1931-02-28 — Page 15

HONG KONG

EXTRA

ChinaTMTM Mail

KONG BANK MEETING

CATASTROPHIC COLLAPSE

OF SILVER

DIRECTORS' FEES IN GOLD.

ONE OF

THE MOST DIFFICULT YEARS IN

MEMORY

Reference to the catastrophic collapse of silver was made at the yearly meeting of the Hong Kong and Shanghai Banking Corpora- tion this morning by the Chairman, Mr. J. A. Plurumer, who added that the past year had proved itself to be one of the most difficult in the annals of banking not only in the Far East but throughout the world.

The profits for the year amount to $20,726,730, or $6,500,000 more than in 1929, while expressed in gold they show a decrease of £16,000 only, in spite of the fact that the conversion rate of exchange has dropped by 32.69 per cent.

It was stated that the dividend and bonus remain the same as last year, whilst the Directors' fees will be increased from $50,000 per annum to £5,000.

NO REDUCTION OF BONUS

Supporting the Chairman werd the Hon Mr. C. G. S. Mackie (De- puty Chairman), the Hon. J. J. Paterson, Messrs. W. B. Bell, B. Lander Lewis B. Miskin, T. E. l'earce, T. H. R Shaw, J. P. Warren (Directors), together with

bonus of £1 per

ESTABLISHED

1845

HONG KONG, SATURDAY, FEBRUARY 28, 1931.

share (subject to Income Tax deduction) $11,702,857.14 Transfer to Bank

Premises Ac- count Transfer to Silver

Reserve

carried Balance ..

forward to the new account

1,000,000.00

600,000.00

•

year the fall of silver has been a calamity for the Eastern trade, a calamity seriously enhanced by the simultaneous decline of world commodity prices.

Natural Forces,

ence.

Operations in Japan.

At

vious trials of strength between Nanking and the provinces. one period of the fighting the re- bellious leaders were so auccess- ful that China appeared likely to split in two, and plans were ac- tually made for setting up a rival I shall re-government in the old capital. By

Depression at Home.

Was

is a view with which I find t quite Impossible to agree. The proportion of China's millions directly touched by the clash of contending armies may be com paratively small but that is only part of the story. What must be remembered Is that vastly greater numbers are ruined by the indirect In the Lancashire cotton trade, lad crashing military taxation, wreck- Consequences of the war-the to the despatch of an Economic ed .communications, the stimulus

The trade depression at home has centered attention on the trade ing possibilities of China. combined with the special distress

This,

took its place "how low can the only hope that the obvious dam- made them possible. Our Cor Mission sent by the British Gov-given to banditry and the destruc-

sible for me to answer.

In commencing my survey of the past year as usual with a re-

Lack of Markets.

carning Branches which we might conscious of dealing with a sub- reasonably have expected. ject which, from being the field I say with little fear of contra- of the specialist, has lately be- diction that the past year proved come a matter of universal inter- est and concern. This state of itself to be one of the most dif- affairs is due to the fact that the feult in the annals of banking, rapid decline, and still more, the Mz. V. M. Grayburn (Chief Man-not only in the Far East but constant uncertainty, in the ster

throughout the world. In Hong ling value of silver, has gravely Hoofdewen Hughes, the Kong and China not only were we dislocated that section of the Hon. Mr W. E. L. Shenton, Messrs. faced with the catastrophic col world's trade which is based on G. C. Moxon, G. H Potts, Fungficulties of very great moment an exchange between silver and countries concerned and to avoid also with the further, burden of labour, and secondly because it is the National Government. A real

are connected have shared with the benefits of peace, it will go cut exception in the general ahead rapidly, carrying with it a world depression besides having, steady demand for imported in some cases, experienced parti- machinery and equipment. The cular troubles of their own of a game applies to the rallways which political or economic nature are crying out for rehabilitation This being so, merchants are

which have placed an additional of the existing lines and for con- naturally asking what is the out- check on trade and enterprise. structional progresu. look ahead in regard to the silver

