Sessional_Paper_1920 — Page 9

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23. On the 19th September an Ordinance was passed providing for the acquisition and disposal of Rice by the Hongkong Government, and for validating acts previously done. The Ordinance is printed as Appendix III to this report.

24. The lists of rice purchased showed certain quantities of Saigon round and Saigon long rice, and on these lists the contract mentioned above for the sale of 10,000 tons to America was calculated. It specified 6,500 tons of Saigon round and 3,500 tons of Saigon long, but when the rice came to be sifted to prepare it for export it was found that only 500 tons of the long rice existed, the remainder being round. As the rice had already been sold in America the consignees there refused to alter the amounts of each class contracted for and it was necessary to go into the market and buy 3,000 tons of long rice to make up the necessary amount. This was effected at a price of about $13.50 a picul, which meant a loss on the net price obtained in America of about $1.75 a picul. The 3,000 tons of discarded round rice were subsequently sold at about the same price as would have been obtained in America.

25. A report was called for as to how the confusion between long and round rice had arisen. It appeared that originally the books were made out to show the different qualities of rice, long, round, and broken, and any other grades used on the foreign market, but as this classification was unnecessary for local sales no distinction was sub- sequently made between long and round rice as the price was the same, and the books were drawn up accordingly. The error caused a loss of nearly $140,000 on a purely technical point of difference in making the contract with the American buyers.

26. The cost to the Colony of the transactions in rice up to the end of the year 1919 will be well over $2,000,000. The price of the rice bought at Saigon was much enhanced by the high rate of discount on the Hongkong dollar at Saigon. The cost of 13,750 tons in Saigon currency was $3,072,300, the equivalent in Hongkong currency being $3,766,211, a difference of $693,911. When negotiations were begun for selling rice to America the rate of exchange was about eighty gold dollars for one hundred Hongkong dollars, and when the exchange was fixed it had risen to ninety-five gold dollars for one hundred Hongkong dollars. The rice was sold at 205 gold dollars a short ton for 10,000 tons and the difference in the amount to be received at exchange of 80 and 95 is $404,605 the figures being as follows:-

10,000 tons @ G. $205 a ton

@Exchange of 80$ 2,562,500 @

95

=

2,157,895

$ 404,605

Freight to America also rose from G. $15 to G. $25 during the same period. The balance of the total loss incurred on the purchase and sale of rice is made up of actual reduction in the price at which local sales had to be made of rice bought locally, rent of godowns, freight on rice from Saigon and Rangoon, commissions on sale of Government rice, interest on overdraft, and insurance. All these charges will be shown in the final

'account.

27. It will be clear from the above that whatever sum in dollars representing the loss is eventually arrived at will scarcely indicate the real facts. The Colony has been receiving during the past four months a supply of excellent rice from Kuangtung at a low price, but it is more than probable that if the Government rice had not been here a considerably higher price would have been demanded. The indirect advantage to the Colony of the policy of non-interference with the ordinary rice trade cannot be reckoned in dollars, but the gain is so manifest that the policy requires no justification.

28. When it became clear that there was no other course open than to sell the bulk of the rice which had been purchased with the least possible delay, the Government sought the advice of those connected with the rice trade, who were in a position to help. Mr. Barretto of the firm of J. M. da Rocha & Co., Messrs. E. A. Beaumont & Co., Messrs. Loxley & Co., and the Hongkong Mercantile Company all gave valuable assistance without which it would have been very difficult to effect satisfactory sales. In the work during August of mixing and selling the graded rice Mr. R. O. Hutchison, Mr. Taylor of