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But they do think, in view of the most complex and conflicting interests of which those Imperial needs are compounded, that it is their duty to présent every possible aspect of the situation as it affects Far Eastern Trade for the consideration of those high authorities with whom the ultimate decision rests."
9. Colonel Thomson arrived in the Colony early in 1918, and, after he had personally consulted representatives of the various shipping interests, the situation was liscussed on the 18th January with the Vital Requirements Committee, the Governor and the Commodore being present at the meeting. An entirely satisfactory settlement of outstanding questions was arrived at, and it was arranged that, before any further vessels were taken on full requisition, the Vital Requirements Committee would be informed fully of the situation and its advice would be invited. Throughout the remain- ing period of the war the arrangements for the taking of further vessels on full requisi- tion worked smoothly and without friction.
10. The time at Colonel Thomson's disposal was too brief to enable him to inaugu- rate the scheme for the local control of shipping, referred to in paragraph 6 of this Report. but details were discussed and a Shipping Control Committee was appointed for the purpose of getting the scheme into working order and of carrying it on, the members being Mr. R. Sutherland, Mr. G. M. Young, and Mr. A. G M. Fletcher (Chairman) with Mr. F. W. Cary, Expense Accounts Officer of His Majesty's Naval Yard, as Secretary. Mr. Sutherland and Mr. Young sat upon the Committee in their capacity as Shipping Controller's Representatives, Mr. Young having previously taken the place of Mr. Nuttall.
11. The local Control Scheme was prepared, and was subsequently operated, in accordance with definite instructions from the Shipping Controller in London, to the following effect:-
All tonnage available was to be utilized in the most economical way and any surplus tonnage must be diverted to meet more pressing needs. To this end all hitherto unrequisitioned sea-going vessels trading in the Far East were to be requisitioned and were to be placed under the control of Colonel Thomson, as Agent for the Shipping Controller, who would constantly and carefully watch the situation in the interests of the different sections of the Indian and Far Eastern trades, so that tonnage might at any time be removed from one service to another which might at the time be relatively more important from the point of view of Imperial interests.
The Liner Requisition Scheme was to be taken as a model. The vessels were to be left as far as possible to the owners to run as if for themselves, though actually for the account of the Indian or Colonial Governments, and the balance of profit, if any, was to be payable to the Governments of India, The Straits Settlements, and Hongkong. The owners would be paid at Blue Book rates and could not therefore urge any financial considerations against the transfer of any of their vessels from trade to trade, and the way would be left open for Colonel Thomson to make such adjustments of the carrying tonnage in the various trades concerned as would secure the most economical use of the ships available. The adoption of the scheme would also obviate any grievance arising from the fact that certain Liner Compa- nies which happened to be registered in the United Kingdom were already fally controlled both financially and administratively while certain other Companies domiciled in India and the Far East enjoyed freedom from such control.
The situation was thus described in an action brought against the Shipping Con- troller in 1917 :---
"It had become necessary in order to secure the most effective use of available Tonnage that all liner tonnage should be made equally available for any employment, and that there should be identity of interest and equality of reward between all lines, together with unity of control and wide common employment, with unrestricted freedom of disposition adapting supply to demand",
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12. Colonel Thomson supplied the Government with a list of thirteen steamers which were to be requisitioned, namely:—
S.S. Haitan, Hai Hong, Manapouri, Castlefield, Telemachus, Pheumpenh, Ching Chow, Patriot, Lien Shing, Hai Mun, Brisbane, Rotorua, Upolit: to which list was added the S.S. Wollowra, referred to in paragraph 7. These vessels were mostly old and out-of-date. Not one of them was suitable for full requisition for Imperial purposes, and several of them would perhaps not have been running at all, had it not been for the war.
13. In February and March, 1918, telegrams were exchanged between the Hong- kong Government and the Colonial Office and it was finally arranged that the requisi- tioning should be done by the Commo-lore in the name of the Imperial Government, but that the Colonial Government must accept full responsibility for the financial result of the scheme. The Hongkong Government proposed that the protit, if any, after payment of local expenses, should go to the Imperial Government, subject to the Imperial Govern- ment guaranteeing the Colony against heavy loss, but the Shipping Controller was unable to accept this proposal. It was laid down that "the Imperial Government is in no way interested in the financial arrangements or their results except to see that remuneration of Colonial registerel vessels is not appreciably higher or lower than that of competing vessels registered and owned in the United Kingdoin. '
14. On the 14th March, 1918, Sir Henry May read the following statement to the unofficial Members of the Legislative Council: -
"I have asked you to meet me this morning in order to inform you of certain instructions that have been received from the Secretary of State for the Colonies in connection with a scheme for bringing under control the re- maining British vessels on the China Coast, which are still being run ou the owners' account, without supervision.
As you are no doubt aware, Companies such as the Indo-China Steam Naviga- tion Company and the China Navigation Company, whose vessels are registered in the United Kingdom, are running those vessels at fixed rates under what is known as liner requisition, the profits over and above those rates being taken by the Imperial Government. It has been decided to inaugurate a similar scheme as regards vessels registered in India, Singapore, Hongkong, and Shanghai, under the general control of Colonel Thomson, a shipping expert who is now in the service of the Government of India. Colonel Thomson visited the Colony early in the year in con- nection with this scheme.
This Colony is concerned only with vessels registered in Hongkong and Shang- hai, fifteen in number. The circular letter, which you have in your hands, outlines the scheme under which it is proposed to control these vessels.
As far as it is possible to foresee, there will remain, after payment of all charges, a substantial profit to the account of the Government. I need hardly say that the purpose of the scheme is not that the Government should take over a profitable commercial undertaking. Its object is to secure that all tonnage available is utilised in the most economical way, and that any surplus tonnage is without delay diverted to meet pressing needs.
I have represented to the Secretary of State for the Colonies that, although, as I have said, there is every prospect that the scheme will be a profitable one, yet there is an element of financial risk which might assume serious proportions in the event of enemy submarines, railers, or minelayers appearing in these waters. The scheme is a matter of Imperial policy, in which the Colony has no direct and separate interest; anil I have accord- ingly suggested that the Imperial Government shoukl take over all respon- sibility for war risk, on the understanding that they will receive the net profits of the undertaking. I have not yet received a reply to that sugges- tion. I may mention that enquiry has been made regarding the market rates of insurance against war risk, and it is considered that the Government would not be justified in paying the very considerable premia demanded.
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