CO129-417 - Public Offices - 1914 — Page 65

62

71. The Green Island Cement Company, a British Company of Hong Kong, of which Messrs. Shewan Tomes and Co. are the Canton agents, have for more than twenty years past procured their supplies of limestone, used in the making of cement in their houses in Macao and Hong Kong, from quarries on the north and west rivers in the neighbourhood of Canton through Chinese contractors. Previous to 1912 only one unimportant instance is on record of trouble in connection with the supply of stone, though in 1908 the Imperial Manchu Government issued mining regulations, which included quarrying under license, but which were never enforced. In April 1912 the Tutu of Canton, at the instance of the Canton Cement Works, a Chinese Government undertaking, and a rival of the Green Island Cement Company, issued a proclamation forbidding the unauthorised quarrying and export of limestone from the province. The almost avowed object of this proclamation was to create a monopoly in favour of the Government concern. In spite of protest on the part of His Majesty's consul-general. who pointed out that this prohibition was in direct contravention of the treaties, orders were issued by the Commissioner of Customs on the 23rd July, to prevent the export of stone not accompanied by a Government permit, and, two days later, junks at Samshui and Canton, loaded with stone destined for Hong Kong, were seized, though duty had been paid thereon in the usual way. The reason given was that the stone had been extracted without a Government licence, in contravention of the mining regulations of 1908. Two boatloads of the stone seized were actually diverted to the Canton Cement Works. In reply to the repeated protests of His Majesty's consul-general, the local authorities contended that the transit pass system did not apply in the case of limestone, that under the regulations no limestone could be exported unless quarried by holders of Government permits, that the Government would not be responsible for contracts entered into with

merchants who were not in possession of such permits, and that the only remedy in such a case was to sue the merchants for breach of contract. His Majesty's consul- general pointed out that the export of stone had been carried on for years with the full approval of the Manchu Government, that the regulations issued in 1908 had never been enforced, and had become a dead letter, and that if the provincial authorities suddenly wished to put them into operation, due notice should have been given to His Majesty's consulate-general. Having obtained no satisfaction His Majesty's consul-general placed the matter in the hands of this legation, and repeated representations, both verbal and in writing, were made to the Wai-chiao Pu, in which it was pointed out that the high-handed action of the provincial authorities was directed solely by the desire to create a monopoly in favour of the Government concern at the expense of the British company. A settlement was finally suggested by which the company should pay the Provincial Government the contract price for all the limestone seized, provided they were allowed to take delivery forthwith, and should express their readiness to pay due regard to the Government's requirements as to permits in future, provided these requirements were construed in a reasonable spirit, and made clear to them through His Majesty's consulate-general. It then transpired, however, that the company did not know the exact amount of the stone seized, though the total amount remaining undelivered out of the amount contracted for was 152,750 tons. The company then offered to waive their claim of some 100,000 dollars for damages suffered owing to the imposition of the embargo, on condition that their Chinese contractors were allowed to make delivery of these 152,750 tons, and thus dispose of all past contracts, while future ones would be made under the new conditions. This solution, did not meet, however, with the approval of the Canton authorities with the result that in December 1912 Sir J. Jordan was compelled to inform the Wai-chiao Pu that unless a settlement was speedily effected, a claim would be presented for the full amount of the losses suffered by the Green Island Company from the date of interference with their legitimate business until such date as the stone-purchasing operations were once more freed from all illegal restrictions. The Wai-chiao Pu replied to the effect that a settlement could only be reached on the spot, and the negotiations were again transferred to Canton. The Canton authorities refused, however, even to consider the release of the limestone seized or the question of future supplies until the company withdrew their claim for damages, or, in other words, acknowledged themselves primarily in the wrong. the company refused to do, unless the Government simultaneously allowed their Chinese contractors to fulfil their outstanding contracts and would also concede to the company the future right to buy stone in the open market. The Canton Government contended that the company were already at liberty to buy stone from holders of mining permits, but it was pointed out that this was impossible, as these permits were steadily refused to all the merchants who had previously made contract for the supply of stone, and who were the only people who understood the business, on the ground that they had thereby contravened the regulations. The Tutu, in conversation with His Majesty's consul-general, even went so far as to contend that this case did not fall within the scope of diplomatic negotiation, being of a "commercial" nature, and not one in which the treaties were applicable, and urged His Majesty's consul-general to acknowledge this fact. He persisted in advancing the argument that the local authorities had a sovereign right to punish contractors who acted contrary to law, and were in no way bound to give previous notice of domestic legislation. Negotiations were not facilitated by the fact that they were partly conducted on the Chinese side by a Mr. Kuan, holding the post of Industrial Commissioner, over whom the Tutu appeared to have no authority, and whose personal interest in the affairs of the Chinese company prevented his taking an unbiassed view of the case. In reporting these negotiations to His Majesty's Legation, His Majesty's consul-general stated that he could see no remedy save the use of force or of a counter-boycott, the latter a dangerous weapon in view of the fact that the Hong Kong Government obtains its whole food supply from the Canton province. The situation had become very serious for the British company, as owing to the failure of the supplies of stone they had been compelled to shut down their factory at Macao, and only half their factory at Hong Kong had been working for several months. Finally, in April 1913, all efforts to obtain a settlement having failed, His Majesty's consul-general presented the company's claim for damages up to that date, amounting to over 600,000 dollars.

This

72. During the ensuing summer nothing further was done in the matter owing to the incidence of the rebellion and the disturbed state of the province. The rebellion was, however, responsible for a complete change of officials in the province,