It is difficult, as I In these circumstances I do not fer shortly to the plans for de- September, however, the tide had exchange? have already intimated, even to propose to dwell on the individual voting the British Boxer Indemn turned and soon the war was misfortunes of the various mar- ity funds to this purpose. Avla- brought to an end by the interven- hazard a guess, but let us ex-kets. In India, of course, the eco- tion meanwhile is progressing and tion of Marshal Chang Hsueh- 3,429,093.38 aming a few of the more encour

aging factors in the present situa-nomic situation has been largely substantial number of aero-liang, the Manchurian ruler, who $16,031,950.62

tion. The low price of silver must overshadowed by political develop-planes for both civil and military desconded on Poking (or Pelping na I should now call it) and fore- When my predecessor address- tend to increase the consumpments. Of these I will only say use were imported in the course

that I think we should add our of the year. The Shanghal-Nan-ed the allies to retire. Generals ed you last year there was much tive demand since it stands to rea- discussion about the premium son that when a currency falls in voice to the tribute paid to the king and Hankow services have Yen and Feng quickly gave up the amount is rework of the Round Table Confer- functioned regularly and plans are struggle and their troops are bo- which then existed on our ex-value a greater change over the laying-down cost quired to meet current require conciliatory spirit which came to tion of an air line to Berlin via the "national" forces.

I sincerely hope that the said to be complete for the opera- ing disbanded or incorporated into of British dollars. This premium, ments, This fact has already I am glad to say, has now dis-made itself visible in the large in the fore in the delegates' discus-Siberia under Sino-German man-

Effect of Civil War. In the supply of air- appeared, but the process of get-crease in the circulation of bank- sions will find a reflection in In-agement.

At this point let me interpolate ting rid of it was somewhat pro- notes in China and, to a still great- dia and provide the foundation craft, as of motor cars, American

a remark · concerning a certain Itructed by reason of the weakness r degree, in this Colony. Low for a friendly and lasting solution firms retain a decided load.

in silver and by an optimistic feel prices must also in course of of the problem of India's future

The export trade from the Yang-view which I not infrequently see LimoTM discourage

It la to Laze, instead of thriving from the the effect that foreigners exagger

repeated in the press. ing among importers that ex-

production. government. There is lastly the effect of re

favourable exchange, showed an change must rise.

ate the importance of wars In stored peace in China, which if)

exceptionally bad record. This Currency Committee,

it continues. is a factor in the In regard to Japan there are was partly owing to civil disturb China which, it is alleged, are In the early part of the year upward direction, since, by stim- two financial operations of con-ance and partly to the decline in really not so vitally important bo- cause they affect a few provinces a committee was appointed to ulating the movement of goods sidedable moment to record the selling values abroad which out- look into the currency question in the country and so necessitat-return to a free gold basis of cur- stripped the fall in exchange ity of the total population. This at a time and only a small minor- of the Colony, but though the re-ing an expansion of China's currency and the floating last May, The Manchurian bean crop port has not so far been made rency, it offers a strong pillar of of conversion bonds in London found to be almost unsaicable and and New York to provide for the silk fell by almost half its value public, it is doubtful if any useful support to the sliver market.

final redemption of the 1905 in spite of a poor harvest. discoveries were made, the origin.

per cent. loan which matured on al cause of the committee's ap

January 1 last. The successful ac- pointment, viz.: the above-men-

These are some of what may complishment of these two opera- tioned high premium on our ex.

be called the natural forces in ations rebounds to the credit change, having soon been lost

operation in regard to the price of the Japanese Government and sight of in the heavy falli in of silver. Governmental action is our congratulations are due to sterling quotations which follow- also, of course, a very important the Minister of Finance whose ed ench other with alarming

factor. As to this last we can akilful handling of the situation rapidity. The question which

age to the world as a whole caus-poration participated as one of ernment to enquire into trading dollar go?" it is of course imposed by the eqllapse of silver will the issuing banks in the London conditions in the Far East and the Mere than this, the reconstruction tion of confidence generally. induce the Governments concern flotation which met-with great best means of advancing the Brt of the country is held up by the ed to stay their hand from any success. The credit of the Japan- tish share. After four months of diverting to purpose of war of the assistance from some of our gold-view of the silver market, I am measures calculated to make theese Government is reflected in the most thorough and painstaking in i Government's resourcea and ener position worse. Of the various fact that these bonds now stand vestigation, Sir Ernest Thompson gles and by the check imposed on schemes for international action at a 4 per cent. premium.

and his colleagues are at present all public enterprises. to stabilise the market, of which

in this Colony engaged in prepar- we have heard so much lately,

Ing their report. We welcome the

Chang Heuch-lang. none would appear to have reach-

The monotonous story of lack of ↑ Mission's visit firstly, because of ed as yet the practical stage. All markets for raw materials export the valuable personal contact be- To return to the situation; as such schemes involve a sacrifice to ed and lack of purchasing power tween British merchants in the soon as the war was over, Mar be made in the general interest, for imported goods, which repent- Far East and these representatives shal Chang Hsuch-liang visited and present a difficult problem ined self in India, Malaya, the of the manufacturing interests, Nanking where finding how to provide for a fair Philippines and Japan, applied including both management and ment was effected between him and apportionment of loss among the that any one sectional interest disorganised exchange-to the leading to a thorough re-survey of understanding between Nanking should obtain the lion's share of case of China, and was reflected the machinery of production and and Mukden is the best guarantee in the trade of Hong Kong, Our distribution of British goods for against the renewal of civil war the profit.

