(This Document is the Property of His Britannic Majesty's Government.)
AFFAIRS OF CHINA.
CONFIDENTIAL.
[36645]
No. 1.
261
[October 30.]
SECTION 3
C.O.
45803
IRE Peking Syndicate to Foreign Office.--(Received October 30.) Rs 27 NOV 17
110, Cannon Street, London, October 29, 1906.
Sir,
I HAVE the honour to acknowledge the receipt of your letter of the 25th instant requesting to be furnished with a statement showing on what basis the figure of £200l. a-day, proposed to be claimed as damages from the Chinese Government, was calculated. In reply, I am instructed by my Directors to say that the above claim was suggested, not so much as an exact equivalent of loss sustained by the Syndicate, as a lever for forcing the Chinese authorities to recede from the position they had taken up, and without abandoning hopes of an ultimate satisfactory settlement. It was, however, apparently the opinion entertained in His Majesty's Legation in Peking that such a claim could not be presented without breaking off negotiations altogether, and, consequently, so long as there were hopes of another solution, the claim for damages was withheld. These hopes it would now seem are not likely to be realized, at least for an indefinite period, and, in justice to the shareholders, my Directors must press for compensation.
From the nature of the case it is not easy for the Directors to state in exact figures what the loss due to the delay in issuing a permit amounts to. In the Prospectus issued to the public on the 3rd March, 1900, it was estimated that from the outset a yearly sale of 500,000 tons of coal could be safely reckoned upon, which, on a moderate calculation, would give an annual profit of £175,000, and it was further stated that, when the Syndicate's operations were in full working order, an annual sale of 2,500,000 tons might be expected, yielding a return of £750,000. It may be said that these figures are of little value as being mere expectations; but to show that they are not exaggerated, I am to quote the experience of the Chinese Engineering and Mining Company (Limited). With an insignificant area as compared with the Syndicate's Concessions, and with coal of a greatly inferior quality, this Company is turning out coal at the rate of 18,000 to 20,000 tons a-week, or about a million tons a-year, which for the year ended the 25th February last yielded a net profit, after paying all China expenses, of £178,580. The profits on the sale of coal by this Company are thus 3s. 6d. a-ton, but the Syndicate has proved, by actual sales of coal from the Honan Mines brought down to the Tien-tsin market, that they can count on a profit of 6s. a-ton.
The calculations of profit given in the Prospectus contemplate the working of both Honan and Shansi Concessions. Our present claim is concerned with Shansi alone, and even of that it only covers the northern portion, viz., the Prefecture of Pingting-chow and the neighbouring district of Yu-hsien. The southern area, including the Prefectures of Tsechow and Luan, is as yet untouched, as the railway has not yet been carried up to the Shansi plateau. No permit, therefore, has been applied for for this area, and consequently there has been no refusal. The Syndicate, however, contemplates the development of this area at an early date, and should the permit in this case be refused, the claim for damages must be increased proportionately.
My Directors consider that their Coal Concessions may be divided into three areas of approximately equal value. One of these areas is the Honan field, for which a permit has been granted; the second is the southern Shansi field, including, as stated, the Prefectures of Tsechow and Luan; and the third is the northern Shansi field, comprising the districts of Pingting-chow and Yu-hsien. It is in respect of this last field only that the claim for damages for refusal of permission to work is now presented.
With regard to the amount, my Directors consider that within six months of the granting of a permit they could with certainty be turning out 1,000 tons a-day, and disposing of it at a profit of 6s. a ton, and, further, that within five years this output could be increased to 2,000 or even 3,000 tons. The immediate loss to the Syndicate on an output of 1,000 tons is therefore £300l. a-day, but, in consideration of being
[2183 gg-3]
(This Document is the Property of His Britannic Majesty's Government.]
AFFAIRS OF CHINA.
CONFIDENTIAL.
[36645]
No. 1.
261
[October 30.]
SECTION 3
C O.
45803
IRE Peking Syndicate to Foreign Office.--(Received October 30.) Rs 27 NOV 17
110, Cannon Street, London, October 29, 1906.
Sir,
I HAVE the honour to acknowledge the receipt of your letter of the 25th instant requesting to be furnished with a statement showing on what basis the figure of 2001. a-day, proposed to be claimed as damages from the Chinese Government, was calculated. In reply, I am instructed by my Directors to say that the above claim was suggested, not so much as an exact equivalent of loss sustained by the Syndicate, as a lover for forcing the Chinese authorities to recede from the position they had taken up, and without abandoning hopes of an ultimate satisfactory settlement. It was, however, apparently the opinion entertained in His Majesty's Legation in Peking that such a claim could not be presented without breaking off negotiations altogether, and, consequently, so long as there were hopes of another solution, the claim for damages was withheld. These hopes it would now seem are not likely to be realized, at least for an indefinite period, and, in justice to the shareholders, my Directors must press for compensation.
From the nature of the case it is not easy for the Directors to state in exact figures what the loss due to the delay in issuing a permit amounts to. In the Prospectus issued to the public on the 3rd March, 1900, it was estimated that from the outset a yearly sale of 500,000 tons of coal could be safely reckoned upon, which, on a moderate calculation, would give an annual profit of 175,000, and it was further stated that, when the Syndicate's operations were in full working order, an annual sale of 2,500,000 tons might be expected, yielding a return of 750,000. It may be said that these figures are of little value as being mere expectations; but to show that they are not exaggerated, I am to quote the experience of the Chinese Engineering and Mining Company (Limited). With an insignificant area as compared with the Syndicate's Concessions, and with coal of a greatly inferior quality, this Company is turning out coal at the rate of 18,000 to 20,000 tons a-week, or about a million tons a-year, which for the year ended the 25th February last yielded a net profit, after paying all China expenses, of 178,580. The profits on the sale of coal by this Company are thus 3s. 6d. a-tou, but the Syndicate has proved, by actual sales of coal from the Honan Mines brought down to the Tien-tsin market, that they can count on a profit of 6s. a-ton.
The calculations of profit given in the Prospectus contemplate the working of both Honan and Shansi Concessions. Our present claim is concerned with Shansi alone, and even of that it only covers the northern portion, viz., the Prefecture of Pingting-chow and the neighbouring district of Yu-hsien. The southern area, including the Prefectures of Tsechow and Luan, is as yet untouched, as the railway has not yet been carried up to the Shansi plateau. No permit, therefore, has been applied for for this area, and consequently there has been no refusal. The Syndicate, however, contemplates the development of this area at an early date, and should the permit in this case be refused, the claim for damages must be increased proportionately.
My Directors consider that their Coal Concessions may be divided into three areas of approximately equal value. One of these areas is the Honan field, for which a permit has been granted; the second is the southern Shansi field, including, as stated, the Prefectures of Tsecbow and Luan; and the third is the northern Shansi field, comprising the districts of Pingting-chow and Yu-hsien. It is in respect of this last field only that the claim for damages for refusal of permission to work is now presented.
With regard to the amount, my Directors consider that within six months of the granting of a permit they could with certainty be turning out 1,000 tons a-day, and disposing of it at a profit of 6s. a ton, and, further, that within five years this output could be increased to 2,000 or even 3,000 tons. The immediate loss to the Syndicate on an output of 1,000 tons is therefore 3001. a-day, but, in consideration of being
[2183 gg-3]
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