CO129-371 - Public Offices - 1910 — Page 452

449

2

It has been previously reported by Mr. Willis that certain British firms had found it necessary to send representatives to Manchuria, who were either engaged in the purchase of beans or were examining local conditions with a view to purchase. The firms mentioned by him were Messrs. Craig and Co., Messrs. Samuel, Macgregor and Co., Messrs. R. G. Shaw and Co., Messrs. Montgomery, Jones and Co., and Messrs. Jardine, Matheson and Co. To these may be added Messrs. E. A. de Pass and Co., Mr. Perey Colman, and the Anglo-Chinese Eastern Trading Company; while Mr. C. R. Burkill, of Messrs. A. R. Burkill and Sons, of Shanghae, agents for Gossage's soaps, was recently in Ch'ang Ch'un, where, according to local report, he failed to effect any purchases. Messrs. Craig and Co, are now established in Harbin, and it is possible that Messrs. Samuel, Macgregor and Co. will follow their example. The local representative of Messrs. R. G. Shaw and Co. is Mr. A. G. Blake, and Messrs. Montgomery, Jones and Co., whose head office is in Liverpool, have been represented since September last by Mr. Kirk, who returns to England to-morrow. He has, he told me, merely been studying the local market and did not buy. Messrs. E. A. de Pass and Co. are a London firm, and are, I understand from their local representative, Mr. Westendarp, working in conjunction with Messrs. Craig and Co. Mr. Percy Colman, who is establishing himself at Chang Ch'un, was formerly Messrs. Jardine, Matheson and Co.'s silk expert in Yokohama, and is now conaccted with Mr. Healing of that town and a London syndicate. The Anglo-Chinese Eastern Trading Company, which has offices both in London and Harbin, is composed of five partners, and the gentlemen who sign for the firm are Messrs. Oxley and Kabalkin, the latter being a Russian.

It will thus be seen that, considering the rapidity with which the export trade to Great Britain has developed, British merchants in Manchuria are well represented. I am not, however, satisfied that the business, as at present conducted, is founded on an altogether sound basis. There is reason to think that there has been a good deal of speculation, and the impression made upon my mind is that some of the gentlemen engaged are apt to eye one another with no little suspicion and, in cases, even with antagonism. For this reason I have found some difficulty in deciding as to how much weight should be attached to the information with which I have been furnished. Yet it may safely be said that there has been short selling, and that losses have been incurred owing to the necessity of fulfilling contracts at enhanced cost. The Chinese, encouraged, no doubt, by the foreign competition on the spot and by the higher quotations for beans at home, have been holding, and there has been a considerable rise in the local price. Both Messrs. Craig and Co. and Messrs. Samuel, Macgregor and Co. have had to pay several days' demurrage on the steamers "John Hardy" and "Charlton" loading at Vladivostock, and do not think that the whole blame can be set down to the inefficiency of the Chinese Eastern Railway Company. As showing how matters of this kind can be adjusted, I may state that, according to Mr. Macgregor, the loss suffered in the form of demurrage on the "Charlton" was more than balanced by diverting another steamer bound for Vladivostock to Dalny, whence she received expeditious despatch and took a larger cargo; freight also being cheaper than from Vladivostock. It is, of course, impossible for one outside of the trade to follow all its intricacies, but it will be easily understood that, as with all speculation, loss on one gamble may be partially or wholly covered or more than counter-balanced by profit on auother. On this account I am chary of accepting without reliable confirmation and without a knowledge of all the circumstances the reports of some gentlemen that others have incurred losses running into thousands of pounds. Thus, Messrs. Craig and Co. are said to have lost 10,000%. and Messrs. Macgregor and Co. 30,000, but, if I have correctly understood Mr. Douglas Macgregor, the loss attributed to him of 30,000l. is entirely dependent upon whether the Chang Ch'un Taotai will or will not recognise two contracts, one for 10,500 tons and one for 30,000 tons, signed by Mr. Baldwin on behalf of the board created for the opening of Ch'ang Ch'un to international trade. He further told me that, the London house having held when the cargo was offered to them and having sold at a good price, he would be able, in the event of the Taotai definitely declining to abide by Mr. Baldwin's contracts, to purchase, as prices stood a few days ago, at a net loss of 15,000. He has also informed me that, including steamers loading at Dalny at the end of January, he will have shipped 64,000 tons from that port during the current season. This fact is possibly not known to his competitors, among whom the idea exists that he is unable to obtain the supplies he requires. At the same time, that the short selling to which I have previously referred has been generally unprofitable would seem to be confirmed by statements made to me by both Mr. Smith (Messrs. Jardine, Matheson's representative)

3

and by Mr. Macgregor. The former told me that he intended to have nothing more to do with anything but "spot" cargo-that is, goods already purchased and delivered ----and I gathered from the latter that next year he will not endeavour to ship from Dalny before January and from Vladivostock before March.