local merchants, it is true; found China and will, no doubt, bring to the North side of the Yangtze, Bome compensating Estimated Figures of Silver.

advantage light whatever weak points the Whether the present agreement able to come before you to-day Lauder, S. Seth, He Ming, A. Fwith such an excellent showing.

from the drop in exchange which, present system containa hath at will start the strain inherent in Let us glance first at the funda I will now give a few estimated sy putting up silver values, as-home and in the East. Judd, F W. Stapleton, J. W. C.

Foreign zuch compacts, particularly on the Eosinar, Io Chung-wan, G. K. Hall. reflecting as it does the highest mental facts. Silver has fallen figures showing the silver situa-sisted those who had stocks to trade with China, after having financial side, it is somewhat early Eunar, 10 Chung Tinson, S. 3. credit upon our Chief Manager, nearly 46 per cent. in price dur- tion for 1930. On the production liquidate. and the trade of the proceeded on somewhat stereotyp to say, but the signs on the whole Churn. A. H. White, Chua Seng- Managers and Agents.

ing the twelve months and re-side we had 244 million fine ounces Colony as a whole survived the ad-ed lines during the past century, are favourable and if China su:- choo, W. Allen, D. Landale, A. G.

mains on the down-grade. Re of new output, 29 million ounces verse conditions of the year with is new experiencing rapidly chang-vives this Spring without a fresh Confidence in Fature.

garded as part of a general price from sales by the Indian Govern-

good picasure of Coppin, Dr. H. Balean, Messrs.

Successing conditions. There is a call | breach of the peace we may hore G. E. Brown, A. M. L. Soares, A. Although fully warranted by the movement in which all the metals ment, 22 million from sales by Ching, on the other hand,-es- for adaptation all along the line that the corner is turned and that Nissim, 1. A. Dastier, J. T. figures before you, I may any have shared, this decline is no-France of demonetised coin and 20 pecially in the northern provinces to meet these new conditions and the phase of civil warfare which Bagram, J. Dalziel, J. D. Butcher, that in view of the still critical thing extraordinary and, other milion ounces from similar sales had to cope with an additional to cope with the dally increasing has now lasted for two whole de-

This gives hindrance to trade in the form of competition with which we are cades will at last be at an end. D. J. Lewis, John Fleming. J. M. state of the world's trade and the things being equal, we might by Indo-China.

difficulties count on a corresponding reaction grand total of about 315 million civil war and all its attendant faced. In these circumstances a Cooper, J. M. de Castro-Besto, I., many dangers and

·Such confidence is strengthered Alves, E. H. Summers, D. H. which still confront us, we con- when commodity prices Improve. fine ounces put on to the mar-evis.

general overhaul of the position by the results of the Plenary Ses- On the consumption side, Dixon, J. Coulthart, H. H. H.sidered very carefully as to whe-But silver is not merely a com-ket.

Judged by the Customs. revenue should greatly assist. Efforts are, sion of the Kuomintang Central imported 90 million Priestler. F. M. Ellis, D. Vaughan ther we were justified in recom-modity: it is also a medium of ex- India

totals for the year, there was a we know, being made at home to Executive which met at Nanking Steavenson, Chan Lim-pak, Chan merding the same dividend and change, and looked at in this light cunces, and China and Hong Kong further decline in the gold value, rationalise export industries and set Autumn. It was there decid- Slu-ming, L. G. S. Dodwell, and bonus as last year. We retain, its prospects pre less reassuring. 180 millions (showing an increaser not in the bulk, of China's ex-I trust that the Mission's reported to convoke a National Conven- however, a sufficient degree of The silver-using countries have over the previous year of 20 mil ports and imports, though of no will, among other things, lond im-tion to meet on May 5, The call- E. S. Abraham.

confidence in the future and I rapidly diminished in number lion ounces in the case of India very serious proportions. The petits to this very desirable pro- Ing of this Convention (or People's trust that you will approve of our and now, China remains the only and a decrease of 13 millions in the British piece-goods trade for the seas. We shall await it with much Conference as it is also called) recommendations. Let me men important one on a silver-cur case of China). The total excess,

answers the charge made by their year in cottons and woollena Interesă tion here that our increased, in- rency basis. Still the outlook is of production for the year may through Shanghai, largely consist

opponents against the Nankitig Party of monopolising power and vestments stand in our books at not so desperate of the exchange be estimated at 95 million ounces,ed in the liquidation of stocks, the

of oppoking popular control a very considerable margin under value of silver can regain a demnly sufficient when taken in divergence between home manufac

