competitive business, it was no more than was actually necessary to keep their business up to date. If, instead of using the money in the business, they attempted to divide it, they would have to borrow, pay interest, and ultimately repay, and that the net result was that they only maintained their 12 per cent. dividend by themselves lending the Reserve Fund without interest. I could not, therefore, admit that any part of what was set aside for reserve-but really to keep their business up to date-- should be taken into account. As regards depreciation, there, again, they were a

• No. 31. † No. 38. ‡ Not printed. § Printed as an enclosure to this despatch.

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