That the trade is profitable to the Chinese Eastern Railway Company is shown by the fact that even last season as much as 162,000 tons of beans were carried from Harbin to Vladivostock, representing, at 30s. a-ton, freight amounting to 240,0007. The charge is heavy and, on a steamer load, equals, if it does not on occasion exoped R 10 the entire freight by sea from Vladivostock home. The railway has not found it an easy task to meet the demand made upon it this season, and, owing to the insufficiency of covered vans, it has been necessary to use open trucks. Rumour has it that the scarcity has been occasioned by the sale of 3,000 to 4,000 cars to the Baikal Railway, but, though this report seems to be fairly generally current, definite confirmation is lacking. Open trucks are unsatisfactory even if supplied with mat covers, which, if insecurely fastened or opposed to a strong wind, leave the sacks exposed to the snow, Mr. Willis has previously reported that, as a result of the visit to Manchuria of the Russian Minister of Finance, the freight rates on beans from Kwangchengtzu to Vladivostock were lowered to the level of the Japanese charges from Chang Ch'un to Dalny. That this was solely done with a view to enable competition with the South Manchurian Railway is manifested by the fact (1) that, whereas the rate is 155 kopecks per pood from Kwangchengtzu to Vladivostock, the charge from Harbin, which is 148 miles nearer to the seaport, is 17·1 kopecks, and (2) that the distance by rail from Chang Ch'un to Dalny is 439 miles, and from Kwangchengtzu to Vladivostock 634 miles. The management of the railway generally leaves, it would seem, much to be desired, and I have been told that quick despatch and rapid service are considerably hindered by the long delays in unloading cars at the eastern end of the line. My attention has also been drawn to the need of giving a "douceur" to stationmasters at points where goods are to be loaded. On the other hand, the railway administration is evidently alive to the fact that the new trade is deserving of encouragement, or it would not have reduced the through rate from Kwangchengtzu to Vladivostock to the level of that from Ch'ang Ch'un to Dalny by the South Manchurian Railway. It also appears to be willing to facilitate to some extent already British merchants who are buying beans, and I understand from Mr. Macgregor that he has secured positions for offices and compounds at Tui Ching Shan, a few miles west of Harbin, and Shuang Ch'eng Pu, Tao Lai Chao, and Shih Tou Cheng Tau, between this and Kwangchengtzu. Mr. Westendarp, too, tells me that he has been able to arrange for the storage of produce at various stations, the railway providing guards at a daily cost of 50 kopecks per man.

The following figures furnished me by Mr. Westendarp gives some idea of the value of the trade to crushers at home :----

One hundred tons of beans at 71. 10s. per ton--the present price in the United Kingdom is 77. 10s. to 71. 12s. 6d-will cost 7501, and will yield, say, 15 tons or 15 per cent. of oil and 85 tons or So per cent. of cake. Fifteen tons of oil at 231. per ton will sell for 3451, and 85 tons of cake at 71. 10s. per ton will fetch 6371, 10s.-i.e. a combined total of 9821. 10s. Adding 100%., which he considers a liberal allowance, for cost of manufacture to the purchase price of 7501, and the net profit to the crusher on 100 tons of beans is 132/. 10s. Hull and Liverpool are the main crushing centres, and the principal crusher at the latter is Messrs. Bibby Brothers, who are said to crush 160,000 tons to 180,000 tons a-year. It will be noted that the value of the cake is the same as that of the bean before the extraction of the oil.

The most recent development in connection with the trade locally has been the prohibition on the sale and export of beans instituted by the Prefect of Petuna (Hein Ch'ong) on the Sungari. I shall report concerning this matter in a separate despatch.

I have, &c.

HL E. SLY.