I will now review shortly the the decision. is honestly carried Experience conjunction with trade depres turing costs and the prices obtain political situation in China. market prices.

gree of stability.

out it should do much to remove I think we have every reason happily showa that adjustmentssion and falling commodity price able for the finished goods in to congratulate ourselves upon to price variations are made with to account for the phenomenal China being such as to discourage After another year of civil the causes of friction and jealousy the choice which we made some greater ease by Oriental coun- venkness of the metal. The mea replacements, With the demand Sghting, the country is now enjoy which have kept nationalist Chine twelve months ago in appoint tries than by the more highly sure of this weakness is given by for cheap-priced materials. British ing a fresh period of peace. This in a state of disunion during the ing Mr. Grayburn Acting Chief developed countries of the West, the more or less steady drop dur- manufacturers are feeling over welcome state of affairs is Inter- past two years. After making full provision for Manager. He has already proved It is also comforting to remem ing the course of the year from & more keenly the competition from preted by some as merely a luil Formidable Problem. losses and contingencies the net his exceptionally capacity for the ber that trade is, in the last maximum figure of 21.5/8 nence Japan and from native mills. profits for the year amount to $20,726,780 or some six and a half post and we had no hesitation in analysis, barter and is bound in per ounce to 14.1/2 pence an million dollars more than in 1929, confirming him in his appoint he long run to recover its equillance, a fall of 7.1/8 pence. Tho brium, whatever the level of mon-Shanghal exchange declined cor while expressed in gold they show ment some six months ago."

etary exchange. We may find con- respondingly from 2/11/4 to the only a decrease of about $16,000 in

solation in the fact that China's tael to 1/4.3/4, these being, it is spite of the fact that the conver

As shown in the Profit and Loss real purchasing power resides not curious to note, actually the first As shown Blon.rate of exchange has dropped by 32.69 per cent. The substan. Account, the amount available, in her silver, but in her surplus and last official rates quoted in thefacturers appear, I am glad to more room for optimism' than for For the last two or three years

after deducting the interim divi- merchandise her tca, silk, cot- year, dend and Directors' remuneration. ton, hides and other exportable

$16,681,950.52 which it is pro- products. posed to deal with as follows: To pay a final divi.......

per).

Shareholders

were the

lapse of silver but also with dif-

Kang-un. K. S. Morrison, Wong Ping-sun. C. E. H. Benvis, J. H. arising from economical or poli-old currencies and so has added Seth, P. S. Cassidy, E. D. Kotowall.itical causes. It, therefore, gives materially to the present causes of A. Stevenson, W. E. Smith, Paul me the greatest satisfaction to be general economic depression.

-

CHAIRMAN'S SPEECH. In proposing the adoption of the report and accounts, the and Chairman said:-Ladies Gentlemen, The report and ⚫ statement of accounts having been in your hands for some time I will, with your permission, take them as read,

tail increase in the silver revenue is, of course, largely due to the conversion of our gold earnings at the low rate of 1/1.1/8; it would have been even greater but for the fact that owing to adverse cir cumstances we have not had the

Allocation of Profits.

dend of £3 per share with

Fundamental Facts.

Calamity for Easter Trade." Such is the long view. In the meantime we cannot disguise from ourselves that during the past

Textile Industry.

Political Situation.

a general agree-

If

between atorms, by others as marking the culminating point of There remains a formidable pro- the National Government's struggle blem calling for all the energy In engineering products there to establish its supremacy. Ex-and determination which President has been a certain demand for perfence of the past makes one Chiang Kai-shek has shown him- exle and electrical equipment, in slow to accept the latter view too self to possess in ample measury. the supply of which British manu unreservedly, but I think there is I refer to the Communist menace.

say, to be holding their own in some years past and fair reason large parts of Central and South -Eastern Trading Conditions.

spite of the difficulty of meeting to hope that the lifting of the ern Chins have been ravaged and forolgn prices. Industrial deve clouds is more than temporary hold in terror by so-called "red" Turning now to Eastern trade topigent as a whole is receiving There is no need to burden you armies, consisting of bandits, dis- ing conditions during the past close attention in China in both with a detailed account of lust banded soldiery and ruined and year, it is superfluous to mention offelal and private circles, and I year's struggle which, though on that the countries with which we think it is safe to say, that, given a large scale, resembled the pre-

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